The Vicuñas and the $9k Sweater

https://www.bloomberg.com/features/2024-lvmh-loro-piana-vicuna-sweater-labor/

by throwaway2037 • 2 years ago

70 51 2 years ago

bloomberg.com

throwaway2037• 2 years ago

Spotted here: https://www.ft.com/content/8fa8550e-7a55-44a7-b3d5-cdb0f81ae...

vanc_cefepime• 2 years ago

https://archive.is/cmHOj

chongli• 2 years ago

Forgive my ignorance but isn't there an obvious solution here? Stop selling the raw fibre. Build local industry and sell the finished product. Or is 99% of the value added after the raw fibre step?

alexchamberlain2• 2 years ago

They need to buy specialist equipment to do that, and it sounds like they can't afford it?

kwanbix• 2 years ago

That is what the government should do. Buy it for them.

rKarpinski2• 2 years ago

Isn't this where capitalism comes in and someone with money steps in to take a chunk out of literally "the richest person in the world's" margin.

dan-robertson2• 2 years ago

What specialist equipment? Incas managed to make fabric out of the wool without advanced equipment. I think garments are still made (by hand) from the wool around the regions where the animals live, though I assume they aren’t as consistent as what you get from Loro Piana, and maybe they aren’t exported (if I remember correctly, this is to try to allow those goods to be used by locals in traditional ways, rather than being made for export, though I’m not confident in that claim)

imgabe2• 2 years ago

Or just stop selling it altogether and focus on some other more profitable industry. LVMH can find another supplier or tend Vicuñas themselves.

resolutebat• 2 years ago

As the article explains, LVMH does tend vicuñas themselves, on fenced lots and at an industrial scale the villagers can't compete with.

photochemsyn• 2 years ago

This looks like a artificial scarcity means of creating value. Vicuna wool is not particularly finer than alpaca wool, but the rarity of the former means a cost increase in the exclusive luxury market, so the owner can say, "it's vicuna" at social gatherings. It's probably no more difficult to raise alpacas and vicunas then Cladoir sheep, the latter being a fine-wooled local Irish breed.

So if you start paying the Andean villagers a lot of money for vicuna wool, all their neighbors will start raising vicunas, because who doesn't want to get rich raising sheep in the mountains? Then the market would be flooded and nobody would pay top dollar for not-so-exclusive vicuna anymore (the villagers probably know all this, but don't have access to direct-to-consumer marketing for more competitive pricing - get them a Starlink Terminal and ah, err, Tiktok account?

Fashion is a funny business, more about social science than economics. Incidentally wool demand might be rising due to microplastic concerns over synthetic fleece clothing.

nemo• 2 years ago

So if you start paying the Andean villagers a lot of money for vicuna wool, all their neighbors will start raising vicunas, because who doesn't want to get rich raising sheep in the mountains?

Vicuñas are dromedaries, they're not closely related to sheep. You can't just raise them. They're the wild animal that was domesticated into the alpaca. They're not a domesticated animal, they are a wild animal with very poor temperament and locals do not keep them, they capture wild vicuñas to shear. There's no realistic way to flood the market, the supply is limited by nature.

brandall10• 2 years ago

It states in the article that it is indeed a fiber fiber than the alpaca.

hiddencost2• 2 years ago

Parody?

brigadier132• 2 years ago

Why is there only one customer?

Retric3• 2 years ago

Because the price is actually extremely high, and the alternatives are far cheaper

“$280 for an equivalent amount of fiber” is just a lot of money to spend on raw materials for a sweater. Include the overhead of selling luxury goods and you need to be charging ~1,000+$ per sweater to break even. Add in there’s only 200,000 animals worldwide and that’s just not a lot of room for multiple companies to be interested in participating in such an inherently limited market.

rKarpinski2• 2 years ago

Loro Piana does over 1B Euro in revenue at over 20% margin [1], I'd say there is room for more than one company.

[1] https://en.wikipedia.org/wiki/Loro_Piana

dan-robertson2• 2 years ago

The sweaters being discussed cost $9000, which is “$1000+” (I see it a bit under $8k on their website in my country but prices might vary by import duties). I don’t know how fair the comparison to the $280 cost of raw materials is – maybe the sweater weighs 500g, and the article found somewhere near the other end of the chain the price is $560/kg, but it could be that Loro Piana are only taking higher grades of wool and so more than 500g of raw wool would be needed to get 500g after grading, spinning, milling, etc. I suspect the cost of getting enough wool for the sweater to Italy ready to be spun is higher than $560 per kg of finished product, but that doesn’t mean the price the workers get before then is fair.

I spent a bit of time thinking about other ways to estimate costs but didn’t try too hard. Loro Piana sell (woven) fabrics but don’t publish prices on their website.

They might sell a similar product in cashmere for around $3000, of which I would guess $250-$500 goes on the cashmere (maybe a bit less as they spin in house), perhaps another $200-300 on labor and manufacturing, and the rest would be the typical luxury goods mix of profit and a bunch of low volume stores in expensive locations.

samatman• 2 years ago

There are other perspectives here worth comparing and contrasting.

https://www.conservation.org/blog/in-wind-swept-andes-sustai...

truculent3• 2 years ago

This is notably looking at the Bolivian communities, not the Peruvian ones as in OP

Beijinger• 2 years ago

That is a nice Sweater. Would complement my 10k comforter... https://icelandicdown.com/product/eiderdown-comforter/

throwup2382• 2 years ago

Damn for that amount of money it should be made of Sasquatch down or some other hitherto unknown cryptozoological specimen.

lsb• 2 years ago

It’s an absolute scandal, as if France only sold wine grapes, and no one in France had ever made or tasted wine. Most of the value add is in the processing.

ZiiS• 2 years ago

They are paying the village the local minimum wage for a month per jumper and the village can't afford to pay her for one day's work?

wmf• 2 years ago

Somebody's embezzling that money and this article seems remarkably incurious about that fact.

truculent3• 2 years ago

I think there’s enough pointed inclusions in the article to make that clear, to be fair. Although I agree it seems weirdly restrained, like half an article.

truculent3• 2 years ago

In 2012, they brought in $788,526 - where did that go? Who is the leader of the indigenous community making these decisions? Was the journalist able to get a comment from them? If not, why not?

readyplayernull• 2 years ago

Now also tell me what chemicals they use to clean the fibers and how and where they dispose the residues? Just to be sure I'm not portraying a wrong image of them.

jerpint2• 2 years ago

I’ve been to Peruvian mountains recently where they farm vicuñas and alpacas and can confirm they live in pretty poor conditions in a very harsh environment; high altitude barren mountains. The majority of income comes from tourism, and it’s very common to see villagers try to sell you goods made of alpaca/llama/vicuna wool. Funny enough, most shops in the bigger cities tend to sell stuff made in china because it’s significantly cheaper to obtain

Dalewyn• 2 years ago

they live in pretty poor conditions in a very harsh environment; high altitude barren mountains.

But isn't that just the Peruvian mountains? If your statement was supposed to be relative ("there are good conditions in <x>") then I'm not sure what you expect.

If it was supposed to be absolute, then you're correct but stating something that hasn't changed since long before humans started living in the area is hardly worthwhile.

brailsafe• 2 years ago

I understood the whole statement to mean that both the physical environment of the mountains and the conditions for living in them (for both alpacas and people) are difficult.

As in, "the mountains are a harsh environment and people are living in poor conditions upon them" which would suggest an even more limited set of circumstances than being just poor somewhere else or just on those mountains but not having to depend on them for everyday living.

DanielVZ• 2 years ago

How did they farm vicuñas? Common knowledge here in the andes is that they aren’t domesticated and don’t reproduce in captivity. That’s why their fur costs so much.

Afaik alpacas can be farmed, but llamas are fully domesticated instead and easy for having larger livestock.

clvx• 2 years ago

There you go: https://elpais.com/america-futura/2023-09-03/la-fuerza-del-c...

Pretty much Chaccu. Free festival. It's usually in June. You can make a trip of it going to Paracas, Ica's dunes, Nazca Lines and finish in Pampas Galeras. Keep in mind in Galeras there's nothing. Just a post of the National reserve and that's it. It's also at 4K meters of altitude so walking for hours could be a whole experience.

jerpint2• 2 years ago

I didn’t interact with the locals much, but you are correct that it was mostly alpacas and llamas that you would see being herded

Gimpei• 2 years ago

The value in the 9K sweater is not in the material. You can get just as nice sweaters for a lot lot less money. Probably 20X less will get you a very nice, very well made, very soft sweater. The value of the sweater is in the brand. Somehow Loro Piano has found out how to get people to agree to pay 9K for a damn sweater. If they can do it with Vicuna, they’ll find another material to do it with as well.

xvector• 2 years ago

Have you actually stepped into a Loro Piana store and felt their cashmere? It is otherworldly. I have some degree of experience in picking out high-end cashmere, telling the overpriced scams apart from the legit ones, and Loro Piana is definitely a noticeable level above the others.

I have skin that is hypersensitive to cashmere. Most high end cashmere itches for me, but not Loro Piana cashmere. There are significant differences in cashmere fiber length, diameter, etc.

markdown2• 2 years ago

All the differences in the world don't make that little amount of animal hair worth $9k. It's the value adding... mostly via brand development. I mean it says right there in the article that it's worth $280.

BTW why are you talking about cashmere when this is about Vicuna hair?

wl• 2 years ago

The value of the $9k vicuña sweater is in the material. If you just want very soft, cashmere and baby alpaca are nearly as soft and considerably cheaper. People get vicuña fiber garments because it's rare, it was the fiber of royalty, and it's arguably the finest natural fiber in existence.

randomcarbloke• 2 years ago

This is false, it's a mix, other houses sell vicuna sweaters, in fact you can buy them from unknown sources, even the raw material itself and have someone knit it for you, it is extremely expensive however you acquire it.

The house adds value to the material, as with any high-end producer like Brunello, Zegna, and the next one to pop-off Rubinacci (watch this space).

ch4s32• 2 years ago

Well now I’m headed to Mr Porter to make some mistakes… I guess that’s what I get for opening this thread.

elephant81• 2 years ago

I toured the Loro Piana mill in Roccapietra a few years back. Highlights include the cashmere carpets they make for gulfstream, the Scottish nettles they brush fabrics with and the five story storage bins that run an automated elevator call back system.

It was very impressive.

Sure it is even more so since it was purchased by LVMH.

thfuran• 2 years ago

Scottish nettles they brush fabrics with

Why would someone go and do a thing like that?

throwup2382• 2 years ago

It's called fulling: https://en.wikipedia.org/wiki/Fulling

First they soak the fabric in stale urine. Then the tiny stinging hairs on the nettles acts as a natural brush to lift and separate the wool fibers.

The Vicuñas and the $9k Sweater

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