Fascinating.... Similar points could be made about several luxury jewellers, as well as watch makers.
I do think LV and Hermes cater to slightly different audiences with some overlap. The different approaches to manufacturing have certainly created a sense of rising unease among Hermes aficionados watching the creeping rise of LVMH ownership in Hermes. It will be interesting to see if Hermes can maintain the aura of craftsmanship and exclusivity they have cultivated if there is ever an Arnault shotgun wedding.
I swear it's one can of worms after the other...you're literally going to have me write dissertations here...
You are 100% right about the demographic of LV and Hermes. There is overlap, but Hermes has wealthier consumers.
I've read so many analyst opinion in too many languages about LV-Hermes that my head hurts, but I can safely tell you B.A. is only interested in a controlling interest, which will require very large ownership of the company considering how much stock is held by insider and 5% holders with aligned interests. He does however have a track record of preserving brand heritage/quality, as he has none of his own (wheres the Arnault Paris store again?). Amazing how a south florida condo hustler can become the deity of some many women basically.
I really don't feel like writing paragraphs about jewelry, but point blank, if you are buying from a brand name jeweler you are getting scammed. Appraisal values also mean nothing. "Precious" metals are commodities much more-so than leather because of consistency and standardization.
An example, a $48,000 ring from Chopard. Not an engagement ring, but one with a micropave setting allover, 18k white gold. Knowing what the weight was, tcw, the size of the stones (8 pointers), and stone quality (using a loupe to estimate F/vvs2) I quickly did some mental math to figure out that even with the mold, that an identical ring would cost less than $6xxxx.
Not to mention, a company in Boston making boron-doped diamond wafers (computing purposes) can make synthesized diamonds suitable for jewelry for between 5 and 15 dollars per carat, and no expert nor machine whatsoever can tell the difference. This is not CZ or moissonite, but a chemically and structurally real/identical diamond. But, I promised I won't write too much, so I'll save the Debeers artificial demand/supply monopoly for another day.
Just an example of consumers finding a certain kind of "value" where it doesn't exist.
Now on the topic of expensive leather, let's take for example what is considered the most expensive, non-exotic, birkin (typing this word makes me die a little inside) there is. This birkin is made from "Box-calf"; $10k or so.
For the best of Box calf, only milk fed calves are suitable for slaughter. Lets add some cost for the husbandry methods of milk feeding costing more than grass/grain, and that the pool of available raw salted hides or welt blue hides is smaller, with a lot of demand for them.
Now we come to the "Box" part of Box calf. This is what happens when you polish the hide using a machine with a retracting "arm" that goes back and forth and polished the leather with a ceramic cylinder, although the best results occur when using agate stone. The result is a finish with the grain being "boxy" as it's called, although some believe the finish is named for someone who supposedly invented it. The time to do this finish drives up the cost again.
Finally, let's say that Hermes rejects 50% of hides it buys from Anonany or Dupuy, driving the price up again because of a smaller pool of hides. Hermes will reject hides due to tiny imperfections most don't even notice, and the rejection rate goes up as does the size of the leather pattern you're cutting, so for a 55cm bag it goes up a lot. Imperfections include stretch marks from the calves' growth spurt, mosquito bites, etc.
Taking into account ALL this, the cost of the raw materials (finished leather) does not exceed $300 dollars.
A friend of mine that retired from making trunks hired someone to work for him in his shop, and he pays the man 37K Euro. This is a top of the line trunk shop that has made trunks for many luxury car companies, champaign producers, and ever does out-work for major brand trunk makers themselves. Lets call that $52,000/Yr for easy math.
If this man can make 2 birkins a week (VERY reasonable estimate), labor+cost of materials will be $800. Labor would be a bit more considering how much time European employees get for vacation, and we are figuring a salary of $1000/wk.
So even with the best craftsmanship possible (I'm not even counting the possibility of hiring someone from a country where benefits cost less and the salary is less, but the quality of the work is equal), you're paying $10,000(might be more now) for a bag that cost Hermes $800 or so. Expensive leather justifies certain prices, but not those prices, I'm afraid.
