Vitale Barberis Canonico: Tailor-made Ingredient Branding

As essential for value creation as it is invisible the consumer eye: this is very often the awkward position in the value chain of suppliers of raw materials and semi-processed goods. And this translates into a weak position at the bargaining table. In fact, in negotiations with producers of final products, they can easily replace a quality supplier with a cheaper one. This makes it hard to clinch a deal with a price that reflects the true value of the product the supplier is furnishing.

One solution for suppliers could be to develop an Ingredient Branding strategy. The aim here is to create a brand for raw materials or intermediate goods to spotlight their value on the B2B and/or B2C markets, value that can then be transferred and incorporated into the final product. New generations of consumers are demanding more and more insistently that value chain be totally transparent and traceable. In line with this, Ingredient Branding can leverage the growing importance of sustainability to contribute to enhancing the value of the end product. It’s a win-win strategy for both the supplier and the end producer. But having said that, the big consumer brands can feel threatened when the raw materials they source have a strong identity of their own. Their fear is that this could detract from the specificities of their own end-product brand, which they’d rather be the only point of reference for their customers.

This reluctance to give suppliers any visibility is a particularly common attitude in the world of fashion, where customers almost always believe that it’s the B2C brand that handles the creative and productive processes from start to finish. By giving suppliers their own identity, the risk is ceding greater bargaining power, making the “behind-the-scenes designer” come out from backstage. This could tarnish the image of the final brand, but more than that, it would also expose the fact that brands with price positionings that are poles apart may actually share the same supply chain. This makes marketing investments necessary for intermediate products – fabrics, trimmings, accessories – so it’s the end consumers who ask for garments produced with a specific component or material (like Gore-Tex). The ultimate goal is for the fabric to win a special status in terms of design, quality, or the manufacturing tradition of the company that produces it. Or another possibility, that specific textile could be used exclusively to create a special collection (for instance an organic fabric).

Ingredient Branding is the strategy adopted by Vitale Barberis Canonico (VBC), the oldest wool producer in the world with over 350 years of history, based in the wool district of Biella (Piedmont, Italy).

In the men’s clothing sector, the amount paid to the textile supplier accounts for less than 10 percent of the final price of a suit on average, despite the fact that the characteristics, design, quality of the fabric are key elements in the finished product. What’s more, in the last few decades, outside producers have broken into Europe’s wool market (primarily China, India and Turkey). They’ve even started to set their sights on the high end of the market, offering low-cost textiles thanks to their low-cost labor.

This was the impetus that spurred Vitale Barberis Canonico to build their own branding strategy in 2002: the need to embrace a distinctive identity, one that would provide a source of market differentiation. The idea was to stake out a positioning not only as a producer that’s 100% Made in Italy, but to connote the company’s image with classic style with an irreverent twist, and high quality fabrics that are at the same time high-performing from a technical standpoint. This was the motivation behind the initial attempt to invest in B2C advertising followed, channeled on traditional media; but results didn’t materialize in terms of the brand awareness VBC hoped to generate. The company’s advertising efforts left end consumers confused as to whether VBC made clothing or “only” textiles (and if so, why should they care about the VBC brand?). What’s more, the investment, which was massive for a supplier, still fell short of the budgets of major fashion brands.

In light of these limitations, in 2011 investments in communication were continued but refocused on various fronts to achieve a comprehensive marketing approach:

• For B2B, targeted trade marketing materials were created (Vitale Barberis Canonico labels in garments, VBC pendants, shop windows, visual marketing materials for stores) to reach final customers via sector brands.
• B2C investments were funneled into a new website and social media platforms, and engaging various international influencers in the world of men’s fashion.
• Lastly, Vitale Barberis Canonico advanced a B2B2C strategy, with the aim of transferring brand value to the customer via the final products, by setting up strategic partnerships with certain B2C brands (for instance, organizing in-store events together, creating exclusive collections featuring VBC textiles, and offering intensive training sessions for sales personnel at the stores of partner brands focusing on the quality and specificities of VBC fabrics).

Finally, in 2015 a VBC showroom was opened in Milan’s fashion district. For now, the showroom isn’t a place for selling; instead it’s a space for organizing meetings, events and training activities with partners and sales representatives, journalists and industry influencers, fans and students of fashion. And the aim is clear: to enhance brand awareness not only for sector players, but among final customers as well, through Ingredient Branding.

• As global supply chains are gaining ground, for suppliers of raw materials and semi-processed goods the biggest threat comes from price competition. A strategic option for contending with low-cost players is for manufacturers to evolve from commodities to specialties through product innovation supported by investments in brand marketing.

• A B2B company can’t usually afford the same marketing and communication budget as a B2C producer, so suppliers need to focus on targeted communication activities in partnership with strategic clients, as well as trade marketing.

• Ingredient Branding is a valid strategy for enhancing the value of a B2B brand, leveraging on the rising consumer demand for more transparency and traceability throughout the value chain. But end producers tend to accept this kind of strategy only if they see the B2B brand adding to – not detracting from – the value of their own B2C brand.