Depending on the type of luxury goods, they can contribute a large amount to the economy. For example, some of the biggest countries in the world have their economies supplemented by companies that specialise in luxury goods.
Today, we will be examining what type of luxury goods drive the economy, and we will establish whether or not they contribute a considerable amount to the economy. Some people have highlighted that luxury goods can contribute negatively to inflation. Establishing what causes inflation is a good start to understanding how the economy works. However, for many strong economies, luxury goods can attract highly wealthy individuals to spend money in their nation.
The world’s richest
Bernard Arnault, CEO of LVMH
A recent study has shown that Elon Musk is no longer the world’s richest man. Due to the price of Tesla stock declining and his multibillion-dollar takeover of Twitter, he has now been replaced by Bernard Arnault, the CEO of LVMH. LVMH controls dozens of some of the biggest luxury companies in the world. Some of these companies include:
Christian Dior
Givenchy
Marc Jacobs
Tiffany & Co.
This might be a strong indicator that despite a bleak economic outlook and a cost of living crisis that i beginning to tighten its grip on many of the large economies across Europe, there is still a huge market for luxury goods. Arnault, the CEO of a company that primarily deals in luxury goods, has increased his net worth to an astonishing US$180 billion. Although Arnault has been criticised for potential tax evasion schemes, he has paid billions of dollars in tax. He has also contributed massively to the French economy.
Other luxury items
Image: Patek Philippe
As long as there is a considerable market for luxury goods, there will be an underlying economy that provides jobs and helps fuel job creation. There is a counterargument, of course, that this money can be better spent, especially in the case of Arnault, who has a dizzying net worth that he couldn’t spend in 50 lifetimes. Studies have shown that the production of a luxury car adds more to a country’s GDP than a standard vehicle, due to the higher market value of a luxury vehicle.
The same applies to other luxury items, such as watches. Some of the top watchmakers in the world create items that sell for upwards of US$30 million. Rolex and Patek Philippe are the two biggest luxury watchmakers in the world, and overall, the luxury watchmaking industry provides a staggering 1.5 per cent of Switzerland’s GDP. This may sound like a small percentage, but the Swiss GDP is over US$800 billion per annum.
The bulk of the Swiss economy comes from manufacturing and pharmaceuticals. Although luxury watches make up a small percentage of this overall market, it adds glamour and mystique internationally. Many people won’t know Switzerland for its manufacturing or pharmaceutical industry. They will, however, be aware of its penchant for world-class watch design, as the premium watches are worn by some of the world’s most recognisable faces.
Luxury yachts
Image: Benetti
Some of the world’s biggest superyachts sell for over US$100 million. A company that manufactures these awesome contraptions only needs to sell one yacht to turn over a mega profit that year. Many luxury yacht providers will hold events where they advertise their products to the mega-rich in the hope of building one for them. Benetti is considered the premium luxury yacht maker in the world. They have won a multitude of prestigious awards and boast a turnover that is considered somewhere in the region of US$1 billion per year.
Conclusion
Luxury goods contribute a sizeable amount to some of the world’s biggest economies. It is important to note that global economic superpowers such as those we have mentioned have several huge corporations operating within their borders, causing them to turn over so much profit annually.
For example, the United States of America has a gigantic tech sector, with some of the biggest companies in the world operating out of the country. Luxury goods comprise a small section of their economy, but some of the world’s richest individuals will indulge in them.
Many economists consider luxury items a recession-proof industry because their focus is solely on customers who will not be hugely affected by any economic downturn. Therefore, the contribution to the economy doesn’t waiver, and some luxury companies continue to post impressive figures. This includes luxury watch sales increasing by 40 per cent in 2022.
While some high net-worth individuals have been accused of moving away from their homeland to pay less tax, their tax liability remains considerable, and as long as there is a market for luxury goods, they will contribute to the economy by purchasing them.
Slowly but steadily, Web3 is gradually creeping into mainstream consciousness as companies across sectors jump onto the bandwagon of releasing features that support this latest technological development. Services like creating digital fashion pieces to owning pieces of virtual land on the metaverse are increasingly the norm.
Of the suite of features available on Web3, NFTs are perhaps the most popular within the crypto community. Along with the rise of cryptocurrencies like Bitcoin and Ethereum, transactions within the space also climbed to reach a peak point last November. The allure of crypto assets comes from monetary gains, and blue-chip NFTs from Bored Ape Yacht Club and CryptoPunks can easily hit millions of dollars. For many, this is a sure-fire way to amass wealth in the shortest time.
While many have become millionaires during this “golden age”, the current situation is not a joyful affair. Pundits have termed this period the “crypto winter”, where prices have reached an all-time low. For example, NFT sales have for the first time not hit the US$1 billion mark in July since June 2021. Marketplaces like OpenSea even reported a 79 per cent fall in sales and laid off about 20 per cent of its staff in mid-July.
Things are not looking great at the moment for the NFT community as the market undergoes a consolidation period to smoothen out the kinks around. While the industry corrects itself and regains a foothold, social media companies are not taking the backseat. Meta announced that Instagram would introduce its Digital Collectible feature to users in more than 100 countries after completing its beta testing in May early this year. Meta, the parent company of Instagram, said that this new feature would enable people to share NFT images on their account, and it will be linked to a digital wallet like MetaMask, Rainbow, Coinbase, Trust Wallet and Dapper. Users can also tag the creator of the NFT on the post and provide exposure for these digital creators who earn a living from their creations.
Having a conglomerate like Meta committing to Web3 helps to legitimise the move towards the new era of the internet. Starting with Instagram, one of the most used platforms, it could bolster courage for other companies to take the first into the world of Web3. As more users become acquainted with the uses of Web3 through interaction with NFTs, it has the potential to scale up and adoption be made easier in the long run. The benefits that could be reaped for consumers and companies are enormous and NFTs are only the start of this impending digital revolution.
On average, Instagram boasts approximately two billion monthly active users. For NFT creators, to be able even to capture a fraction of this massive audience could help their careers. The move to integrate NFTs into a social media platform is not novel; competitors like Twitter, Reddit and Snapchat have experimented with it. This can range from allowing users to set their NFT as their Twitter profile picture to creating a marketplace for fixed-price NFT over at Reddit, while Snapchat has been testing NFTs as AR filters.
To differentiate from the regular posts, NFTs posted on Instagram will have a shimmery effect and are indicated with a hexagonal icon at the top right. Upon clicking it, information such as who has created this NFT will be displayed, but users are not able to buy directly from the post. Adding the buy function could enable users to have a more complete experience. As mentioned, these NFTs will be linked to a wallet and information regarding that particular piece can be traced back to its source. Any problem relating to provenance is potentially mitigated as each NFT is encoded on the blockchain with information readily obtainable.
Earlier in May, Meta CEO Mark Zuckerberg shared that the company is moving to bring augmented reality NFTs to its Instagram Stories where digital art can be superimposed into physical spaces. This aligns with the company’s continued progress in integrating the metaverse into its platforms.
Other significant players across industries have already started their move into Web3. From fashion brands like Gucci debuting NFTs to international banks such as JP Morgan purchasing a piece of virtual property in Decentraland, investments are pouring in. The present obstacle that is stalling the advancement of Web3 is its lack of a strong base of users and Instagram could be that missing piece of the puzzle that kickstarts the engine for Web3.
The world’s largest conglomerate LVMH posted a strong H1 performance with a 28 per cent increase in revenue compared to the previous year. This growth amounted to €36.7 billion, and the group reported that all its business groups achieved double-digit organic revenue growth over the period. Demands from Europe and the United States were attributed to the strong achievement of the group. At the same time, Asia (especially China) saw lower levels of growth due to the new health restrictions.
Breaking the results into quarters, one would notice that the group’s growth is slowing down. Compared to the Q1 results, the latest Q2 financial reporting only registered a 19 per cent increase compared to a 23 per cent growth for the former. The decreased growth is telling of the impact China has on the conglomerate. Despite growing demand from customers in Europe and the United States, it cannot offset the missing demand from its Chinese consumers.
Powering the group’s H1 performance is its mammoth fashion and leather unit, which recorded an organic revenue growth of 24 per cent. According to LVMH, its maisons’ “exceptional creativity” is key to its success. Louis Vuitton, its powerhouse, had excellent first half across its business activities and maintained profitability. Highlights include Nicolas Ghesquière’s inaugural showing at Musee d’Orsay for his women’s Fall Winter 2022 collection. At the men’s universe, Louis Vuitton held several spin-off shows commemorating the late Virgil Abloh.
Similarly, Christian Dior enjoyed remarkable growth in all of its product categories and the collections by Maria Grazia Chiuri were well-received by clients. Furthermore, the brand reopened its flagship store at 30 Avenue Montanige in Paris after three years of renovations. This further cemented the return of brick-and-mortar stores, with new boutiques springing up over the past few months. Other brands like Fendi, Celine, Loewe, Marc Jacobs, Loro Piana and J.W. Anderson all posted strong growth.
At the group’s watches and jewellery business unit, it recorded organic revenue growth of 16 per cent in the first half. Brands like Tiffany & Co., Bvlgari, TAG Heuer, Zenith and Hublot did well. The former two jewellery brands displayed remarkable growth with their High Jewellery collection showcases such as “Blue Book” from Tiffany & Co., and Bvlgari’s “Eden: The Garden of Wonders”. For the watch brands, the successful return of Watches and Wonders also helped to garner attention for the novelties and create opportunities for buzz.
Aside from these two main pillars of revenue, LVMH’s wines and spirits, perfumes and cosmetics and selective retailing units also posted substantial growth ranging from 13-22 per cent. In particular, for its selective retailing units, profit from recurring operations shot up by 181 per cent. This was attributed to strong demand from North America, France and the Middle East.
Image: Bvlgari
Speaking on the group’s half-year performance, Bernard Arnault, Chairman and CEO of LVMH said: “LVMH has enjoyed an excellent start to the year, to which all of our business groups contributed. It is the creativity and quality of our products, the excellence of their distribution and the rich cultural heritage of our Maisons, fueled by their history and know-how, that enable the group to excel around the world. We approach the second half of the year with confidence, but given the current geopolitical and health situation, we will remain vigilant and count on the agility and talent of our teams to further strengthen our global leadership position in luxury goods in 2022.”
Luxury is not traditionally associated with sustainability; so much so that the two concepts are perceived as oxymoronic. A decade ago, luxury and sustainability appeared to be conflicting topics due to their opposite nature. While luxury is related to an excessive, exclusive, and prestigious lifestyle; sustainability is connected to a frugal lifestyle aimed at reducing, protecting, and respecting the planet’s finite resources. Therefore, sustainability issues were — more often than not — overlooked in the luxury industry. What we don’t realise is that sustainability is embedded into luxury’s DNA. Rarity in the luxury market is linked to the use of rare resources such as skins, leathers, and pearls that depend on environmental sustainability in terms of the preservation of natural resources. On this basis, luxury depends on sustainability, and at the same time, sustainability finds in luxury a potential ally.
“It’s all about sustainable solutions,” said designer Stella McCartney in a video posted on her Instagram last weekend. The brand’s goal is to “swap out the conventional, bigger industries with these new, problem-solving sustainable companies.” After a US$200 million venture capital fund focused on climate solutions, it seems as if fashion companies and executives alike still see opportunity in start-ups pursuing sustainable solutions. The designer is currently working with investment firm Collaborative Fund to back early-stage start-ups reimagining materials, ingredients, energy and supply chain; working alongside leather-alternative producers Bolt Threads and kelp-yarn manufacturer AlgiKnit.
Image: Evolved by Nature
She’s not the only one to seize the opportunity. Even in the midst of a grim economic landscape, companies such as Chanel and Adidas have all taken a step to enter the sustainable tech space. In June of 2019, Chanel took a minority stake in a green chemistry firm that’s exploring ways silk could replace chemicals used in clothing manufacturing. Bolton-based Evolved by Nature has developed a natural, silk-based alternative to the harsh and toxic chemicals currently used to create many high-performing textiles. The company’s technology allows it to manipulate liquefied silk protein to achieve similar effects. Its patented activated silk can reduce the pilling in cashmere, or enhance the performance characteristics of nylon and polyester.
Image: VitroLabs
French luxury giant Kering followed suit, investing US$46 million in San Francisco-based lab-grown leather startup VitroLabs. Kering’s investment in VitroLabs is the latest in a series of recent bets by the group focused on furthering its sustainability goals. “A partner like this is a stamp of approval, and we’re seeing more and more brands starting to look for solutions when it comes to leather and other alternatives to materials,” said VitroLabs co-founder and chief executive Ingvar Helgason. While many companies have focused on plant-based leather alternatives made from mushrooms or grapes, VitroLabs uses stem cells to grow leather that’s indistinguishable from the real thing without needing to raise and slaughter animals. That means the material is able to plug into existing supply chains of fashion brands and artisans while cutting out the heavy environmental impact and animal welfare issues associated with cattle farming.
In August of 2022, Ralph Lauren took a minority stake in Natural Fiber Welding, a material science start-up focused on improving the quality of recycled cotton. Similarly, Adidas secured exclusive access to Mylo, a mushroom-based leather alternative developed by biomaterials maker BoltThreads.
For many brands, the current trend marks a shift from years of pilot programmes that, while highly marketable, didn’t require substantial financial outlays and didn’t really move the needle. But there are still significant barriers to transforming the industry.
The amount of capital flowing into sustainable fashion start-ups is still small compared to the size of the challenge. When it comes to sustainability investments, the funding rounds that luxury fashion brands participate in rarely top US$10 million, according to publicly available information on investment tracker Crunchbase. But transforming the industry in line with ambitious climate goals will require investments of between US$20 billion to US$30 billion annually, according to January 2020 report by Boston Consulting Group. The good news is that there is significant interest from venture capital funds, impact investors and most importantly, large fashion brands. There are growing tailwinds encouraging more interest in the space too, from the maturation and commercialisation of recycling technologies and leather alternatives to political changes, such as the legislative support for climate action in the US in recent weeks.
To be sure, the fashion industry’s investments in sustainable innovation is in its infancy, but there are promising signs of a broader movement. While exclusive access to maturing technologies or innovative materials with limited availability could undoubtedly give brands a competitive edge, there is a growing understanding that it is not possible for one company to do it alone. Brands are working more closely with manufacturers in a bid to embed new technologies into the supply chain, pointing to the potential for closer partnerships.
For example, when Fashion for Good — a platform that aims to drive the collective movement to environmentally friendly solutions — first launched four years ago, it started with a handful of brands and retailers as its corporate partners. Now, it counts manufacturers among its collaborators too. “We realised how important it was to get those upstream suppliers at the same table,” said Brittany Burns, director of strategy and development at Fashion for Good. “We felt like it was really important to create these opportunities for a cross-pollination of ideas, but also co-development across the entire fashion industry.”
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After a long couple of years, the idea of starting a business has yet again become a dream for many. However, it can be difficult to go from idea to reality, as starting a business isn’t exactly a piece of cake. Are you planning on starting your own business? Then read our three best tips below to get your business off to a successful start.
Research Different Industries Before Deciding on One
The first step to getting your business off to a good start is to figure out which industry you want to go into. When considering this, think about how you’re gonna keep it going in the long run. Not every business is meant to last. So, before you decide on one, make sure it’s something you love doing and see growing potential in.
For instance, if real estate is your thing, Singapore real estate businesses are booming at the moment. So maybe this would be a good industry for you to look further into? Of course, you should always do your due diligence – but be careful not to take too much time to do so. Business opportunities are all about striking while the iron’s hot and utilizing the momentum. So, if you see an opportunity and feel passionate about it, take a chance!
When starting a business, it’s important to have a solid idea what you’re about. Which products or services are you selling, and why is your business idea better than your competitors? It’ll probably take you a while to figure out how to create a business that stands out.
Once you’ve figured out what you want to sell, you must make yourself noticeable – especially online, since many people do their shopping there. To get yourself started, try coming up with a catchy name first. This will help you zero in on your brand identity and, if done right, help you appeal to your target audience.
If you need inspiration, https://businessnamegenerator.com/ is a great resource. Once you’ve entered keywords that best describe your business, this generator will help you come up with a unique name for your new business. Hopefully, potential customers will notice and be interested in getting to know more about your services.
Be Cautious, But Trust Your Gut Feeling
Image: Pixabay
In business, you’re never guaranteed anything. Some businesses do very well, while others just don’t. Sometimes, there really isn’t any deeper explanation to it. For some, this can be nerve-racking and seem way too risky. But life is risky, and sometimes, you just have to jump and see where you land.
There are many helpful guides on how to start a business, but none of them can promise you anything. Even though a higher percentage of the US population has gotten involved in business startups, statistics also show that many of them won’t make it in the long run. You must be cautious when starting a business – but on the other hand, you also have to be somewhat spontaneous and believe in your own gut feeling, or else you won’t go anywhere. Any business opportunity is a risk. But if you want to end up with a successful business, you’ll have to take a couple of chances from time to time.
If you’re feeling a bit nervous about a decision, consider speaking to other professionals with experience in growing businesses. Their expertise will help light the fire in you. Starting a business is rarely easy. But once you make it work, it’s well worth the effort. A successful business starts with your own motivation and drive, so what are you waiting for?
For a few years now, the Indian sports market has been thriving, and entrepreneurs have especially been emphasising Indian fantasy sports games. One such investor is Gia Janashvili. He has been talking about the potential and opportunities the Indian iGaming market will have in the future and has stated that out of all countries, India has immense potential, especially in the iGaming sector. Being an entrepreneur himself and co-founding Veli, Janashvili thinks the Indian fantasy sports market will grow rapidly in the coming years. We sat down with Janashvili and talked about what led him and Veli to move into this particular market with their Fan2Play investment.
Why is the Indian iGaming market so attractive for entrepreneurs and investors like yourself?
For about two or three years now, tech investors, business leaders, and various internet services have been trying out their luck in the Indian market. Because of the large population, the marketplace for technological goods is promising. You add in the increase of people starting to use the internet, and you have an iGaming market that can grow. Here at Veli, we haven’t stayed far behind. Look at the statistics for the past two or three years, and you’ll see that investments worth hundreds of millions of dollars were poured into the Indian iGaming market. This is a great sign that not only iGaming will grow, but it can become one of the best industries in India. In the past couple of years, we have contacted several Indian up-and-coming tech businesses and offered our services. However, Fan2Play seemed the best decision for now.
Which past experiences have nudged you to go with a project like Fan2Play?
All of our past ventures have been in places where we deem iGaming to change and improve for the better. We have made many investments in the Pan African market simply because we saw numerous opportunities in countries like South Africa, Nigeria, Congo, Kenya, etc. The sole fact that the South African iGaming industry alone grew by US$300 million lets everyone see that targeting these countries will bring big steady growth revenues. Same as South Africa, the iGaming markets in Congo have immense potential. With the platforms that we provide, we enable various targeted and highly customized experiences. I firmly believe that the same fate will follow the Indian iGaming scene. The potential it has shown in recent years is exemplary, even more so with the growing fantasy games. This was the main reason why Veli decided to invest in the well-known Fan2Play.
Can you explain what Fan2Play is?
Fan2Play is an online fantasy sports game platform where you can go up against other players and make teams in cricket and football. It can also be described as a fantasy sports contest where you can build teams and go up against other players in public leagues, make private leagues for your friends, or accept random players’ challenges. Basically, it’s a game like every other. You start by choosing your team, and then when you have accepted a challenge, it all comes down to which players score more points in their performance in the match.
Is Fan2Play legal in India and have there been any drawbacks?
It is entirely legal and safe to play. Following the laws in India, it is clear that Fan2Play and its contests like Fantasy Cricket and Fantasy Football are considered games of skill. Now, because all Indian laws are being followed, certain states in India cannot participate in the contest where there is cash distribution as prizes, including Assam, Odisha, Sikkim, Andhra Pradesh, and Telangana. The good thing about this is that Fan2Play wants to include every state in India, so players from the states I mentioned can still play practice contests for fun.
Where do you see Fan2Play and the Indian iGaming industry in the future?
We already know that more than three million players are registered and play at Fan2Play. This was also one of the major reasons why Veli decided to invest in the online fantasy sports platform. We can’t predict the future for certain, but seeing the evolution that Fan2Play has had in the past two years, I can firmly say that this sector will develop further. As for the overall Indian iGaming industry, as I mentioned, I am positive about its continuous growth. More and more players will come through, and it won’t be surprising to even see international gamers.
Most businesses conform to economic theories such as production efficiency and retaining manufacturing profit margins. Companies buy out its external suppliers or make long-term deals as it sees the importance of achieving high-level growth through acquiring external parties. This acquisition reassures companies that production capacity is maximised. Companies such as Volkswagen, Prada and Hermès have incorporated forward and backward vertical integrations for further growth and stability within its own markets. Also, this strategy would help the industry leaders be a frontrunner when competing with the others.
Economies of Scale: Production Efficiency & Quality Control
When luxury companies lower its per-unit fixed cost, “economies of scale” is achieved. This is done through consolidating manpower, optimising operations and eliminating intermediaries where expensive markups tend to be present.
While most fashion companies outsource raw materials to third parties, Hermès go to great lengths and keep the process in-house wherever possible as quality and heritage are of utmost importance for the Maison. A reason why the French luxury leather goods maker pays special attention to securing its fabric supply and material production is to ensure its products are of the highest quality and that prompts the quest for resources worldwide.
Image: Gaspar Ruiz Lindberg
For example, back in 2010, Hermès reportedly purchased crocodile farms in Australia so that it has its own standardised source of croc leather. As for the fragrance supply chain, Hermès set up its perfumery labs which could potentially spur innovations and enable it to gain additional know-how. Doing so allows Hermès to pay close attention to details that are fundamental to its success in the luxury market.
Long-term association with partners also enables strict supply chain traceability and tight supply control, which could potentially help the companies to mitigate any potential issues. This gives the buyers confidence in the brand knowing that it is self-sustained even during unfavourable circumstances.
With Prada Group’s acquisition of Car Shoe, a business that creates exclusive driving moccasins, the luxury fashion brand stand to gain expertise in high-performance design, leathers and craftsmanship that Car Shoe is already known for. Furthermore, it aligns with Prada’s business model that goes from the creative process to the sourcing of raw materials, manufacturing and up to distribution. While Prada Group manages its own supply chain, the benefits outweigh the shortfalls.
In essence, a vertically integrated business implies more control over a brand’s supply chain, pricing and improves customer satisfaction. A way that Prada forward integrates its business is through the usage of Sprinklr, a leading customer experience management platform to reach the new generation of luxury customers through modern channels. With this step forward in integrating Sprinklr, Prada Group can study the data provided and fine-tune its advertising objectives to create effective marketing content and reach relevant audiences. This builds a foundation for future growth, creating an effective digital and social media communications strategy for greater consumer interest.
A Change Of Strategy: Anticipating The Future
In the ongoing Covid pandemic, there are shortages in materials like nickel and labour, extreme weather events, war and sanctions have all contributed to the disruptions in the supply chain.
In the ongoing Covid pandemic, the supply chain is under a crunch where shortages in labour and materials abound. Extreme weather events, wars and sanctions have exacerbated the disruption and put even more pressure to the already distressed state of affairs. The timely supply of raw materials and components is crucial for smooth production — profits are also at stakes in the long-run.
For example, many carmakers have taken action to switch up their strategy by securing supplies through vertical integration.
Image: Mining
Earlier this year, Tesla confirmed a long-term supply agreement with Vale, one of the largest nickel producers globally, with mines in Brazil, Canada and Indonesia. Aside from the agreement, the electric vehicle company is equally invested in securing its own source of nickle and thus it is actively looking for mines in Indonesia.
Not only Tesla is adopting vertical integration in its business plans, German carmaker Volkswagen (VW) had also signed two memorandums for cobalt and nickel supplies. The first joint venture will be a three-way partnership between VW, Huayou Cobalt and Tsingshan Group for the extraction of these raw materials from Indonesia. The second is for refining sulphates from nickel and cobalt that are needed for battery cathode production.
Employing a multiple sourcing strategy like Tesla and VW, carmakers safeguard its future supply to avoid any potential problems from arising when newer and more advanced technologies are created in the future.
These strategies will be beneficial at improving cost efficiency and shortening the lead time to manufacture cars. Forward integration of car manufacturers is popular for many brands. The usage of distributors around the world could lift the burden off the carmaker’s shoulders of having to deliver the cars to its customers living away from the headquarters.
Building business-to-business relationships is pertinent as carmakers can leverage on the distributors’ wide network and its knowledgement of the regional market for access to a new market of buyers. The time that the products take to reach its customer determines the satisfaction levels and in a time of global disruptions, carmakers are evermore reliant on distributors.
Global coffee brand, Starbucks uses a vertically integrated supply chain to surpass its rival, Dunkin’ Donuts. The company is involved in every step of its supply chain process, from the coffee beans to the cup of coffee sold. With this system, Starbucks works directly with its nearly 300,000 coffee growers worldwide. The coffee giant also works with growers as the company is committed to having its suppliers meet quality standards.
Image: Starbucks
After vertically integrating its business plans with plantations, Starbucks also commits to providing its suppliers with special training and education programs. The interaction with growers, along with the company’s sourcing and social responsibility standards allow the suppliers feel they are key players in the corporation.
Having close connections and frequent communication between its suppliers ensure the supply chain is less susceptible to major disruptions in the present or future, such as overplanting or lack of workers. Once supply chain disruptions are kept to the minimal, the market can anticipate steady growth. The Starbucks franchise is ever-growing, adding locations around the world for greater accessibility will allow the company to flourish in the coming years.
How Starbucks forward integrates its business after securing the backward integration process is by working with large retailers like Walmart and 7-11 convenience stores. This makes it easier for coffee lovers to have access to bottled Starbucks coffee, sachets and capsules on the go. Consumers are happy when they find something they want in a short amount of time. The partnerships with third-party businesses and with more physical stores at ideal locations offer a greater reach to consumers. With this expansion, which strengthens the business, it would allow more third-party investors and retailers to be drawn towards Starbucks.
Increased production efficiency and anticipating the future are the main reasons why companies adopt vertical integration in their business model. However, on all the good sides of a vertically integrated business, it is difficult to do so unless the company possesses large resources to execute this strategy.
However, successful vertical integration is a mammoth task to take up and the company needs to have the financial means and determination to see it through. In the short term, the company may incur higher costs from buying other smaller players in the market, but in the long run, the benefits will prove to be a worthwhile investment that will take the company to greater heights.
In 2018, leaning back against a well-cushioned leather sofa in a seaside bungalow in Sentosa Cove belonging to another cryptocurrency mogul, Su Zhu was basking in the aura of his power and influence as he nursed a 21-year-old whiskey at a “crypto insiders” party.
For Zhu, this was his moment of peak crypto.
Surrounded by hangers-on trying to pitch him their latest project, Zhu largely ignored the cacophony of voices that were droning around him as he sipped his drink.
Zhu and Kyle Davies, former high school classmates and founders of 3AC, a Singapore-based cryptocurrency hedge fund, had just secured an early investment in Terra Luna, giving them access to hundreds of millions of dollars’ worth of Luna tokens.
For 3AC, the investment in Terra Luna was made more special by the fact that some of the biggest names in crypto were also backing the algorithmic stablecoin project, including Galaxy Digital, whose CEO Mike Novogratz would soon go on to tattoo the Luna logo on his upper arm (a tattoo that would unfortunately not age well) and Pantera Capital.
Terra Luna also counted Lightspeed Venture Partners, Coinbase Ventures and Jump Crypto as backers, cementing 3AC’s status as a major player in the digital asset scene.
By the time that Zhu and Davies had backed Terra Luna, they were already one of the top cryptocurrency venture capitalists, backing such successful projects as Avax, Near Protocol, Aave, Deribit, Starkware and Axie Infinity, with their assets under management estimated to be as high as US$18 billion at one stage.
Even by late 2021, when Pantera Capital had sold most of its stake in Terra Luna, Zhu was busy buying, not Luna, but real estate.
As reported by Bloomberg, Zhu was shopping around for another Good Class Bungalow, Singapore’s most exclusive form of housing located in its toniest districts, to find an abode befitting his stature near the top of the crypto world.
When Zhu wasn’t busy buying high-end Singapore real estate or superyachts, he enjoyed using his considerable influence on social media, in particular Twitter, to shape sentiment and possibly profit from it.
With over 560,000 Twitter followers, Zhu was known for using psyops and playing mind games with his followers, creating a thread in November 2021 that flamed Ethereum, while taking advantage of the drop in prices to snap up some US$660 million worth of Ether.
Like the boy who cried wolf, Zhu’s frequent use of Twitter to talk up or spread fud (fear, uncertainty and doubt) about tokens made it difficult for followers to determine if he was gaming his audience for profit, or serious in his views, and often it appeared to be both.
Nevertheless, plenty of people held Zhu and 3AC in high regard, especially given that Zhu had correctly predicted the end of the “Crypto Winter” in 2018 and that Bitcoin would break its all-time-high in 2020.
However what Zhu and Davies had not factored in is that just as the U.S. Federal Reserve giveth, it also taketh.
Zhu, in his characteristic deadpan, declared at a podcast recording for cryptocurrency exchange FTX,
“When there’s a lot of despair, you can start buying. You don’t have to follow the despair.”
Yet the despair in financial markets in general and the cryptocurrency markets in particular was not unwarranted.
With the U.S. facing the greatest inflationary pressures in four decades, Fed policymakers started to unwind many of the pandemic-era measures which had contributed in no small part to the success of both the cryptocurrency markets and 3AC.
Even as cryptocurrency veterans like Pantera Capital were unloading their stake in Terra Luna, Zhu continued to talk up the merits of the algorithmic stablecoin, leading some to wonder if the 3AC cofounder was in fact looking to offload his holdings.
On December 26, 2021, Zhu bragged about the future growth prospects of Terra Luna in a tweet,
“We’re seeing some of the earliest and most ambitious ideas in crypto starting to unfold. Crosschain decentralized stablecoin backed entirely by digitally native assets was the holy grail in 2016. Bless $BTC $LUNA.”
and further that day,
“People down 50x more from selling early than from buying top this year, and it’s not even close, SOL, LUNA, AVAX, MATIC, DOGE, SHIB, FTM, list goes on. Tops are emotionally memorable because plebs snapshot themselves to a portfolio all-time-high, yet nobody buys top while everyone sells early.”
Despite roiling markets, Zhu walked with the cocky confidence of someone who had made it from humble beginnings to being hounded by global media and many believed that the bulk of 3AC’s funds were proprietary, making them bulletproof when in fact, they were not.
A venture investor in some of the best-known cryptocurrency startups, in many cases, 3AC also served as a manager of their corporate treasuries, which helped it to circumvent the regulatory restrictions of its Registered Fund Management Company (RFMC) license.
As early as 2013, 3AC held an RFMC, a type of fund management license administered and governed by the Monetary Authority of Singapore (MAS), but which came with specific restrictions that few investors were aware of.
An RFMC only allows up to 30 professional investors and a maximum of S$250 million in assets under management, limitations which 3AC got around creatively.
Instead of managing a fund which promised a return on investment, 3AC would borrow money from investors, and promise a projected coupon rate, structuring these investments as loans instead of what they were marketed as — investment products, and thereby declaring these funds as “proprietary capital,” which was misleading to say the least.
But by September 2021, concerned that these workarounds would eventually surface, 3AC novated the management of its only fund to an offshore entity in the British Virgin Islands, notifying MAS in February 2022 that it intended to cease fund management activity in Singapore from May.
By late 2021, Zhu also publicly declared that 3AC was relocating to Dubai, an uncontroversial move at the time, given that many other cryptocurrency companies were doing the same.
However, 3AC had not applied for any fund management license in Dubai nor notified regulators in the United Arab Emirates of its intention to do so.
Publicly, Zhu remained sanguine on the prospects of cryptocurrencies, arguing on Twitter that 2022 would mark the year of peak adoption, even as investors were fleeing risk assets in the face of rising interest rates and tighter monetary conditions.
Many believed that Zhu was engaging in his usual psyops, to get other investors to soak up the bags of cryptocurrencies that he was looking to offload.
In reality however, Zhu, having correctly predicted market turnarounds in the past, was convinced that this time was no different, borrowing heavily to bet big that cryptocurrencies would eventually rebound.
In May this year, 3AC attempted to plug the hole caused by the collapse of Terra Luna, soaking up some US$559.6 million worth of Locked Luna tokens, a stake which would be worth around US$600 by late June, and go on to become worthless.
Unfortunately, 3AC’s bid to shore up Terra Luna was ultimately futile, and the price of Luna kept falling, taking the rest of the cryptocurrency market with it, at a time when sentiment was already weak.
Even as things started looking bleak in January, Zhu was still showing off pictures of his latest trophy acquisition, a 171-foot Sanlorenzo 52Steel superyacht, that was intended for delivery this month, to investors and friends, presumably to maintain an air of invincibility.
It would later turn out that 3AC was only able to pay the down payment on the US$50 million superyacht, and it’s been suspected that even that was paid for with borrowed money.
As Zhu and Davies were going hat in hand to investors to raise more money, 3AC was keeping secret its massive margin long position on Bitcoin, with a liquidation price of US$24,000, betting that the cryptocurrency would never fall that low.
Some have speculated that Zhu and Davies may have engaged in “revenge trading” where a trader borrows even more money to trade (gamble) their way out more quickly of a hole they’ve dug themselves in by using leverage.
Unfortunately, by mid-June, 3AC had started missing margin calls from the companies funding its trades, including many major crypto lenders, who are now known to have offered the hedge fund undercollateralized loans.
Given how volatile cryptocurrencies are, most lenders are only willing to lend a fraction of the value of digital assets pledged as security for a loan, yet somehow Voyager Digital, a crypto broker and lender, lent around US$700 million to 3AC, undercollateralized.
Voyager Digital was hardly alone in extending undercollateralized loans to 3AC, with fellow cryptocurrency broker and lender Genesis alleged to be facing losses of as high as 9-figures.
It has now surfaced that BlockFi and BitMEX have exposure to 3AC as well and the list of affected counterparties reads like a who’s who of the crypto world, including Cumberland DRW, Galaxy Digital and crypto options exchange Deribit.
Even before the walls started closing in on 3AC, in a desperate bid for liquidity, Zhu and Davies were said to have solicited Bitcoin from large holders known as “whales” as well as other trading firms and are thought to have lied about their assets under management in a bid to secure fresh loans.
Undeterred by the rapidly deteriorating market conditions, Zhu and Davies are said to have promised yields of as high as 20 per cent to potential Bitcoin lenders despite liquidity and speculation, the main driver of lending yields, rapidly drying up, but most potential lenders detected something amiss and declined doing business with the pair.
And although Zhu tweeted that 3AC was working with relevant counterparties and remained “fully committed to working this out,” in reality both he and Davies had been ghosting their creditors for some time.
When cryptocurrency prices started to falter in the wake of the Terra Luna collapse in May, lenders approached 3AC to ask for collateral, but struggled to contact the pair, forcing these lenders to liquidate the fund’s positions and causing Bitcoin to fall even further from US$24,000 to US$20,000.
Those liquidations sparked off a spiral of cascading defaults and triggered a run on several major crypto lenders, some of which have already gone into bankruptcy.
Throughout the debacle, creditors claim that Zhu and Davies were nowhere to be found, although some suspect that they may have decamped to Dubai.
According to one source, Zhu was urgently trying to sell a US$35 million house in Singapore, which was being held in trust for his daughter, and with the proceeds of the sale to be transferred to a bank account in Dubai.
A search of registry records suggests that Zhu, Davies, and parties connected to the duo (as opposed to 3AC) own a fleet of high-end cars, and at least five high-end properties in Singapore, including the US$35 million Good Class Bungalow and another US$28.5 million property of the same type held by Zhu’s wife, Tao Yaoqiong.
For starters, the 3AC that is being liquidated was incorporated in the British Virgin Islands and the process of liquidators in that jurisdiction attempting to enforce any judgments in Singapore will be complicated and drawn out.
To make matters worse, Zhu is only known to have held in his own name a US$4.5 million strata bungalow at Goodwood Grand, located in the ritzy Balmoral Road neighbourhood.
3AC’s liquidators will likely have their work cut out for them if they want to go after the assets of the fund’s founders because they would need to prove beyond a reasonable doubt that Zhu and Davies were guilty of criminal misconduct.
Although 8 Blocks Capital, a smaller market maker which claims it used 3AC’s trading accounts for fee discounts, and alleges that the hedge fund misappropriated as much as US$1 million of their funds without permission, possibly in an attempt to meet margin calls, no other counterparties have alleged any criminal behaviour.
Complicating the job of liquidators, 3AC filed a petition in the U.S. Bankruptcy Court for the Southern District of New York and seeking protection from creditors in the U.S. under Chapter 15 of the U.S. Bankruptcy Code, which allows foreign debtors to shield U.S. assets.
For now, nobody really knows where Davies and Zhu are, with the former having surfaced for a Wall Street Journal interview only to disappear soon thereafter, with the latter resurfacing only for the occasional tweet.
The Monetary Authority of Singapore has issued a reprimand of 3AC and is investigating, and Solitaire LLP, the Singapore lawyers retained by the fund, claim that the firm is keeping regulators apprised of developments, but such investigations typically take a considerable amount of time.
It’s unclear whether Zhu and Davies are guilty of any impropriety or financial misconduct towards the end of their reign as princes of the crypto world, but their very visible public absence and attempt to dispose of assets is disconcerting to say the least.
The Goodwood Grand bungalow where Zhu was last seen has been put up for sale and neighbors claim that no one has been witnessed entering or leaving the house in weeks.
Mail is piling up outside the Suntec City offices that 3AC operated out of, while staff say that they have been unpaid and unable to contact Zhu and Davies since early June.
Given the amount that both Davies and Zhu have contributed to the cryptocurrency space, their fall from grace and manner of exit from the industry is disappointing to say the least.
While Zhu was known to have been dismissive and arrogant to those he deemed not his intellectual equal, Davies and he were also approachable to founders and willing to write checks that would fund the further development of the cryptocurrency ecosystem.
Some of the most successful companies in the cryptocurrency business today were funded out of the coffers of 3AC, and in some cases, personally, by Zhu and Davies.
The cofounders of 3AC were also known to have taken time out to spend with founders, sharing with them their thoughts on technology, markets, and the general development of the industry and helping out through more than just money, but with connections and influence as well.
Ultimately 3AC’s legacy and contribution to the cryptocurrency industry will be forgotten under a deluge of allegations and litigation.
With just US$1.2 million in late 2012, 3AC started off trading emerging market currencies, before it’s been said that they were squeezed out of the already crowded trade and forced to switch to trading cryptocurrencies.
That fortuitous switch to cryptocurrencies by Zhu and Davies turned out to have been at an opportune time and which would help to propel the duo to fame and fortune, turning their million-dollar fund into billions and making them rich beyond the dreams of avarice in the process.
But like Bill Hwang’s Archegos Capital, one-directional leveraged bets on cryptocurrencies would ultimately also spell the demise of 3AC, one of the industry’s biggest success stories and also, one of its biggest cautionary tales.
By Patrick Tan, CEO & General Counsel of Novum Alpha
Novum Alpha is the quantitative digital asset trading arm of the Novum Group, a vertically integrated group of blockchain development and digital asset companies. For more information about Novum Alpha and its products, please go to https://novumalpha.com/ or email: [email protected]
DISCLAIMER: Whilst every effort has been made to thoroughly research, verify sources, ensure the timeliness and accuracy of the information in this article, neither its writer, Novum Alpha or Luxuo.com assumes any liability or responsibility for the completeness, accuracy, or usefulness of any of its content. Information in this article should be construed strictly as opinion, and neither the writer, Novum Alpha or Luxuo.com make any representation or warranty, expressed or implied, in respect of the content of this article. Information in this article may be subject to correction, retraction and/or edit without prior notice and no party should rely on any of the information contained herein for any reason whatsoever.
For generations of women, Revlon’s red Fire & Ice introduced in 1952, was the go-to lipstick shade on a Saturday night. In the 70s, they spritzed Charlie perfume on their wrists, and when the supermodel Cindy Crawford showed up in ads wearing Raisin Rage in the 1990s, millions of women snapped up brown lipstick shades.
The company’s products have found their way into the everyday lives of individual customers and onto the shelves (digital or physical) of major retailers across the world. Though best known for their makeup, they eventually diversified their lines to a startling range of hair colouring kits, deodorants, and fragrances for both men and women globally.
Image: Revlon
For much of its 90 years, Revlon was a leading cosmetic empire. The cosmetics company’s roots stretch back to its 1932 nail polish launch by Charles Lachman and brothers Charles and Joseph Revson. The Golden Era for the company came in the 1980s with its “Most Unforgettable Women in the World” campaign, shot by the famed photographer Richard Avedon and featured many supermodels of the era, including Cindy Crawford, Claudia Schiffer, Iman and Christy Turlington.
However, in recent decades, the company has struggled with enormous debt and competition from new generations of cosmetic brands. On 16 June 2022, Revlon filed for Chapter 11 bankruptcy protection, its financial statements awash in red ink.
Chapter 11 is a form of bankruptcy involving a reorganisation of a debtor’s business affair, debt, and assets. It allows Revlon to strategically reorganise its legacy capital structure and improve its long-term outlook, especially amid liquidity constraints brought on by continued global challenges.
The company, which incurred US$3.8 billion in debt along with a staggering 5,700 employees, has been floundering for some time. In June 2016 — to diversify and shore up its business — Revlon acquired Elizabeth Arden in an acquisition funded largely by debt. But the company’s sales lagged over the years due to the fall in demand and lack of innovation and fell 22 per cent from its 2017 levels.
Business of Fashion then confirmed that “its annual interest expense was nearly US$248 million last year, and it reported US$132 million of liquidity as of March 31”. The publication made a note of a call back in May with Chief Executive Officer Debra Perelman, where she acknowledged the company’s decline and expressed the inability to meet product demand with inflation at an all-time high and the trouble with securing a reliable supplier.
Image: Revlon
When Revlon filed for bankruptcy, it cited complications with its supply chain as a host of complications. Vendors that traditionally offered up to 75 days for payment began demanding cash in advance of new orders, while labour shortages and inflation added to its troubles.
“For example, one tube of Revlon lipstick requires 35 to 40 raw materials and component parts, each of which is critical to bringing the product to market,” stated Revlon’s Chief Restructuring Officer Robert Caruso. With shortages of necessary ingredients across the company’s portfolio, competition for any available materials is steep.
The company also made headlines two years ago when Citigroup Inc (C.N) accidentally sent nearly US$900 million of its own money to Revlon’s lenders, resulting in an ongoing litigation over ownership of the US$500 million not returned by recipients.
The following chain of catastrophes resulted in a record-breaking drop as Revlon’s stock plummeted by 46 per cent on Friday, June 10. As of today, the company’s stock now stands at US$5.10 per share.
Inability to Keep Up With The Times
Image: Youth To The People
Revlon isn’t the only legacy makeup brand struggling to return to its former glory. As a brand that started well before the current booming internet era, its business model has relied heavily on retail stores and spaces in physical retailers like Walmart.
As with all brick-and-mortar retail, it’s been a constant battle to keep up with upstart, online-first brands. This is particularly true in the cosmetics space, which sees a rise in the creation of niche and celebrity brands like Kylie Skin, Fenty Beauty and Youth to the People.
Aside from this, Revlon’s hesitance to make use of new online platforms and tech such as TikTok and the Metaverse, robbed them of the opportunity to revive their old products and go viral online. For example, Esteé Lauder, who partnered with Decentraland’s Metaverse Fashion Week in March, offered users free, wearable Advanced Night Repair NFTs to enhance their avatar’s skin generated a lot of publicity. Esteé Lauder and Clinique’s products have also gone viral on Tiktok. With its US$75 Advanced Night Repair serum, Esteé Lauder managed to attract a customer who’s been alive for less than a quarter of the company’s 76-year existence while Maybelline’s Sky High Mascara and Clinique’s Black Honey lipstick — which debuted in 1971 — went viral on the platform, quickly selling out on brand sites and retail stores.
“They’re putting these old school products into new school modes of communication and digital commerce,” said Korrine Wolfmeyer, Senior Research Analyst at Piper Sandler. It allows brands to connect and interact with their new target demographic: the Gen Zs. Young people also love nostalgia — and Revlon has an opportunity to tap into that.
Revlon could go back to its DNA with its classic perfume, Charlie. The fragrance changed the perfume industry when it came out in 1973 since it was the first perfume marketed to women as a gift they could buy for themselves (rather than something that a man bought for a woman). “That was Revlon as an innovator, changing the way women thought about themselves. People love stories, and they love stories that circle back and then are relevant today,” Marie Driscoll shares.
The Future For Revlon and Beauty Brands
Image: Revlon
The term “bankruptcy” often leads to thoughts of a business closing down entirely and ceasing to exist. This can be the case under some circumstances but Chapter 11 bankruptcy is specifically designed to keep a company operational.
“Revlon could use its time in bankruptcy proceedings to prune its portfolio, given it owns numerous brands, some of which are performing better than others,” said David Silverman, a retail senior director at Fitch Ratings. “If executed effectively, Revlon could emerge from bankruptcy with a cleaner balance sheet and a better operating profile, improving longer-term business prospects,” he continued.
The collapse of Revlon’s finances follows a downturn for the beauty sector during the height of the coronavirus pandemic, while the group has been hit this year by ingredients shortages and steep cost rises. Sales had continued to lag pre-pandemic levels. Traditional beauty brands have also struggled to fight back against online start-ups, niche brands and celebrity brands, driving them to look for more innovative techniques and products to entice their target demographic and revive the beauty industry.
Some luxury brands are releasing exclusive editions of digital wearables and “digital twins” as non-fungible tokens (NFTs) collectables to open up new revenue streams, build brand loyalty or raise money to give back to society. Others use them to boost their branding, tell a story or reach new audiences. While NFTs started to gain traction in 2021, it only became popular in 2022 and a key player in the trillion-dollar marketing industry. Marketers are increasingly creating distinctive brand experiences and awareness to encourage more interaction within the popular market of NFTs.
Luxury Brand’s Digital Twin To Promote Community Building
In the fashion industry, counterfeits are a big problem around the globe. Luxury labels lost US$98 billion worth of sales to counterfeits in 2021 alone. These losses could potentially damage any luxury brand’s profit growth and reputation. This is one reason companies are looking towards technology, specifically NFTs to decrease losses and retain consumers. Another significant reason is the popularity of the NFT market, which luxury brands could potentially tap on to improve their marketing efforts.
Image: Cointribune
Although being competitors, luxury brand conglomerate Louis Vuitton Moët Hennessy(LVMH) joined forces with Prada Group and Cartier in 2021 to establish the Aura Blockchain Consortium. This non-profit platform creates a “digital twin” for designer products. A “digital twin” is essentially a virtual model designed to accurately reflect a physical object utilised as NFTs. The acquisition of the “digital twin” of the product could act as a membership to event invites and exclusive access to releases. Its main driving force is to build a community for consumers to align with the brand’s message. As these luxury fans want in on this special privilege, it generally increases the number of spenders on these luxury goods, overall growing the brands’ awareness in the market.
Apart from fashion, other industries are gradually beginning to use NFTs to sustain its steady growth in the specific markets. The latest addition to the Aura Consortium Blockchain is Mercedes-Benz. The German car manufacturer’s access to Aura Blockchain Consortium’s blockchain technology enables Mercedes‑Benz to explore new strategic dimensions of digital brand development such as creating NFTs for in-car digital art experiences. The in-car digital art experience is a significant next step for Mercedes-Benz UI/UX. Digital artworks could be displayed on the vehicle’s expansive interior screen, turning it into a personalised, immersive art space. As the market for NFTs is still finding its way to commercialisation, artworks enriched by light and sound may be another strategic step for the company. Therefore, luxury car brands are opening up to explore different approaches to NFTs including auto-related artwork and experiences luring art collectors as well as auto enthusiasts towards them.
Utilising NFTs for Rebranding And Revival
Not only are NFTs used as promotional material, but also for a different path of branding which companies take to rebrand or revive brand interests. According to reports from The Financial Times, Vertu’s UK manufacturing operation will be shutting down, leading to the loss of some 200 jobs. Vertu followers were disappointed in 2017 when the British luxury phone maker failed to free the company from bankruptcy. Offering to pay creditors US$2.4 million of the firm’s US$135 million debt left Vertu in shambles. Murat Hakan Uzan, a prominent businessman from Turkey, currently living in Paris will retain ownership of Vertu’s brand, technology, and design licences, intending to resurrect the company.
However, Vertu reemerges into the market together with NFTs to celebrate the brand’s 22nd anniversary. They collaborated with Binance to set in motion its new Vertu Constellation X Ulm luxury smartphone. One could land it through an exclusive sales process that revolved around NFTs.
Image: Journal du Geek
Vertu provides about 10,000 smartphones available for sale via the purchase of an NFT on the official Vertu Paris website and around 1,000 NFTs will be on sale on Binance’s platform. On purchasing the NFT, Vertu introduces buyers with two options. One is to turn their purchased NFT into the physical Vertu Constellation X ULM 2122 smartphone, or to hold the NFT and become part of the new Vertu 3.0 business club. Those who choose the latter will receive exclusive access to the Vertu 3.0 Business Club, which gives the NFT holders the opportunity to attend private events that bring together an assembly of business high flyers from the company’s 300,000 private buyer list.
It is similar to how Prada, LVMH and Cartier’s strategy in retaining consumers from their already huge customer base. This further draws consumers in as they could expand their social circle and business activities. Whatever path the consumers wish to take, each original NFT holder could stand a chance of receiving a string of prized assets amounting to approximately US$4.7 million.
Vertu’s business strategy with convertible NFTs could make or break the NFT and phone market. However, as it stands with the relevance and popularity of NFTs in today’s time, the brand is more likely to soar than dip.
Luxury brands jumping into the world of NFT may be one of the most critical economic topics in the modern world. The metaverse is a growing marketplace for NFT of the future and companies have already started to venture into this virtual space, which is touted to have an immense potential in attracting and growing new consumer base.
Italian luxury fashion house, Gucci is one of the world’s most renowned fashion brands and on the other hand, Roblox is one of the most popular games and platforms. There is no doubt that a partnership between the two created something unique. That was what went down when Gucci created a virtual garden exhibition within Roblox. The exhibition spotlighted the reimagined shopping experience and digital wearables as NFTs. One of the assets is the digital iteration of the Dionysus Bag being sold for US$6 and eventually scored for almost a thousand times more. The fact that Gucci’s digital assets could only be bought within a limited time offered users an understanding of scarcity. It functions as a marketing tool to create the space for exclusiveness and awareness building. This also lures newer and younger audiences towards the brand, priming them in a way where they would look towards Gucci in the near future as a brand aspiration.
Image: UGC
Another luxury fashion brand Burberry has also embraced the relevance of the NFT collaborating with the Roblox and Blankos Block Party. One could find prominent Burberry items such as the trench coat, boots, crop top, and shorts in the game.
One unique twist is that Burberry’s complete outfits and individual picks are available in the market both online and offline. This highlights the evolution that has made brands’ NFTs so relevant to attract new demographics of consumers.
Other than Gucci and Burberry adopting NFTs for leverage, Givenchy has also entered the digital fashion landscape with its new NFT collection in collaboration with graphic artist Chito. The series comprises 15 NFTs featuring eye-catching airbrushed characters and symbols, which were also utilised for Givenchy’s Spring 2022 pre-collection. The NFT movement has inspired Givenchy due to the tremendous drive to provide artists like Chito to broadcast their work and vision directly to a worldwide audience. NFTs also represent a brand new way of conceptualising fashion’s role, not just physically, but digitally as well, linking the gap between the two worlds.
Many luxury fashion brands seek to present fashion in every form possible, from runway shows to retail experiences, fashion presented as art, film and photography. The construct of luxury could be presented in various ways that extend beyond the boundaries of reality and is one of the ways to build connections with the audience using NFTs. After all, anything with the utilisation of NFTs seems to be working out so far.
It doesn’t take a genius in anthropology to notice that these athletes have one thing in common. Generally speaking, to make millions from sport, you still need to be male. There is one notable exception to that of course, and it’s someone who fully deserves all the rewards of being one of the most remarkable athletes of all time.
A Unique Sporting Talent
Serena Williams isn’t just a tennis player, of course. She is also independently wealthy through her business interests, which include two fashion labels and numerous lucrative endorsement deals. But it is her talent as an athlete that made it all possible. Right now, Williams is dominating the sports pages again as she attempts to win a 24th grand slam title at Wimbledon.
Since the announcement that she would be playing, legal online sports betting on Unibet has gone into the stratosphere as her fans get behind her one last time. Let’s be clear here, Williams is 40 and in a sport where most retire at about 30; she has not played for a year and she last won a grand slam five years ago. What’s more, she turned pro before most of her opponents in this year’s event.
Rewriting The Rules
With an estimated net worth of US$250 million, it is safe to say she’s not in it because she needs the prize money. Along with sister Venus, Serena Williams has made a career out of challenging the status quo. They turned pro in the mid-90s, but pro tennis was so exclusively white middle class that the casual and sometimes overt racism made it look more like the mid-50s.
Undeterred and uncowed, they continued to upset the order of things with bright clothes and accessories. Fast forward to 2017 and Serena didn’t just win a grand slam at the age of 35 — she did so while eight weeks pregnant, too.
It’s easy to see why Serena Williams is such an inspiration and how with a little business savvy, she has created some highly lucrative brands. She has also accumulated quite the property portfolio. Her Beverly Hills mansion was her main base over the past decade, but recently went on the market for US$7.5 million.
She also has an awesome property in Palm Beach, which sister Venus helped to design. This oasis has been her main residence since becoming a mother and is in addition to a chic apartment in Paris on the seventh arrondissement with views of the Eiffel Tower.
Serena shares a love of fast cars with the sporting millionaires we mentioned earlier. Her collection definitely shows a love of luxury and includes an Aston Martin Vanquish, a Bentley Continental and her personal favourite, a Lincoln Navigator, plus several others.
The world’s richest man, Elon Musk, has been heavily involved in all kinds of digital asset initiatives. He remains inextricably linked to cryptocurrency through his actions, being one of the first people to invest in Bitcoin in early February 2021. Shortly after, the gradual rise and popularity of cryptocurrency eventually led to the creation of Non-Fungible Tokens (NFTs), leading to multiple major international brands and independent artists creating their own digital asset. Soon enough, the cryptocurrency market was flooded with these valuable collectibles.
However, recent occurrences have shown that just like their physical counterparts, digital assets, too, carry risks and can lose value as easily as anything else. No matter how popular digital investments became, no sensible investor saw them as the future of their entire portfolio. Responding to the high-risk situation, individuals like Hong Kong billionaire, Calvin Lo, sought out new investment opportunities with a more tangible asset, such as his recent venture into rare, highly collectable jewellery.
The Legacy Jewellery Fund
Calvin Lo — an elusive, high-net-worth investor with an inclination towards privacy — has made a career out of being invisible. However, his recent purchase of the Williams F1 Racing Team, as well as the renowned Mandarin Oriental Hotel in Taipei raised his profile to a significant degree. He is known for astute investment strategies that continually deliver remarkable success for his Singapore-based investment company, R.E. Lee Capital, a US$10 billion fund with an exceptionally diverse portfolio.
Through his private investment company, R.E. Lee Octagon, Lo directly invested and ultimately raised US$1.1 billion to his latest endeavour, the Legacy Jewellery Fund, making it one of the largest funds dedicated to jewellery investments.
Jewellery is proving to be a highly valuable asset, with its precious metals and rare stones. Unlike many of today’s investment opportunities, there is a tangible, intrinsic value beyond any speculation. However, similar to any investment strategy, choosing the right channel matters.
Rare and highly collectable jewellery have been around since the early 1990s, with a wide variety of manufacturers and styles, so how does Lo know which ones to invest in? For his Legacy Jewellery Fund, Lo has chosen three specific manufacturers: Bvlgari, Cartier and Van Cleef & Arpels; historic brands that have withstood the test of time.
Like all established brands, each has its own golden period; where design, craftsmanship and vision peaked. For Van Cleef & Arpels, their most iconic time was during their Art Deco period in the 1960s and 1970s while for Cartier, the legendary Tutti Frutti style reigned supreme in the 1930s and 1940s. For Bulgari, their golden period was in the 1960s with the creation of the La Dolce Vita style.
Beyond the brand name, Lo believes that an investment piece should have some other considerations. These five factors include: an official mark of the manufacturer on the piece itself, the condition of the piece, the level of quality reflected in its craftsmanship and the allure of a vintage accessory.
Together, these conditions help narrow down investment choices and find the ideal investment asset that also provides a fantastic ownership experience, acting as both an investment, and a satisfying collection piece.
While the amount of investment Lo has managed to attract for the investment fund shows a high level of interest in these rare, highly collectable jewellery, there are other pieces of evidence that point to its potential. A recent survey by The Hurun Chinese Luxury Consumer Survey asked high net worth individuals about their preferred collectable items, with 93 per cent divulging they preferred divulging in jewellery collections.
With jewellery attracting a multitude of attention from multiple investors, it is no doubt that this is a market that is very likely to grow in the near future. The tangible value of these pieces supports the investment in a way that a digital asset can never have and is perhaps one of the reasons why they are becoming so attractive.
Whatever your previous investment choices, rare, highly collectable jewellery is definitely one to consider in the future, and Lo has once again pioneered this with his own money.
