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Debdatta Das
Meera Mohanty

Hidesign to retain own brand identity

New Delhi March 16 Avant-garde French luxury brand Louis Vuitton (LV), from the LVMH (Moet Hennessy Louis Vuitton) stable, is close to acquiring a minority stake in the Puducherry-based leather goods maker Hidesign. Hidesign is arguably among the first few to have retailed as an Indian brand abroad from the early '90s, long before other brands made it to the world stage.

While Hidesign's President, Mr Dilip Kapur, was unavailable for comment, leather industry sources say that Louis Vuitton's President, Mr Yves Carcelle, has sewn up a strategic alliance with Hidesign to be announced soon. LV's stake, sources say, could be under 10 per cent or a little more.

Touch of exclusivity

The LVMH Group is understood to have identified the Indian premium leather accessories brand as a partner as it sees a similarity in the way Hidesign approaches craftsmanship. As a leather industry expert sees it, a luxury brand needs a touch of exclusivity, which can never come out of China, even though its productivity is higher. Hidesign's products involve a great deal of assiduous handwork and it is this skill that has drawn Louis Vuitton to identify Hidesign as a partner.

No outsourcing

Hidesign has always turned down offers to be an outsourcer and, according to sources, it has offered a stake to LV to bring in a greater understanding of what making luxury goods is all about and give Hidesign a leg-up in new markets. A stake in Hidesign will make it a part of the LVMH family as well.

However, Hidesign will retain its own brand identity and not be the outsourcing destination for LV, even after the stake acquisition comes into effect. Both companies are believed to be setting up their own manufacturing units alongside, on land acquired not far from Hidesign's current set-up in Puducherry.

Mr Carcelle is also believed to have made a quick and quiet visit to Puducherry in January. For LV this would be the first time the company will be manufacturing its goods outside Europe. The investment is expected to be "substantial."

Also, says this source, Louis Vuitton will help position Hidesign as a possible contender to combat competition the former faces from mass luxury brands such as Coach, which has shown the way with its aggression at the lower end of the market.

Competition

Although LV is deemed as the ultimate in luxury fashion accessories, its prices are far steeper than Coach's handbags that have begun directly targeting LV customers, both in terms of fashion and design. The other brands in the LVMH portfolio too are pricier than Coach and cannot fill in the mass luxury market.

The French brand has also identified the South Asian markets as its immediate focus area. While Japan is believed to be its largest market in Asia (LV currently has 51 stores in Japan), China has been identified as the fastest growing, globally.

More Stories on : Leather | Mergers & Acquisitions

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