Chanel acquires 4 silk companies to firm up supplies

Continuing its trend to secure access to high-end raw materials, French luxury goods maker Chanel has created a silks production unit by investing in four silk companies of long-standing in France’s Loire region.

After completing the third deal in four months aimed at strengthening its silks supply chain, Chanel said in a statement that the companies, were long-standing suppliers involved in every step of silk production from yarn making to weaving and printing.

"Through these investments, Chanel is reaffirming its commitment to the long-term sustainability of a high-quality segment and to ensure the longevity of the silk weaving industry in France," Bruno Pavlovsky, President of Chanel Fashion said.

Chanel plans major investment in the four companies to boost their production capacity and modernize their manufacturing tools, the statement said but remained quiet on the monies transacted in the process.

Three of the firms carry the government-sponsored label Entreprise du Patrimoine Vivant, reserved for companies delivering traditional, high-end artisan work.

In recent years, every major luxury group such as Hermes, Kering, Richemont and LVMH has been firming up suppliers, from tanneries to flower growers, as the competition gets fiercer every year.

Chanel, which is the world’s second largest luxury brand after Louis Vuitton, has been buying up specialists such as feather providers, milliners and boot-makers for more than a decade and made significant investments in cashmere production and leather goods manufacturing.

Earlier in July, it picked up a majority stake in the family-run Richard Tannery, a provider of lambskins for the brand's small leather goods. The company came from the Millau region, where Chanel acquired the Bodin-Joyeux tannery in 2013 and the glove-maker Causse a year earlier.

In April, Chanel bought a minority stake in 129-year-old tulle and lace supplier Sophie Hallette near Calais, France's lace capital. The lace industry has been hit hard by a sharp drop in lingerie demand from major markets such as Russia.

Chanel is estimated to generate just under 7 billion euros ($8 billion) in annual sales. It is owned by billionaires Alain and Gerard Wertheimer, who are reportedly very secretive and do not publish figures or financial details of their acquisitions.