BULGARI’s fairwell to Italy
In a surprise move, French billionaire Bernard Arnault, owner of LVMH and a ”collector” of prestigious international luxury brands, has snatched up Italy’s flagship jeweller BVLGARI. Although, financially, the deal does not confirm an actual sale, the fact that the brand will be integrated within the LVMH Group indicates a clear take over. While prominent Bulgari family members Paolo and Nicolo will maintain their board positions, more honorary than executive, the former Bulgari CEO, Francesco Trapani will manage the new ”hard luxury” division of the LVMH Group which will include Bvlgari, Chaumet, Fred and De Beers.
The Italian media has been quick to react with headlines such as ”Good bye Dolce Vita”, ”Bulgari says fairwell to Italy” and ”Bulgari, no longer Italian”, connecting the sale of Bulgari with other major Italian luxury brands such as Gucci and Fendi which are also French owned. The sensible questions that arise are related as to why Italian companies do no go beyond their creativity and craftsmanship to establish successful international businesses in the long term.
Take case by case, the takeover of major Italian maisons always happened at a critical timing – Gucci was on the verge of bankruptcy after the death of Guccio Gucci, Fendi was in deep financial difficulties and there are several other similar examples, such as Emilio Pucci, Acqua di Parma, Sergio Rossi etc.
Sotirios Bulgari set up his first silver shop under the Bulgari name in 1884 and in 1905, Constantino and Giorgio Bulgari opened the first Bulgari flagship, the legendary location in the heart of Rome on Via Condotti, till today, a symbol and the international flagship of the brand. In 1995 the company was listed on the Milan stock exchange and a major campaign to celebrate 125 years ran throughout 2009. From the debut of the crisis in 2008, Bulgari’s performance has shown signs of a weakness in several key markets and found the company unprepared to compete with other key brands on accessories (bags, scarves, leather accessories), a division which took off well during the booming years of 2004-2007 with a major international expansion both in wholesale and with franchised and directly operated boutiques.
From early 2010, Bulgari began to seek a strategic partner, Trapani, says, first in Italy, yet his initiatives were not welcomed by any of the major players. It was only last week that he confirmed talks with Arnault started mid 2010 and a synergie was uncovered. In numerous interviews, especially in Italian media, both Paolo Bulgari and Francesco Trapani insist the move was not a take over by LVMH and the Bulgari family did not sell their business, however, now, LVMH owns 51% of the brand and will have direct control over its management and operations.
In the current turbulent economic context, it is uncertain whether Bernard Arnault’s ”traditional” take over recipe which he applied for all the luxury brands he acquired, would apply in the case of Bulgari. The Italian maison needs a major shake up not only from a financial and business point of view, including operational, but also from a creative and identity point of view. In the past half decade, Bulgari has been diversifying in too many product categories, some failing to live up to the reputation of the brand, let alone prove financial sens. Today, the Bulgari brand includes mid range bathroom amenities in hotels, ties, writing instruments as well as restaurants and hotels, way beyond jewellery and watches which, for over a century used to be the only products of the house.