The Vicuñas and the $9k Sweater | Hacker News Reader

The Vicuñas and the $9k Sweater

bloomberg.com

70 pointsthrowaway203751 comments

Forgive my ignorance but isn't there an obvious solution here? Stop selling the raw fibre. Build local industry and sell the finished product. Or is 99% of the value added after the raw fibre step?

They need to buy specialist equipment to do that, and it sounds like they can't afford it?

That is what the government should do. Buy it for them.

Isn't this where capitalism comes in and someone with money steps in to take a chunk out of literally "the richest person in the world's" margin.

That is not the goal of capitalism.

What specialist equipment? Incas managed to make fabric out of the wool without advanced equipment. I think garments are still made (by hand) from the wool around the regions where the animals live, though I assume they aren’t as consistent as what you get from Loro Piana, and maybe they aren’t exported (if I remember correctly, this is to try to allow those goods to be used by locals in traditional ways, rather than being made for export, though I’m not confident in that claim)

In the article, it states that the fibers are shorter and thinner (13 microns) than other wools, which gives them the desirable properties, but also makes them very hard to spin into a wool. Admittedly, I had assumed spinning by hand wouldn't scale to the level that the comment above intended.

Or just stop selling it altogether and focus on some other more profitable industry. LVMH can find another supplier or tend Vicuñas themselves.

As the article explains, LVMH does tend vicuñas themselves, on fenced lots and at an industrial scale the villagers can't compete with.

This looks like a artificial scarcity means of creating value. Vicuna wool is not particularly finer than alpaca wool, but the rarity of the former means a cost increase in the exclusive luxury market, so the owner can say, "it's vicuna" at social gatherings. It's probably no more difficult to raise alpacas and vicunas then Cladoir sheep, the latter being a fine-wooled local Irish breed.

So if you start paying the Andean villagers a lot of money for vicuna wool, all their neighbors will start raising vicunas, because who doesn't want to get rich raising sheep in the mountains? Then the market would be flooded and nobody would pay top dollar for not-so-exclusive vicuna anymore (the villagers probably know all this, but don't have access to direct-to-consumer marketing for more competitive pricing - get them a Starlink Terminal and ah, err, Tiktok account?

Fashion is a funny business, more about social science than economics. Incidentally wool demand might be rising due to microplastic concerns over synthetic fleece clothing.

>So if you start paying the Andean villagers a lot of money for vicuna wool, all their neighbors will start raising vicunas, because who doesn't want to get rich raising sheep in the mountains?

Vicuñas are dromedaries, they're not closely related to sheep. You can't just raise them. They're the wild animal that was domesticated into the alpaca. They're not a domesticated animal, they are a wild animal with very poor temperament and locals do not keep them, they capture wild vicuñas to shear. There's no realistic way to flood the market, the supply is limited by nature.

It states in the article that it is indeed a fiber fiber than the alpaca.

Parody?

They are paying the village the local minimum wage for a month per jumper and the village can't afford to pay her for one day's work?

Somebody's embezzling that money and this article seems remarkably incurious about that fact.

I think there’s enough pointed inclusions in the article to make that clear, to be fair. Although I agree it seems weirdly restrained, like half an article.

In 2012, they brought in $788,526 - where did that go? Who is the leader of the indigenous community making these decisions? Was the journalist able to get a comment from them? If not, why not?

I toured the Loro Piana mill in Roccapietra a few years back. Highlights include the cashmere carpets they make for gulfstream, the Scottish nettles they brush fabrics with and the five story storage bins that run an automated elevator call back system.

It was very impressive.

Sure it is even more so since it was purchased by LVMH.

>Scottish nettles they brush fabrics with

Why would someone go and do a thing like that?

It's called fulling: https://en.wikipedia.org/wiki/Fulling

First they soak the fabric in stale urine. Then the tiny stinging hairs on the nettles acts as a natural brush to lift and separate the wool fibers.

I’ve been to Peruvian mountains recently where they farm vicuñas and alpacas and can confirm they live in pretty poor conditions in a very harsh environment; high altitude barren mountains. The majority of income comes from tourism, and it’s very common to see villagers try to sell you goods made of alpaca/llama/vicuna wool. Funny enough, most shops in the bigger cities tend to sell stuff made in china because it’s significantly cheaper to obtain

>they live in pretty poor conditions in a very harsh environment; high altitude barren mountains.

But isn't that just the Peruvian mountains? If your statement was supposed to be relative ("there are good conditions in <x>") then I'm not sure what you expect.

If it was supposed to be absolute, then you're correct but stating something that hasn't changed since long before humans started living in the area is hardly worthwhile.

I understood the whole statement to mean that both the physical environment of the mountains and the conditions for living in them (for both alpacas and people) are difficult.

As in, "the mountains are a harsh environment and people are living in poor conditions upon them" which would suggest an even more limited set of circumstances than being just poor somewhere else or just on those mountains but not having to depend on them for everyday living.

How did they farm vicuñas? Common knowledge here in the andes is that they aren’t domesticated and don’t reproduce in captivity. That’s why their fur costs so much.

Afaik alpacas can be farmed, but llamas are fully domesticated instead and easy for having larger livestock.

There you go: https://elpais.com/america-futura/2023-09-03/la-fuerza-del-c...

Pretty much Chaccu. Free festival. It's usually in June. You can make a trip of it going to Paracas, Ica's dunes, Nazca Lines and finish in Pampas Galeras. Keep in mind in Galeras there's nothing. Just a post of the National reserve and that's it. It's also at 4K meters of altitude so walking for hours could be a whole experience.

I didn’t interact with the locals much, but you are correct that it was mostly alpacas and llamas that you would see being herded

The value in the 9K sweater is not in the material. You can get just as nice sweaters for a lot lot less money. Probably 20X less will get you a very nice, very well made, very soft sweater. The value of the sweater is in the brand. Somehow Loro Piano has found out how to get people to agree to pay 9K for a damn sweater. If they can do it with Vicuna, they’ll find another material to do it with as well.

Have you actually stepped into a Loro Piana store and felt their cashmere? It is otherworldly. I have some degree of experience in picking out high-end cashmere, telling the overpriced scams apart from the legit ones, and Loro Piana is definitely a noticeable level above the others.

I have skin that is hypersensitive to cashmere. Most high end cashmere itches for me, but not Loro Piana cashmere. There are significant differences in cashmere fiber length, diameter, etc.

All the differences in the world don't make that little amount of animal hair worth $9k. It's the value adding... mostly via brand development. I mean it says right there in the article that it's worth $280.

BTW why are you talking about cashmere when this is about Vicuna hair?

Isn't the raw hair worth $280 but it still needs woven into fibers and then turned into clothing? Definitely not $9k but the vicuna clothes for sale in Peru (not a fancy brand name) are still significantly more expensive than other fiber. I think the cheapest sweaters from baby alpaca in Cusco are about $300.

$300 sounds right... shipping is negligible so 3 times that in the US... around $1000 would be about right. The other $8000 is just for the brand.

Archibald sells a vicuna sweater for $3.1k, and they say the at cost price is $1.9k [1]

Given maybe $500-800 in production cost, shipping, duties etc, the cost is probably $1k. It is significantly more expensive than other fibers.

1. https://www.archibaldlondon.com/us/collection?category=vicun...

I’ve seen a 40 meter skein selling for as much as $600. A sweater might be 800m-1600m of yarn. But assuming $300, that’s easily $6k in yarn.

The value of the $9k vicuña sweater is in the material. If you just want very soft, cashmere and baby alpaca are nearly as soft and considerably cheaper. People get vicuña fiber garments because it's rare, it was the fiber of royalty, and it's arguably the finest natural fiber in existence.

This is false, it's a mix, other houses sell vicuna sweaters, in fact you can buy them from unknown sources, even the raw material itself and have someone knit it for you, it is extremely expensive however you acquire it.

The house adds value to the material, as with any high-end producer like Brunello, Zegna, and the next one to pop-off Rubinacci (watch this space).

Well now I’m headed to Mr Porter to make some mistakes… I guess that’s what I get for opening this thread.

Why is there only one customer?

Because the price is actually extremely high, and the alternatives are far cheaper

“$280 for an equivalent amount of fiber” is just a lot of money to spend on raw materials for a sweater. Include the overhead of selling luxury goods and you need to be charging ~1,000+$ per sweater to break even. Add in there’s only 200,000 animals worldwide and that’s just not a lot of room for multiple companies to be interested in participating in such an inherently limited market.

Loro Piana does over 1B Euro in revenue at over 20% margin [1], I'd say there is room for more than one company.

[1] https://en.wikipedia.org/wiki/Loro_Piana

They make other things besides this one sweater though, right?

Yea it's a bunch of different products, "textile division produces high quality textiles from cashmere, vicuña wool, linen, and merino wool;"

I don't know the exact numbers for this sweater. But it takes a alpaca 4 years to produce enough cashmere for one sweater. 200,000 / 4 = 50k sweaters at 20% profit margin on 9k a pop that's 90 million in profit a year assuming they sell everyone at full price. More realistic could be 2/3 to 1/4 of that, though I'm just guessing here. Now split it across X companies and it’s going to be a small market.

Edit: Looks like other companies are using this kind of wool, just not from that particular location. https://www.alpacacollections.com/belen-vicuna-sweater.html

The sweaters being discussed cost $9000, which is “$1000+” (I see it a bit under $8k on their website in my country but prices might vary by import duties). I don’t know how fair the comparison to the $280 cost of raw materials is – maybe the sweater weighs 500g, and the article found somewhere near the other end of the chain the price is $560/kg, but it could be that Loro Piana are only taking higher grades of wool and so more than 500g of raw wool would be needed to get 500g after grading, spinning, milling, etc. I suspect the cost of getting enough wool for the sweater to Italy ready to be spun is higher than $560 per kg of finished product, but that doesn’t mean the price the workers get before then is fair.

I spent a bit of time thinking about other ways to estimate costs but didn’t try too hard. Loro Piana sell (woven) fabrics but don’t publish prices on their website.

They might sell a similar product in cashmere for around $3000, of which I would guess $250-$500 goes on the cashmere (maybe a bit less as they spin in house), perhaps another $200-300 on labor and manufacturing, and the rest would be the typical luxury goods mix of profit and a bunch of low volume stores in expensive locations.

I don’t doubt they could pay more or sell at a lower price point, but by fair I am simply talking in terms of market forces. They aren’t using underhanded tactics, just buying an item for what it’s worth.

Looks like other companies are buying the wool from other locations, but still charging high prices. 3,795.00 https://www.alpacacollections.com/belen-vicuna-sweater.html

There are other perspectives here worth comparing and contrasting.

https://www.conservation.org/blog/in-wind-swept-andes-sustai...

This is notably looking at the Bolivian communities, not the Peruvian ones as in OP

Now also tell me what chemicals they use to clean the fibers and how and where they dispose the residues? Just to be sure I'm not portraying a wrong image of them.

That is a nice Sweater. Would complement my 10k comforter... https://icelandicdown.com/product/eiderdown-comforter/

Damn for that amount of money it should be made of Sasquatch down or some other hitherto unknown cryptozoological specimen.

It’s an absolute scandal, as if France only sold wine grapes, and no one in France had ever made or tasted wine. Most of the value add is in the processing.

Spotted here: https://www.ft.com/content/8fa8550e-7a55-44a7-b3d5-cdb0f81ae...

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