Honda website
Honda website

JULY 31, 2002

Montezemolo and cigarettes

The news that Luca di Montezemolo is involved in a consortium trying to buy the Italian state tobacco monopoly is, at first glance, rather an odd one. The gist of the story is as follows: there is a group of Italian companies which have joined forces to form Imprenditori Associati. These include the Fratini, Marzotto and Benetton companies - all of which are active in the fashion business. In addition there is an involvement with financiers Piofrancesco Borghetti and Emilio Gnutti.

Fratini was the first European company to produce jeans and the firm's Rifle brand was successful in the 1970s. Since then the company has diversified in various different directions and today produces jeans for Calvin Klein and Guess and owns the Cotton Belt and Massimo Osti brands. They are heavily involved in property and are also part owners of the Van Cleef & Arpels company.

The Marzotto Family is also a major player in the fashion world, owning Hugo Boss and the licence to produce clothing for Marlboro Classics, Gianfranco Ferre, Missoni and its own brands Borgofiori, Uomolebole and Principe.

Benetton needs little introduction.

Borghetti, on the other hand, is very low profile but he too is involved in the luxury business, owning the German fashion house Jean Pascal AG and the cosmetics firms Limoni, Marbert AG and BBF. He is also believed to be close to a deal to buy the Austrian fashion retailer Schops.

The aim of this group appears to be to create an Italian luxury company and the planned acquisition of the tobacco business is as much to do with the distribution network as it is with the products. Italy has an estimated 58,000 tobacco shops but as pressure mounts on the industry they are transforming themselves into small businesses selling luxury items, notably perfume. In the future they could be selling more fashion items and merchandise and so the investors can see the possibility of increasing their sales and thus their revenues. Ferrari may be an automobile company but increasingly it is expanding its merchandising operations and the use of the Ferrari prancing horse as a fashion statement is beginning to catch on.

There may not be any direct effect on Formula 1 but the revenues raised by increased merchandising will do the company no harm at all.

In the interim the tobacco business owns not only the MS brand but also has a deal to manufacture and distribute Marlboro in Italy, which is something which is close to the heart of those at Ferrari, as Marlboro is the team's biggest sponsor.