Plutocrats Want to Turn Your Sweet Tooth Into Cash

Along a cobbled street in Turin, the whitewashed front beneath a half-century old sign saying “Cioccolataio” may look like a scene out of a Truffaut film. But it’s actually just another plutocrat’s trophy. Ferrari NV chairman and Agnelli scion John Elkann acquired a stake in Peyrano, an artisan chocolate maker and retailer founded in 1915, out of liquidation just before Covid-19 hit. He’s been showing it off to his rich friends ever since.

Mark Zuckerberg (when he’s not working out) has been there; so has Patrick Collison of Stripe Inc. Elon Musk received his own specially designed box of chocolates in an aluminum case to take on space trips. The Prada SpA clan has collaborated with Elkann on a co-branded Marchesi Peyrano panettone, combining the doughy sponge cake from Prada’s Milanese pastry shop with Peyrano’s Gianduja chocolate drops.

Bankers have been salivating over Italy’s food industry for a decade — since Bernard Arnault’s LVMH Moet Hennessy Louis Vuitton SE bought one of Italy’s oldest pastry shops — over its potential to match Milan’s fashion houses in the global marketplace. The industries share similarities: They feature small family-owned groups with high-end products that command premium prices overseas. Consultants Bain & Co. consider food a key component of the fast-growing category of luxury experiences, an area that’s particularly attractive to those sought-after millennial and Gen Z shoppers. Indeed, selfies with food are among the biggest drivers of traffic on Instagram, according to luxury analysts.

The trends are borne out in the data. The food industry is now Italy’s leading manufacturing sector, with €179 billion ($193 billion) in annual turnover, industry association Federalimentare Censis reported in May. The crucial detail is exports. Overseas food sales have risen by 60% in a decade to about €50 billion. That pace is expected to continue, if not accelerate. “The sector is one of the most dynamic and robust in Italy,” says Paolo Mascarino, president of Federalimentare.

Elkann is not the only, nor the first, European luxury baron to bet on what may as well be called haute food. The Prada clan acquired Marchesi in 2013, having lost out on another august Milanese pasticceria, Cova, to Arnault. Both Prada and LVMH have since opened their respective coffee and cake houses in luxury resorts across the world. Arnault put a Cova next to his showpiece department store La Samaritaine, opposite the Louvre in Paris, and drew on the Milanese pastry chefs’ know-how for the newly launched Breakfast at Tiffany’s restaurant on Fifth Avenue.

Luigi Consiglio, whose consultancy GEA has advised Italy’s food groups, says Arnault’s acquisition of Cova “sent the sector into a frenzy,” and left dealmakers scrambling to find luxury food merchants to buy. Remo Ruffini of Moncler, through his private investment holding, subsequently acquired Langosteria, a high-end restaurant chain that’s rapidly expanding. Renzo Rosso of Diesel and Marni owns an organic grocery chain. Francesco Trapani, the Bulgari heir, bought into pizza and gelato chains, two areas with some of the fattest margins in food retail.

Cake and fashion may seem a strange mix, but Lorenzo Bertelli, the Prada scion, told me once the attraction of food retail to Prada was that only a certain number of people could wear Prada, but everyone can eat cake.

Many of the luxury moguls have invested in haute food with private capital. That’s a sign the investments are currently niche to their main businesses, but also an acknowledgement that retailing handbags and puffa coats is a very different business to selling croissants and pralines. Consiglio acknowledges there are parallels with the frenzy over Italian ready-to-wear brands in the 1980s and 1990s but says there’s another specific difference with haute food. Whereas marketing was key to the apparel success, selling food purely based on branding doesn’t work. People want their meals to taste good too.

But in the AI and climate crisis age there is a parallel with personal luxury goods that’s also making food a desirable, if dystopian, investment. In an era of scarcity, artisanal know-how, vertical integration and key relationship with food suppliers, are increasingly valuable. That’s not only related to getting top-end leathers and qualified craftspeople to make handbags, but also experienced pastry chefs, and a supply of cocoa nibs and hazelnuts.

Alessandro Pradelli, chief executive and co-shareholder in Peyrano with Elkann, says one of the key assets acquired at Peyrano was the privileged relationship with suppliers. During the Covid pandemic, Peyrano’s supplier relationship allowed it to keep producing chocolate that went into its sweet joint venture with Prada’s Marchesi.

Of course, there’s another message hidden in its fluffy saffron tinged dough, one Marie Antoinette would be familiar with. If ever there were a treat that encapsulates our new Gilded Age, this panettone of plutocrats takes the cake.

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Plutocrats Want to Turn Your Sweet Tooth Into Cash