Prada Heir Takes Versace Helm as Luxury Giant Gears Up for Major Expansion

Lorenzo Bertelli, the 37-year-old eldest son of fashion designer Miuccia Prada and industrialist Patrizio Bertelli, is poised to assume the role of executive chairman at Versace. This pivotal appointment will take effect once Prada finalises its acquisition of Versace on December 2. The deal, valued at approximately €1.25 billion ($1.45 billion), represents the largest acquisition in the Prada Group’s 112-year history. This strategic move is expected to integrate Versace's distinct aesthetic into Prada’s portfolio, fostering a larger Italian luxury conglomerate better equipped to compete on the global stage against rival groups.

The Prada Group has demonstrated a robust commitment to enhancing its industrial infrastructure, investing over €200 million between 2019 and the end of 2024. In 2024 alone, the Milan-based company allocated approximately €40 million towards vertical integration, strategically bringing various stages of the production process in-house and bolstering its core capabilities. These significant developments, alongside discussions on supply chain compliance and the "Made in Italy" ethos, were recently explored with Lorenzo Bertelli and Andrea Guerra, CEO of the Prada Group, during a meeting at the state-of-the-art Scandicci facility in Florence, dedicated to the comprehensive production of bags and leather goods for Prada’s men's and women's lines.

Looking ahead to 2025, Andrea Guerra detailed further ambitious investment plans. The Group intends to expand and refine its work on fine leathers in Milan, aiming for a more sophisticated workshop. A second major investment within the next 12 months includes a new, cutting-edge leather-goods plant in Piancastagnaio, Siena, which will consolidate existing workshops in the region and exemplify sustainable practices. Additionally, a new knitwear production hub will be established in Gubbio, Umbria, complementing the existing Torgiano site, which already hosts an Academy project and multiple highly specialised production processes. Further expansions are planned for the Northampton plant in England, the Foiano della Chiana plant in Arezzo, and new developments in footwear in the Marche region, with no current plans to acquire new suppliers.

Regarding supply chain compliance and mitigating risks associated with subcontractors, Lorenzo Bertelli underscored Prada’s long-standing philosophy. He highlighted that, unlike many industry players, Prada has always integrated its factories with its fashion shows. This approach, rooted in his father Patrizio Bertelli’s belief in owning manufacturing facilities, ensures that industrial matters are culturally embedded within the company’s core operations. Bertelli noted that this early commitment to vertical integration and direct oversight of production, though initially costly and laborious, allowed Prada to address supply chain challenges far earlier than many competitors, fostering a cleaner and more controlled network through continuous inspections and audits.

When questioned about the selective disclosure of suppliers on Prada’s website, Lorenzo Bertelli explained the rationale. Legally, companies are typically only required to disclose Tier 1 suppliers, allowing some to present a deceptively "clean" image while relying on un-disclosed subcontractors. Prada, which works almost exclusively with Tier 1 and very few Tier 2 suppliers, chooses to disclose only those it is particularly proud of, rather than the entire list. This decision is partly influenced by competitive concerns, as sharing comprehensive supply chain information could provide an undue advantage to rivals. Bertelli affirmed that if reporting regulations were to change, requiring 100% disclosure, Prada would gladly comply.

Andrea Guerra emphasized Prada's significant level of internal production, although specific percentages are not publicly disclosed. He stated that from the company’s perspective, production is "totally internalised," reflecting Prada's profound ability to steer its entire supply chain from conception to completion. Guerra confidently asserted his belief that Prada’s level of in-house production is among the highest in the luxury industry, having dramatically shortened and streamlined its production processes.

Addressing the topic of pricing in the luxury sector, Andrea Guerra critically observed that in the post-COVID period, some competitors pursued continuous price increases without necessarily delivering commensurate value in their products. He suggested that this disconnect contributed significantly to the industry’s recent downturn, prompting many brands and companies to re-evaluate their pricing strategies and focus on intrinsic product value.

Andrea Guerra reiterated Prada’s unwavering commitment to "Made in Italy," acknowledging its profound importance. He highlighted that Italy’s strength lies in its manufacturing, innovation, and production capabilities, not its "Made in" label. However, Italy's challenge historically has been in sales, marketing, and effectively engaging with the global consumer. While Italian companies excel at making, they have often lagged in selling, a contrast to French or Anglo-Saxon entrepreneurs who typically showcase their businesses through retail spaces rather than factories. Guerra pointed out that companies like Prada, which ventured into the direct-to-consumer market over three decades ago, are exceptions among Italian businesses. Despite Italy producing approximately 80% of global luxury goods, Italian companies account for less than 20% of the sector's revenue, underscoring a critical area for improvement in consumer management for future generations, crucial for the Italian industry.