Business Breakdowns
· Chris Davies, Matt Reustle
The cultural undercurrent was so strong that actually the Pet Shop Boys sang a song about this called Paninaro, which they released in 1986, which is worth a listen. If anyone wants to get a flavor of that sort of cultural milieu. [00:00:00] S0: Can dub it into the recording, perhaps. [00:00:00] S1: Put it in the show notes. Definitely. So this is the second phase of the company's history. It's quite different to the first. It's much more fashion oriented. And that brings us on to the third phase of the company. So by this point you've basically established that Moncler has these technical credentials in performance, in mountaineering outerwear, but it also has these credentials in fashion as well. Now that's an unusual combination and it's something that was recognized by a guy called Remo Ruffini, who actually starts working for them around the time of the late 90s, early 2000s, and ends up buying the company. Over the course of the next 20 plus years, he basically takes full advantage of this really unique amalgamation of the technical and the fashion and builds Moncler into this gigantic, successful fashion powerhouse.
· Chris Davies, Matt Reustle
[00:00:00] S1: Put it in the show notes. Definitely. So this is the second phase of the company's history. It's quite different to the first. It's much more fashion oriented. And that brings us on to the third phase of the company. So by this point you've basically established that Moncler has these technical credentials in performance, in mountaineering outerwear, but it also has these credentials in fashion as well. Now that's an unusual combination and it's something that was recognized by a guy called Remo Ruffini, who actually starts working for them around the time of the late 90s, early 2000s, and ends up buying the company. Over the course of the next 20 plus years, he basically takes full advantage of this really unique amalgamation of the technical and the fashion and builds Moncler into this gigantic, successful fashion powerhouse. [00:00:00] S0: It's amazing how often, when you look back at history of luxury brands, it does start with earning the credentials in whatever space it may be. Hermès, with their leather actually being used with the horses or in the field with the watch industry, certainly with Rolex watches. There's some overlap here with Moncler. When you think about the brand today, obviously that street style is what I see, at least on a day-to-day basis. Would you say that is the primary focus? Do they still keep that focus on the actual slopes in the mountains and that type of physical exertion type wear? When you think about the brand as a whole, how do you think they approach that?
· Chris Davies
[00:00:00] S1: So there are two brands actually under the umbrella here, which I'm going to get to the other one later on, but it's called Stone Island. But for Moncler, they have these three pillars to the brand. So the first is what they call collection. And this is the core brand. It's the core products, it's the Maya jackets, it's the bread and butter of the business. But you also have these two other pillars which are really important as well. One is called Grenoble and the other is called Genius. Grenoble is basically this kind of strand of the Moncler identity that Remo Ruffini has pulled on. So it was launched not a separate identity by any means, but certainly as an extension and expansion of Moncler. And this was back in 2010, and it very much harks back to the company's technical heritage. It actually launched in New York, I think at a golf driving range on the Hudson River on an old pier with this massive scaffolding with 100 models standing on it wearing Moncler garments. So it was very much calling out the fact that, hang on, there's a technical heritage here, but this is still very much a fashion brand. And what you've seen them starting to do over the course of the last sort of 10, 15 years is gradually open some of these more technical leaning stores. And I guess this has culminated a bit more recently where they've actually started to open dedicated Grenoble boutiques where you take those technical products and you can see these online, by the way. It's not just something you have to go to a store for. You can go online and have a look at the various products that they have under that Grenoble range, but it's very much this deliberate reclaiming of that technical heritage. The other one is Genius. Now, Genius is really quite interesting because first of all, it's the newest of those three pillars. It was brought in back in 2018 and it's kind of a platform. It's a multi-designer platform. If you think of the typical way that a luxury fashion business would work, you would usually have one creative director. Gucci is a good example. How many creative directors of Gucci could you name over the years? Well, you've had people like Tom Ford, who did pretty well for himself. Frida Giannini, I think, came after him. More recently, you've had people like Alessandro Michele. But that model is very much dependent on one individual.
· Chris Davies
How they think about the brand, how they imagine the brand. And you'll have fashion shows which then reveal on a periodic basis what that designer has come up with. Remo Ruffini is not that keen on industry standards and the usual way of doing things. And part of the reason for this is that when he bought Moncler back in the early 2000s, you already had some pretty big brands out there in the world. So if you want to try to compete with these, you've got to do something that's really quite different. And this really culminates in the launch of Genius in 2018. And the idea is that you just collaborate with a whole bunch of different designers during the course of an individual year. So I think so far they've probably collaborated with 80 plus different designers over the history of Genius so far. But what it does is basically generates hype and excitement and interest. These are limited edition, time-limited collections that they develop with individual designers, and they've actually blown this up to a much larger scale. So actually, if you go back last year, they had this incredible extravaganza in Shanghai where they basically took Genius and in one go had 10 different designers collaborating in this old shipyard which had been completely revamped. It was a bit like Disneyland for fashion designers. And they had 8,000 people attend. It was live streamed by nearly 60 million people. And so you had these 10 different areas where these different designers would interact with the Moncler brand, reimagine, reinterpret it. So you had one section which was Donald Glover with an agricultural theme, another explore the intersection, connection between fashion and AI. So that was really interesting. To really understand how it works, you need to see it as part of a flywheel. It very much drives interest and excitement for the brand. So those are the three pillars, I would say, the core collection, Grenoble, and then you've also got Genius as well.
· Matt Reustle
[00:00:00] S0: And I think you've covered a decent amount about what makes Ruffini different. But are there other things that you would point to just in terms of him taking over this business, which was struggling at the time? He was opportunistic in terms of the time that he acquired it. You've described some of the ways that he's left his fingerprints on it. But anything else that would get into the ethos of Ruffini, because he does seem like such a primary character within this business story.
· Chris Davies
[00:00:00] S1: Oh, yeah. He is the impresario in this case, for sure. So he's the chairman and CEO. Moncler doesn't have a creative director, but he's like the driving force on the creative side as well. He is restless. He is constantly innovating, looking for ways to reinvent Moncler. I've heard him say in the past, we should never compromise, never get bored, so we don't bore others. And this, as a philosophy, has worked pretty well. So I think Moncler had about $45 million of revenue when Ruffini took over. He grew that tenfold to approximately $450 million by 2012, which was the year before the IPO. I think to really get into his head, you need to go back and look at his history. So actually, his parents were involved in the fabric industry a long time ago. So there are stories of him, aged six, seven, sitting around the kitchen table talking about fabrics and styles and the like. He said to us in a recent meeting that he used to have this light blue Moncler jacket when he was a kid, and he loved this jacket. But it really planted a seed for his career when he went to work for his father's business. So his father set up this business called Gianfranco Ruffini S.p.A. in the early 1980s. He actually moved out to the east coast of the US and Remo Ruffini actually went to work for him. For a while, but he was traveling around. He explored the east coast of the US and this was around the time back in the 1980s, when the sort of preppy lifestyle was taking off. Very much oriented around quality clothing, lots of links to sailing and tennis and these sorts of things. And it's the sort of style that's really survived. And people even today can still figure out what preppy actually means. But that inspired him and he came back to Italy, went back home to Como, and basically set up these two brands of his own, one of which was called New England. And he describes this period as basically a bit like going back to school. Now, these two brands were pretty successful. He sold both of them to a private company called Stefanel. This was in about 2000. Stefanel specializes in knitwear. But this gave him some liquidity. Now, I think I mentioned earlier, he was working as a creative consultant for the holding company which owned Moncler at the time, and they were really struggling with the fallout of the TMT crash. Were just looking to sell.