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INGREDIENT BRANDING & SUPPLY

CHAIN TRANSPARENCY IN THE


JEANSWEAR INDUSTRY: THE ISKOTM
CASE
Ingredient Branding & Supply Chain Transparency: the ISKO case

Ingredient Branding & Supply Chain Transparency in the


Jeanswear Industry: the ISKOTM case

The financial year is closing and the management of the companies involved in denim and jeanswear supply
chain are reflecting on their annual results, they wonder if they did the right choices in terms of
collaborations and ingredient branding projects.
ISKO Global Marketing Director, is at the window thinking about what to do next year to better manage and
orchestrate the denim supply chain, to make its brands more visible on the final market and to become “the
key ingredient” in the premium denim industry. Archroma marketing director shares the same ambition. On
the other hand, Diesel, Guess, Haikure, Patagonia, Levi’s and Nudie Jeans management teams are looking for
successful differentiation strategies and wondering if collaborating with some of their suppliers on ingredient
branding projects can support them in delivering new messages related to innovation and sustainability to
their final customers.

1. The denim and jeanswear industry

Brief overview of current industry trends


In the last ten years, the jeanswear market experienced a drop in consumption for medium-priced jeans and
an increase for the premium segment (in this segment price elasticity has decreased), while the low-priced
segment has witnessed an amazing growth (in this segment price elasticity has increased). The consequence
is that the minimum price has reduced, the average price has increased and from the previous pyramid-like
structure, the market now resembles an hourglass and companies need to strongly differentiate themselves in
order to compete in the industry.
The increasing relevance of ingredient branding is coherent with this “premiumization” trend:
communicating the presence of a quality ingredient that will be mentioned on the garment on display in the
store, reassures and satisfies the consumers, providing an interesting way of getting out of that tired old look
of a self-repeating shopping experience. The brand and the quality ingredient brand can together generate
new energy, making the shopping experience more interactive and granting a high level of participation to
the consumers.
Another differentiation strategy for the brands is the sustainability strategy: this could be the result of a
proactive approach or a way of getting back the reputation eventually mined by scandals. Sustainability
projects include those related towards the environment such the use of natural organic fibres and recycled or
renewable synthetic resources, reduction, re-use and recycling of the resources (raw materials, energy and
water) necessary in all stages of the product’s life-cycle, from production to consumption, reduction of
chemical substances and the use of vegetable dyeing, vintage, second-hand and upcycling.
The above mentioned differentiation strategies such as ingredient branding and sustainability needs specific
choices in terms of supply chain management which should be consistent with the strategic goals. As the

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Ingredient Branding & Supply Chain Transparency: the ISKO case

nature of many business relations is changing from companies manufacturing goods within wholly owned
facilities in national operations to companies engaging in supply chains and supplier-based manufacturing
across national borders, the concept of CSR (Corporate Social Responsibility) and sustainability is likewise
transforming. CSR is no longer the individual company’s domain: increasingly, it encompasses the entire
supply chain.

The Denim and Jeanswear Supply Chain


The denim and jeanswear supply chains include all those activities needed to transform the raw materials
(cotton and the other fibers used) into the final garments and can be split in two supply chains:
! the first one refers to the processes and activities involved in the creation of denim fabrics
! the second one refers to the processes and activities needed to create the final garments.
The Exhibit 1 below summarizes the main activities of the two mentioned supply chains.

Exhibit 1 – Denim & Jeanswear Supply Chain

Source: The Jeanswear Industry, XXX

2. The main industry players


The players of the denim industry include: denim fabric suppliers, suppliers focused on specific services
(such as finishing) and brands manufacturing and distributing the final products. Isko is the leading global
player for the manufacturing of premium denim fabric. After Isko’s, the profiles of some of the most
important industry players are shortly described below: in particular the company profiles of Candiani, one of
Isko’s main competitors, two of the main Isko’s suppliers, Archroma and Wash Italia, five of the main Isko’s
customers, Diesel, Haikure, Guess, Levi’s and Nudie Jeans are provided. Also Patagonia company profile has
been added as a key player working on sustainable denim.
1
ISKOTM

ISKO is the world’s largest denim manufacturer with a production capacity of 250 million meters of fabric
each year in a 300,000 mq factory operating in 60 international locations with a sales force of over 200
experts, supported by R&D and marketing teams that serve brands locally. The company covers more than
35% of the global premium denim market with more than $1 billion turnover.
It all begins with meticulous attention to quality and details, making ISKO the ideal choice for premium
denim. Its mission is the creation of value generated through massive differentiation and segmentation of the
product portfolio. Every six months, more than hundreds of new fabrics are created with very high

1
ISKO is a brand of SANKO TEKSTIL, the textile division of SANKO GROUP. SANKO GROUP is a
multinational company active in a wide range of different business sectors: from textiles to renewable energy,
construction, packaging and financial activities. Privately owned by the Konukoglu family, today, SANKO is
one of the largest conglomerates in Turkey with over 15,000 employees around the world and a turnover that
exceeds €2 billion. The Group has a solid and well-established presence in the textile industry, greatly to the
credit of ISKO, the international leader in denim fabric production.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

technological advancements, including remarkable innovations that have been patented all over the world.
With over 20 patents (see Exhibit 4) and more than 100 trademarks, ISKO protects both the wording and the
concept of premium developments. These exclusive patents certify ISKO Intellectual Property and preserve
value for fashion manufacturers that collaborate with ISKO: guaranteeing flawless, cutting-edge products.
High vertical integration
ISKO has integrated production from yarn to finishing processes that gives the flexibility needed to create
made-to-measure products. This quality ingredient brand gives the client a competitive edge: helping them to
capitalize on the specific value of their collections and helping to explain the innovations to final consumers.

Exhibit 4 - ISKO iconic patented innovations

Source: ISKO internal documents

For ISKO, innovation in denim is a cultural imperative, that is why ISKO established two unique think-tanks
in Italy, in key areas for denim production.2

2
ISKOTECA, in San Benedetto del Tronto, is the exhaustive product “library” where all ISKO concepts -
over 25,000 products - are on display. It is not by chance that ISKOTECA is place in the Marche region in
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Ingredient Branding & Supply Chain Transparency: the ISKO case

Knowledge sharing
One of ISKO’s major commitments is to pour knowledge back into the industry because research and
innovation can only evolve if ideas are shared with sector players: especially with designers, brand collection
managers and product developers. In recent years ISKO’s ideas and knowledge have been on display at trade
fairs, in washing seminars, in trade publications and in educational and cultural initiatives for talented youth.
ISKO’s significant co-branding projects and attention from the world press are indications of the level of
recognition of the value of their initiatives for the entire denim sector.
The Washing Seminars are organized and carried out in partnership with Archroma, Wash Italia and some
other key partners.
In 2014, ISKO conceived and assembled Bluemasters, Innovation in Denim, a two hundred page large-
format book which tells the story of the past and, above all, the future of denim through the innovations and
the voices of those who “do” denim. “Bluemasters” are the men and women who have brought innovation to
denim: in production and manufacturing, in creativity, in retailing or communications, or in making jeans the
most iconic, sought-after garment on the planet.
ISKO I-SKOOL is an outside- the-box project involving some of the most important schools on an
international scale; it is a talent award for students of design and marketing aimed at stimulating their
creative expression as they learn how to industrialize their ideas: letting their talent take shape and flourish.
In 2014, ISKO brought all of its experience and visionary capacity to the Copenhagen Fashion Summit to
predict denim trends from monitoring and analysis. Along with ISKO, the entire sector has intensified its
focus on innovative ways of thinking and using denim fabric and on infinite possible uses of sustainable
materials.
Ingredient branding projects
Many major brands have chosen ISKO as their partner for projects and designs.
Each of them acknowledges ISKO as the international denim specialist among them Guess, Diesel, Levi’s
and Haikure.
Thanks to the investment in R&D ISKO was able to study special patented technologies with their partners,
developing products such as “jeggings”, “joggins”, and “blue skin”.
In order to support its ingredient branding strategies, ISKO is interested in building partnerships and
collaborations projects with the main supply chain actors: its suppliers and its customers.
For what it concerns the customer’s side: ingredient branding, for ISKO, can be focused on sustainability, on
innovation or on both, its idea is to link its brand with premium brands of the jeanswear industry.
ISKO has the ambition of becoming the “key” ingredient in jeanswear industry and is always available to
create new partnerships for IB projects with the leading industry players such as Diesel, Replay, Liu-Jo,
Guess, Jeckerson and others. When ISKO proposes to one of its customers an “ingredient branding” project,
the managers know that they will have addition activities to manage. They will have to work with the
customers on different topics: define how to structure and deliver the communication plan, ensure to give
consistent messages to the final customers, guarantee all the required supply chain controls, especially if the
IB is focused on sustainability. ISKO knows that this is much complex but it firmly believes that the right IB
project will contribute to improve its brand recognition within the industry and will drive additional sales in
the future.
For what it concerns the supplier’s side: ISKO believes that it has to promote its suppliers activities towards
its clients. In the last years, the company did several activities with Wash Italia in order to create culture
about available and innovative washing and treatments to customize and make the final garments unique as

Italy: Italy is divided in industrial districts and in the center of Italy (Marche and Abruzzo regions) very close
to where ISKOTECA is placed there are more than 40 “lavanderie” (laundries in Italian) that are specialized
on the washing and treatments for the jeans, among them Wash Italia, Fimatex and Itaclab; CREATIVE
ROOM, in Castelfranco Veneto near Treviso (Italy), is the fashion design and research center for jeanswear,
sportswear and streetwear brands as well as garment makers who are looking for a partner providing new
inspiration. A second hub of the CREATIVE ROOM is in Istanbul. Newly opened in 2014, the CREATIVE
ROOM gives designers the latest insights into the denim world, new trends, washing and accessories. It
contains an archive of samples from around the world as well as the latest news of retail points and brands.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

well as with Archroma in order to promote fabrics which have been dyed with sustainable or innovative
chemicals able to improve the fabrics performances and innovation.
The ingredient branding projects are communicated both through B2B tools but also with B2C tools such as
specific labels.

Supply Chain Management, sustainability to “responsible innovation”3


The denim production is centralized in Bursa factory, which is the largest industrial plant in Turkey, the
company performs all the washing and finishing treatments on the denim fabrics internally. On the contrary,
it outsources the production of the final garments used for the “ISKO collection”, which is presented to ISKO
final customers in order to make them understand the different uses and potential of ISKO fabrics, and the
washing/ finishing treatments on the final garments to different washing companies such as Wash Italia, Itac
Lab, Martelli, etc.
ISKO prioritizes transparency and on-going relationships among their different players and stakeholders.
Respect for the environment: an eco-friendly approach embraces every phase of the manufacturing chain
with constant attention to ecological sustainability (see Exhibit 5, 6, 7).

Exhibit 5 - ISKO sustainability initiatives (1/3)

Source: ISKO internal documents

3
ISKO is certified by authoritative institutions who recognize their commitment to quality standards and
their environmentally- friendly approach. Here are the certifications: OEKO TEX 100 Standard,
Certification for the ecological requirements for textile products in direct contact with the skin; GOTS
(Global Organic Textile Standards) Certification for products made with 100% organic cotton; OCS
(Organic Content Standard) Certification for products made mostly with organic components; ISO 9001 -
ISO 9002B Certification of manufacturing processes in terms of the finest internationally recognized
quality standards.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Exhibit 6 - ISKO sustainability initiatives (2/3)

Source: ISKO internal documents

Exhibit 7 - ISKO sustainability initiatives (3/3)

Source: ISKO internal documents

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Candiani

Candiani Denim was established in 1938 in a tiny town near Milano and is a family-run company ever since.
In 75 years of experience the enterprise grew to become the World's finest and most sustainable denim mill
creating the fabrics that gave birth to the premium denim Industry. Candiani firmly believes in the
importance of Made in Italy, Sustainability and Innovation, values that are deeply woven into each fabric
conferring quality and uniqueness to it.
Today Candiani is known as one of the greenest textile companies in the blue world and produces for the
most prestigious names in the market. Candiani's close relationship with its local environment and
community makes the company particularly sensitive to environmental issues. More than 35% (and growing)
of the overall cotton Candiani process is sourced from Better Cotton Initiative.
One of the latest examples of development in dyeing systems is the N-Denim. A very futuristic Nitrogen
dyeing technology that Candiani has recently developed and patented.
In 2013 Candiani Denim celebrated its 75th Anniversary. In that occasion the Italian Premium Denim Mill
launched the Rivetto D’Oro project (see Exhibit 8 below), an ingredient marketing initiative in the denim
industry.4

Exhibit 8 - Rivetto d'oro

Source: Candiani internal documents

4
The Rivetto D’Oro, a 24-Karat Gold plated rivet, was conceived as a transversal operation from supplier
through brand to consumer with the aim to return the compass to the final client. The golden rivet is therefore
a Quality Seal that helps the consumer to identify a real premium product. An immediate visual identification
mark for quality-conscious consumers, the rivet is a source of information about the product as well as a
visual statement of the brand's choice to go for quality. This initiative creates a Win-Win situation for all the
players involved in the production process of a jean, from the creation of the fabric to the store-shelf. This
way we offer our core values: Made in Italy, Sustainability and Innovation as added value to the final
product.
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Ingredient Branding & Supply Chain Transparency: the ISKO case

Archroma
Archroma is one of the leading players in the global textile chemical industry, with a knowledge and
experience of chemistry and industry spanning more than 120 years. The company was founded in September
2013 from the textile, paper and emulsions businesses of Clariant5. Today Archroma is a portfolio company
of SK Capital Partners, a private investment firm with a disciplined focus on the specialty materials,
chemicals and healthcare sectors.
The company headquarter is based in Reinach near Basel, Switzerland, operates with approximately 3,000
employees over 35 countries and 25 production sites and has a total turnover of USD 1.3 billion annual
revenues.
One of the main company goals is being able to produce goods in a sustainable and responsible way.
Archroma supports and collaborates with many environmental organizations and initiatives, such as
bluesign®, Textile Exchange, Sustainable Apparel Coalition.6.
The company purpose is to create chemical technologies that minimize environmental impact at all stages in
a product’s life cycle, from extraction to disposal, maintaining sustainability as the major driver for managing
the following five steps: raw material selection, product innovation and development, production, transport
and logistics and customer manufacturing processes.
The company strongly believes that sustainability can generate innovation, performance and even cost
savings, it has been offering sustainability services offered since as early as 1996. Nowadays about 30% of
its revenues come from sustainable processes. Archroma is involved in several ingredient branding projects,
which are considered very strategic for the future although they represent less than the 5% of the total
turnover of the textile division which is around one billion, and 2% of the customer base.
Currently the company is working on two main ingredient branding projects: the first one with the denim
division of Patagonia, which is producing denim apparels using “Advanced Denim system” by Archroma.
This is the first project that allows the company to reach the end – consumer. Archroma is very proud and
satisfied with it because the main project values are sustainability and transparency and Patagonia is a
reference in the market. The efforts requested in an ingredient branding project are higher than those of a
“standard sale”: it is normal for a partner to require more information regarding the product/technology
because they need a reason to use it.7
The second ingredient branding project is with ISKO. The collaboration with ISKO is based on innovation
and product development: when Archroma develops new processes, it uses ISKO to test its products. This
collaboration started four years ago on a proposal by Marco Lucietti, Global Marketing Director of ISKO.
ISKO is one of the biggest denim companies worldwide and a key account for Archroma. The last
collaboration with ISKO was related to the “Advanced Denim Technology”.

5
Clariant itself was formed in 1995 through the spin off from Sandoz, a chemical company, which was
established in Basel in 1886, and the acquisition of the specialty chemicals business of Hoechst, a German
chemical company, in 1997.
6
Bluesign® is a standard that addresses not only consumer safety, but also the complete range of
environmental, health and safety issues, including air and water emissions, occupational health and resource
management. Textile Exchange is the non-profit organization committed to the responsible expansion of
textile sustainability across the global textile value chain. Sustainable Apparel Coalition (SAC) was founded
by an industry-wide group of leading apparel and footwear brands, retailers, manufacturers, non-
governmental organizations, academic experts and the US Environmental Protection Agency (EPA), the SAC
works to reduce the environmental and social impacts of apparel and footwear products around the world.
7
Patagonia asked Archroma to provide all the needed details and show why its technology was more
sustainable than the other available on the market. The information to be provided were much more than
those required for a traditional project: Patagonia needs to further educate its customers and it needs
guarantees to publish on its website the features of Archroma technology that makes it unique and different
from others. The involvement in an ingredient branding project with a company like Patagonia means, for
Archroma, higher costs for managing the project, additional controls to be defined and implemented along
the production chain, specific communication campaigns, higher complexity but the company thinks that the
possibility of being the “ingredient” of a Patagonia product is worth all these additional efforts.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Wash Italia
Lavanderia Italia was founded in 1987 through the desire, will and commitment of transforming a simple
provincial town into a place of innovation, research and experimentation linked to the exciting and
everchanging fashion world. In 1989 Mario Lucci and Francesco Pistilli become members of the company.
At that time, the facility was capable of processing approximately 5,000/6,000 items, the production location
had a surface area of 1,500 mq and the main activities were related to industrial washing, dyeing and some
unique differentiations of treatments. During the 90s, the customer base of Lavanderia Italia grew and
became more international as well as the company team; in 2002 the name was changed in “Wash Italia” and,
in 2004, it became a jointstock company. In 2007, the production site was enlarged and the company invested
in new managerial technologies and machinery. The company had more than 100 direct employees and its
production capacity increased to 20,000 items per day. Nowadays, handcraftsmanship and technology
characterize this laboratory made up of Italian creativity with an international team and approach.
The company past or current customers includes very famous brands such as Diesel, Fendi, Dior, Roberto
Cavalli, Valentino, Replay, Meltin’Pot, Guess, Lee, Liu-Jo, Nudie Jeans, etc.
Once industrial washing represented almost the 100% of the turnover, today it represent less than 20% while
other specific treatments account for most of the value created.
For the company is very important to communicate mainly to the brands, not to the final consumers, and
Wash Italia doesn’t see itself as a potential ingredient in the final product.
On the contrary, in terms of communication activities, the company consider very relevant to collaborate
with the other supply chain partners. For example, recently, the company recorded a video with ISKO, the
main goal was to describe how many possibilities exist in order to customize the same fabric. Although the
collaboration with ISKO is strong and useful, the company prefers to concentrate on the collaboration with
the final brands, such as Diesel, one of its main customers.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Guess

GUESS was founded in 1981 by two French brothers, the Marciano’s, who moved to USA. Today GUESS is
a truly global lifestyle brand with a full range of denim, apparel and accessories offered in over 80 countries
around the world. The company designs, markets, distributes and licenses a collection of apparel and
accessories for men, women and children.
The product lines include a range of clothing, including jeans, pants, skirts, dresses, shorts, blouses, shirts,
jackets, knitwear and intimate apparel.
The Company's apparel is marketed under various trademarks, including GUESS, GUESS Jeans,
MARCIANO, GUESS by MARCIANO, etc and its products are sold through direct-to-consumer, wholesale
and licensing distribution channels, using both physical stores and e-commerce website.
In 2015, the Company directly operated a total of 837 stores in the world and 244 smaller-sized concessions
in Asia and Europe and its licensees and distributors operated 1,187 stores. The Company also sells through
both domestic and international wholesale distribution channels including department stores such as Macy's,
Bloomingdales, Liverpool and The Bay. The company employed about 14,600 people and achieved a total
turnover in 2015 of USD 1.4 billion.
As a condition of doing business, GUESS requires that suppliers comply with all laws applicable to the
country in which the merchandise is manufactured, including but not limited to laws against child or forced
labor and unsafe working conditions. To further ensure the protection of workers, GUESS has adopted and
issued a clear statement of standards in a detailed Supplier Code of Conduct and Global Sourcing Vendor
Manual.8
In 2015 Guess joined the Sustainable Apparel Coalition to leverage industry collaboration and potentially
introduce greater efficiencies in its supply chain auditing efforts.
As its sustainability program continues to grow, Guess?, Inc. will continue to engage stakeholders, evaluate
the materiality of metrics and information presented in its Sustainability Report, and track its progress in
addressing key environmental and social issues.
The company decided to engage in an “ingredient branding” project mainly for differentiation purposed: the
average price market range for denim is very high: from 10€ to 500€, the product mix offered is wide and
Guess needs to give its customers more added value and specific “reason why” to its customer for buying its
products. This differentiation aim is achieved through an Ingredient branding project.9

8
The GUESS Supplier Code of Conduct is the foundation of its Social Compliance Program, which involves
supplier factory approval, monitoring, remediation and continuous improvement.
Guess Inc requires to its licensing partners and suppliers to operate in compliance with applicable laws and
regulations and promote ethical business practices and compliance with laws through its internal and vendor
operating guidelines, code of conduct and monitoring programs but they don’t control their licensees or
suppliers and their labor, environmental, safety or other business practices.
9
Guess considers as “ingredients” all those product characteristics, which are not immediately visible to the
end customer such as the fabric, the washing, the treatments and the details. Guess wants to give higher
visibility to these elements.
Ingredient branding projects represents about the 20% of the total offering and Guess is promoting ingredient
branding projects with two main suppliers: ISKO and Orta, which are competitors among them. The
company has been working with these suppliers for years but only recently decided to give them visibility as
“ingredients”.
The ingredient branding projects are at the moment active only in the EU market: the EU and US subsidiaries
are independent and develop independent collections.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Diesel
Diesel is an Italian company, which was started in 1978 by Renzo Rosso and his former boss Adriano
Goldschmied (of the AG Jeans company). The brand was founded with the idea of addressing people across
the world in one common language and product. In 1985, Rosso gained full control of the company and
started the transformation process from a jeans label to a major fashion brand.10
In 2002, the company had already opened more than 200 stores around the world.
In 2007 it launched a campaign related to “Global Warming Ready” which was discussed and perceived as
controversial by some customers.
The company pumps about 7% of its revenues into research and development, experimenting with fabric
treatments to make stiff new denim look naturally worn and soft.
Nowadays, Diesel is a brand of a holding company called “Only the Brave”11 with 2012 revenues of $2
billion.
Although the company doesn’t publish a corporate social responsibility report and doesn’t disclose its list of
suppliers and contract manufacturers, it launched a series of interesting initiatives12.
Diesel is a customer of Wash Italia and of ISKO: Diesel jeans are famous for their fashion content and
unique appearance, there are specific Diesel jeans types which are washed and treated by Wash Italia and
require up to 13 different treatments. Several Diesel jeans are made of ISKO denim.
Diesel doesn’t disclose any information related to its collaboration with Wash Italia while started several co-
branding and ingredient branding projects with ISKO.
Some of them were related to JOGG jeans, Diesel Turbodenim and other ISKO technologies, in specific
cases the company asked to use the ingredient on an exclusive basis, which lasted, for example, for two
seasons. The two companies launched the ingredient branding projects advertising the launch of “Diesel
Turbodenim” and their partnership for its development on the web and on the industry press.
In addition to this, for a specific project, they developed the following labels for the pair of jeans which
includes both brands: ISKO and Diesel (Exhibit 9).

Exhibit 9 - Ingredient Project Label ISKO and Diesel

10
Along the years, Diesel has grown to truly be a lifestyle brand. Under the Diesel umbrella, the company
has both men’s and women’s clothes, Diesel Kids, fragrance, eyewear, underwear, footwear, leatherwear, a
luxury line, Diesel Gold, and 55 DSL, which is the sportswear division.
11
“Only the Brave” is the parent company of other iconic fashion brands such as Maison Margiela, Marni
and Viktor&Rolf, and state-of-the-art companies Staff International and Brave Kid.
12
Some of these intitiatives are: the creation of “Only The Brave Foundation” which is a not-for-profit
organization founded by Renzo Rosso and supported by his group OTB. The foundation was born in 2008
with the mission to fight social inequality and to contribute to the sustainable development of less advantaged
areas and people throughout the world. It has so far supported over 170 innovative projects providing
concrete solutions to the life of more than 180,000 people, investing 10% of its funds in Italy and the
remaining 90% primarily in Sub-Saharan Africa. In addition to this, the company funds several socially
responsible initiatives, from innovative sustainable projects covering the basic needs of disadvantaged areas
and people, to the preservation of Italy’s cultural, artistic and artisanal heritage and know-how. In 2012, OTB
had won the bid to become the sponsor of the Rialto Bridge restoration with a contribution of 5 million euro
to the city of Venice.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Source: ISKO internal documents

Nudie Jeans
Nudie Jeans is a Swedish clothing brand originating in Gothenburg and a subsidiary of Svenska Jeans AB,
founded in 2001 by Maria Erixon, a former employee and AD of Lee Europe and Swedish designer JC. As of
2003, the company had 12 employees, revenue of 93 million Swedish kronor and a net income of 13.6
million kronor. 70% of their revenue was generated outside of Sweden. These figures are likely to have
increased massively during the past 3 years as the brand has become more popular (in 2004, Nudie's net
income increased by 70%). Nudie specializes in raw and prewashed denim jeans, but the company's
collection includes many other items of casual clothing & accessories. In 2003, denim jeans comprised 70%
of their total sales.
As with most other clothing brands, they don't own the factories in which their clothing is made. However,
together with the garment factories the company collaborates with and bears the responsibility to provide a
safe, fair and ethical working environment for all the people who are involved in the manufacture of their
clothes. They work together with only a handful of partners, all of whom are required to comply with its code
of conduct. The membership of Fair Wear Foundation is a key element ensuring that everyone across the
production chain works under fair conditions.”
Fair Wear Foundation is an independent, non-profit organization striving to improve working conditions in
the textile industry. The foundation is an initiative by trade organizations in the textile sector, trade unions
and NGO's. Fair Wear Foundation verifies that member companies implement a Code of Labour Practice
along their supply chain and checks compliance by monitoring audits and remediation efforts. Annual
reporting by member companies and by FWF itself promotes transparency at all levels. Nudie Jeans is a
member since November 2009.
Nudie Jeans is also a member of Textile Exchange, which is a non-profit organization that supports the
farming and trading of organically grown cotton.
Starting from fall/winter collection 2012 all Nudie denim articles are made with organic cotton.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Haikure
CS jeans is an Italian manufacturing company born in 1981 with a turnover of about 30 millions Euro and
around 100 employees in 2015. CS controls the whole production cycle: from research to prototype making,
from styling to raw material purchasing, from cutting to sewing, followed by washing, ironing and finishing,
and finally shipping. CS jeans currently works as a subcontractor for the best brands in the world such as G-
star, Replay, Fornarina and Acne, just to name a few. The complete manufacturing process is located in Italy:
the warehouse, prototyping and manufacturing is based in Campania region (South of Italy) while the
washing is based in Abruzzo and Marche region (Center of Italy) and the HQ is based in Umbria (Center of
Italy).
In 2011, CS jeans launched its own innovative brand, Haikure, setting a vision as follows:
“Respect for people and planet, suggesting a new lifestyle, where the latest fashion trend and sustainability
can coexist, in constant search for an exclusive and unique product”.
The idea was to attract the lovers of designer jeans and simply elegant glam pants by the excellent cut,
original washes, and Made in Italy details. Its respect for people, the planet and natural resources, it is
certified by MADE-BY 13 and convinces the ever increasing LOHAS consumers who go for eco-
sustainability. So Haikure still proves foremost in meeting the market’s demand of exclusiveness,
sustainability and technology in fashion products.
In just four seasons Haikure was able to be distributed into 250 stores among the most popular for scouting of
new
 trends in Italy, Spain and Germany.
The value proposition is about “sartorial craftmanship, use of new hi-tech fabrics, unique fits enhancing the
body curves, eco-sustainable materials, energy saving processes, Made in Italy, engagement and transparency
through the QR code experience”.
The link with the territory, especially with the genius loci of Umbria, is well narrated in Haikure website
through an emotional video (http://haikure.com/track).
The young history of Haikure is strictly linked to several partnerships with other companies such as Isko for
the supply of eco-denim fabric, Martelli for the “ice finishing “washing of the denim, Fimatex for the eco-
aging14or Wash Italia for the vintage effect or the already mentioned MADE-BY.
With the partnership of Isko, Haikure launched its first collection in Fall/Winter 2011/12 named “Once upon
a future” and based on customization, product performance and transparency: the Recall in Shape was the
technology innovation launched by ISKO for a stretch textile fabric made from organic-fibers and with the
differentiation feature of the selvage15. A QR core on the labels that gave the opportunity to trace the
production process of every item enabled the transparency.
When talking about the partnership with ISKO, Federico Corneli - founder and CEO of Haikure – is
especially pointing out the willingness to communicate both to the customers and to the trade working on
newsletters, social networks, tracking-system, call to action/QRcode, PR, special advertising campaigns and
videos, presentations to press. The objective is to have a mutual support in explaining to the customers the
premium price of an ingredient branding and traceable product, which is on average of 10%-20% compared
with the pricing of a traditional product.

13
MADE-BY is an award-winning European not-for-profit organisation, acting to improve environmental
and social conditions within the fashion industry (http://www.made-by.org).
14
The eco-aging method is done through a vegetal mix composed of the waste from the food chain and
produces the “used” effect on the fabric and substitutes the traditional “sandblasting” technique. The solution
is the result of the investments in creativity and innovation of an Italian group, Fimatex, from Corropoli
(Teramo), in Abruzzo, a manufacturing company specialized from over twenty years in the production and
processing of jeans.
15
A selvage (is a self-finished edge of fabric. The selvages keep the fabric from unraveling or fraying and are
a result of how the fabric is created. In woven fabric, selvages are the edges that run parallel to the warp (the
longitudinal threads that run the entire length of the fabric), and are created by the weft thread looping back
at the end of each row. In knitted fabrics, selvages are the unfinished yet structurally sound edges that were
neither cast on nor bound off.

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Levi’s
Levi Strauss was born in Bavaria in 1829, he moved to San Francisco in 1853 and started a wholesale textile
business, in 1873 he developed together with one of its customers a pair of jeans with riveted pockets for the
coal miners of the region. Jeans were considered worker’s apparel for the next two decades and in 1920
Levi’s waist overall were the most preferred working clothes in USA.
During the first 100 years the family members ran the company and in 1971 the company went public and
started its international expansion.
Nowadays, Levi Strauss & Co. is a privately held branded apparel company, which designs and markets
jeans and other casual wear for men, women and children. Levi Strauss headquarter is in San Francisco but
the company operates in the Americas, Europe and Asia, employing about 15,000 people and recording
revenues of $4,754 million.
In March 1992, Levi’s released its business partner terms of engagement and guidelines for country selection,
becoming the first multinational apparel company to confirm in writing its responsibility for labor practices
in factories owned or controlled by its contractors throughout the world.16
In 1998, the NGO Global Exchange challenged Levis to disclose which subcontractor factories it will work
with and what the related wages applied but the company did not disclose its global factory database until
October 2005.
Levi’s decision to disclose its factory list is best understood as the culmination of a series of incremental
steps that created managerial confidence that the risks of factory disclosure were outweighed by the benefits
of going transparent.
In 1999, Levi’s joined the FLA, thereby agreeing to open up its factories to outside inspectors for the first
time, albeit in a very limited way. It also joined the British-based multistakeholder Ethical Trading Initiative
(ETI) that same year. By endorsing the FLA and the ETI, Levis signaled a subtle shift toward a greater
willingness to engage external actors in a dialog about supply chain labor practices.
Despite the growing sentiment in favor of transparency, the notion of voluntarily disclosing the entire factory
database was not one being seriously considered at Levis prior to Nike’s move to disclose their factory list in
the spring of 200517.

16
The guidelines included a system of internal monitoring and unannounced audits, a tiered approach to
resolution of problems, and the possibility for cancelation of orders for noncompliance. In the early days of
the guidelines, the company terminated contracts with more than 30 contractors in countries including
Burma, Saipan, Honduras, Uruguay, and the Philippines for noncompliance.
17
There was some initial resistance within sourcing, and from some exclusive licensees who did not want to
be included on the list. However, most suppliers were pleased to be included on the list, because the fact that
they had satisfied Levis’ guidelines assessment process was perceived as a positive marketing tool. One
supplier called Levis complaining that it had not been included on the original circulated list. By early fall,
2005, Levi’s had decided to disclose its global factory list. The list already existed on the factory database,
and after some checking for accuracy of names and addresses, the factory list was released in October 2005
on the company’s website. (Doorey, 2011)

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Ingredient Branding & Supply Chain Transparency: the ISKO case

Patagonia18
Patagonia’s philosophy is summed up in its corporate mission statement: ‘Build the best product, cause no
unnecessary harm, use business to inspire and implement solutions for the environmental crisis.’ Yvon
Chouinard, founder of Patagonia, began climbing in 1953 at the age of 14. At the time, as pitons were made
from steel, he realized that it was a good idea to replace them with aluminum. This had less of an impact on
the rock as they were easier to extract without leaving any trace. ‘Clean climbing’ was born.
Having started with mountaineering, which remains Patagonia’s core business, the company now covers a
wide range of sports— including skiing, snowboarding, surfing and fly fishing—all of which are considered
‘silent sports’ as they take place without engines and guarantee a greater interaction with nature. The
approach to product design shows a tendency towards simplicity and functionality: it is telling that
Patagonia’s iconic and bestselling product is the pile fleece jacket, first introduced in 1977.
The company’s eco-sustainability can be summarised by some key initiatives: 1% for the Planet, the use of
environmentally sustainable materials, the Common Threads Initiative and the transparency and traceability
of the value chain19.
Given the relevant impact of the denim production in 2015 Patagonia decided to launch a new denim
production process thanks to the partnership of several suppliers, including Archroma: this innovative
process is called Advanced Denim.

18
Interesting videos. Video: Interview with Yvon Chouinard, Founder of Patagonia
www.youtube.com/watch?v=O3TwULu-Wjw
Patagonia: Environmental and Social Responsibility www.patagonia.com/eu/enIT/common-threads
Video: Patagonia: Environmental and Social Responsibility
www.patagonia.com/eu/enGB/footprint
19
1% for the Planet. Patagonia donates 1% of sales to hundreds of projects which work towards reducing
negative environmental impact all over the world. The use of environmentally sustainable materials. Since its
early years of activity, Patagonia has invested in the research and development of fibres such as recycled
polyester and organic cotton, with the overall objective of reducing the environmental impact of each stage of
production. The Common Threads Initiative. This defines the series of commitments that Patagonia wants to
take on consumer awareness and involvement to reduce environmental impact. The Common Threads
Initiative creates awareness for the following behaviours: “Reduce” with tools like the Patagonia Care Guide,
the company provides all the necessary advice for post-purchase care of the product and for extending its
useful life; “Repair” because despite its high quality, sometimes the product might need to be repaired,
maybe as a result of being washed. Patagonia provides a guaranteed repair service both for production faults
and for issues arising from wearing the garment; “Re-use”, Patagonia undertakes to donate unsold products to
charity. The partnership with eBay for the resale of second-hand Patagonia garments is one of the
applications of this commitment; “Recycle”, Patagonia provides a collection service in shops for garments
which have reached the end of their life, with a commitment to recycle the fibre or fabric; “Reimagine” with
the consumer, thinking again about production and consumption in order to protect the earth and the water
we love. The transparency and traceability of the value chain represent a strong element of differentiation
for Patagonia compared with other sportswear brands: a section of its website, ‘The Footprint Chronicles’
provides a detailed list of all suppliers with their main information. Transparent communication of business
behavior is guaranteed by The Cleanest Line19, a blog for employees, friends and clients dealing with various
topics on environmental sustainability and sustainable lifestyles in an experiential and involving manner
(http://www.patagonia.com/us/footprint).

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Ingredient Branding & Supply Chain Transparency: the ISKO case

References

Clark, E. (2004). THE WASH WORD. WWD.


Cotton Inc. (2015). Tratto da Cotton Inc: http://www.cottoninc.com/corporate/Market-
Data/MonthlyEconomicLetter/
Cristopher, J. (2015). DENIM IN-DEPTH. WWD.
Doorey, D. J. (2011). The Transparent Supply Chain: from Resistance to Implementation at Nike and Levi-
Strauss. Journal of Business Ethics.
Environmental Justice Foundation. (2005). White Gold: The True Cost of Cotton. Uzbekistan, Cotton and the
Crushing of a Nation. London: EJF Foundation.
European Commission. (2003). Integrated Pollution Prevention and Control. Reference Document on Best
Available Techniques for the Textiles Industry. Brussels: European Commission.
Lazlo, C. (2008). Sustainable Value: How the World’s Leading Compa- nies Are Doing Well by Doing Good.
Stanford, CA: Stanford Business Books.
Lee, G. (2013, 09 18). History Of The Dishwasher. Tratto il giorno 05 23, 2014 da Blog Ransom Spares:
http://www.ransomspares.co.uk/blog/news/history-of-the-dishwasher.htm
Magatti. (2011). Verso nuovi modelli di business. Milan: Bruno Mondadori.
Philipkoski, K. (1998). FBI Tracks the Denim Trail. Wired.

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