Interview: Luxury Italian outfitter Zegna and Peru’s vicuña wool

Paolo Zegna met with President García on a recent visit to Peru. (Photo: Sepres)

What is the relation of the brand with Peru?

It’s very close. We are part of the group of three enterprises – Loro Piana, Zegna of Italy and the Incapalca of Peru – which in 1994 convinced the Peruvian government to again export the vicuña wool after it was prohibited in 1969 to avoid its extinction.

A vicuña wool coat of Ermenegildo Zegna is worth $18,000. How much of the fiber you use is Peruvian?

Since 1994, 100% of the vicuña wool we’ve bought is from Peru. Nevertheless, this represents 5% of the fibers that we acquire around the world.

It’s a scarce product.

Very scarce. What we want is for the production of vicuña wool to grow for the price to decrease, because nowadays the approximate prize is $450 per kilogram, which makes it accessible to very few people in the world.

Peru sells only between 5,000 and 6,000 kilograms of vicuña wool, which is approximately $2.5 million per year. From that total amount, we buy more than the half, between 2,000 and 3,500 kilograms,  approximately $1.5 million.

What do we need to increase production?

We asked the farmers and they told us that the main thing is the water. More water means more grass, which allows the farmers to raise more vicuñas in the same area and increase the production of wool. That is the reason why we invest hundred of euros in a social responsibility project to build an irrigation system of 11 kilometers in Picotani, Puno that can benefit 200 families, who raise 2,000 vicuñas and 30 thousand alpacas.

That was the topic of your meeting with the president?

I think our project is the first one done by a private brand in Peru, which can be a good example for other enterprises or even to the Peruvian government.

Global Warming represents a big risk for the vicuña: If the glaciers diminish and irrigation systems are not created in the highland, vicuñas will go all the way down to look for food and they will settle down in an area of a higher temperature.

So the wool quality will decrease.

Exactly! We have to invest, the government and the private sector, to keep vicuñas in their normal habitat and avoid something like that to occur.

Your Picotani project will increase production or will just assure that the current level is maintained?

We expect more production, but we don’t have numbers that can prove that yet. The important thing, and that’s what we discussed with García, is the creation of an information campaign about the vicuña in the national environment, for it to be more attractive for the consumers and the investors.

Many Peruvian don’t know how much vicuña wool actually is; nonetheless, in China they pay more than twenty thousand dollars for a piece of clothing made with vicuña wool.

You sell $1.2 million in your stores in Lima located on Miguel Dasso. What does it take  to consolidate a luxurious market here in Peru?

It will take investing in developing commercial areas that has the enough quality, luxury and service for Peruvians to buy here and not travel to the United States or Europe. It doesn’t just take more money in the economy.

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This week the Boulevard Jockey opens, a luxury commercial zone.

This will help. We evaluated the possibility of getting in, but we didn’t find a location that looked perfect for us.

The second part of this area will be ready in 2011. Are you evaluating the possibility of opening a new branch there?

It’s probable, but we cannot be sure yet because it depends on the fact we find the perfect place. If we do, we would invest $300,000 to open the new store.

What is the secret of the success of Ermenegildo Zegna?

In our stores we don’t only sell the product, but we also educate the customer to understand it and appreciate it. This has allowed us to create new markets and to export 90% of our products. At the beginning we had to teach the Chinese everything, but after 20 years, China is now our best customer.

How did the crisis affect you?

We ended 2009 with sales of 867 million euros, approximately 7.5% less than 2008, but we survived by investing in the emerging countries: Brazil, India and China.

And how do you see 2010?

We’ve yet to release information to anybody, but if you insist, I’ll tell you we expect to grow 15%.