There is a poolside revolution going on and something might be up when a luxury swimwear brand makes it into the London Stock Exchange’s ‘1,000 Companies To Inspire Britain’ annual of fastest-growing small and medium-sized enterprises (SME’s) in the UK, as tailored men’s swim shorts maker Orlebar Brown did in 2015.
Appalled by the standard of the men’s swimming clobber whilst at a pool party in Rajasthan in India’s north-west a decade ago, photographer Adam Brown decided to produce a range of swimwear that would reflect the elegance and sophistication of the French Riviera and Palm Beach of the 1960s.
Brown’s collection of tailored shorts has now evolved into a full resort range including T-shirts, polo shirts, knitwear and accessories. These days their range is stocked at around 350 outlets globally with menswear accounting for 90% of the business, of which swimwear accounts for c.45%.
The West London-based business was expected to reach £20m (c.$28.8m) in revenues in 2016 – up 40% over the year before. The likes of actor Daniel Craig donned their sky blue ‘Setter’ shorts in the role of James Bond ‘007’ in the film Skyfall. Adding to the celebrity endorsement, last summer the former British Prime Minister David Cameron was seen on the beach in Orlebar’s ‘Bulldog’ swim shorts.
The private equity interest in the two main swimwear companies is worth noting. In 2012, private equity firm G-III Apparel Group, who licenses brands including Calvin Klein and Tommy Hilfiger, acquired the luxury Saint-Tropez brand Vilebrequin, which was started in France by photographer and automobile journalist Fred Prysquel in the early 1970s, for a cool $106.2m. Vilebrequin had one of its busiest years in 2014 turning over £12m.
Then in August 2013, Orlebar Brown raised £8m ($12.4m) from private-equity firm Piper in exchange for a significant minority stake.
Vilebrequin’s flamboyant printed shorts have been kitting out the private-yacht set since the 1970s and whose prices range from the expensive – at the £120-plus mark. Their Golden Turtle trunks, a limited edition, retails for around £5,300 and are embroidered with 24-carat gold.
(Photo: AP Photo/Phelan M. Ebenhack).
According to recent estimates (April 2016) by Euromonitor the market for global swimwear has been projected to reach an eye popping $19.3 billion (c.£15bn/€17.5bn) by 2018.
This is driven in large measure by male customers and the luxury brands that are now serving them. The evolution of the swimwear – and luxury apparel in the space – has been likened to that of denim twenty or so years ago. Indeed, when the online retailer Mr Porter opened for business back in 2011 it stocked two or three swimwear brands. Today it sells a dozen or so.
Another report issued back in November 2015 from Research & Markets titled ‘Global Swimwear Market, 2015-2019’, forecast that the global swimwear market – including key regions of the Americas, Asia Pacific, Europe and the Middle East & Africa – would grow at a compound annual growth rate (CAGR) of 5.77% over this period.
The Business of Fashion
Menswear, which has long been considered the least profitable segment within of the fashion industry, has been projected according to research firm Mintel to crank up sales of £16.4bn (c.$25 billion) by 2018. That still represents just a tad more than half the £30.4bn forecast for womenswear for the same year.
The majority of companies in Euromonitor’s report are publicly traded, and therefore may not reflect figures for the luxury market, as many (including Orlebar Brown, Onia, etc.) are privately held. For example, in the UK, companies with highest market share include Adidas (UK), Arena, Nike (UK), Speedo International and Tesco Plc.
That said, examining unit sales volume growth for men’s swimwear in the U.S. market figures (April 2016), this had risen 8.7% from 58.9m back in 2010 to 64.0m in 2015. Over the same period the growth in sales value increased 15.4% from $868.8m to over a billion dollars at $1,002.8m . (equating to a 2.9% Compound Annual Growth Rate (CAGR) between 2010 and 2015).
In Brazil, the figures for the same two corresponding points – revealed a growth rate of 11.4% in units to 7.8m during 2015 and a 43.2% jump in sales volume (a 7.4% CAGR 2010-2015).
Bankers In The Business
But the protagonists getting involved in the luxury swimwear market these day and initiating start-ups in the space have been coming from individuals with backgrounds in banking and stockbroking.
Take Frescobol Carioca, a label set up by a former British stockbroker JD O’Brien and designer Nicola McCulloch and inspired by Brazilian beach culture, as a case in point. It offers Sao Paulo Sports Swim Shorts in blue.
Then there has been banker Josie Natori of the Natori fashion brand, who worked on Wall Street and switched careers after rising from stockbroker to vice president in investment banking at Merrill Lynch to become Natori’s CEO. In recent years the brand expanded into new products such as swimwear.
And last year Christine Serhal, a former banker at Citigroup and Goldman Sachs, who plied her trade in London and Madrid for nearly a decade and who has a passion for “all things South American” embarked on a vision to up standards in luxury swim shorts and tap the boom in the market.
Her new venture Marané, which took several years to galvanise into reality has led to the creation of the Manantiales swim short, was founded with family friend Alessandro Aquilina, who holds a Masters from Imperial College where he studied Management focused on finance and entrepreneurship.
The original idea to the business took around six months to flesh out, with specific research on the luxury men’s swim market not being readily available since it is fairly niche. Furthermore, they were not only focused at looking at the swim market and were particularly interested in the spending habits of young urban males.
The duo saved up money from when Serhal worked at Goldman Sachs and Aquilina’s stint in the mezzanine finance world. This capital enabled them to finance the Manantiales swim short designs with a London tailor and to start an inventory.
The luxury swimwear start-up touts a “new vision of bespoke luxury” right form from the heart of Punta del Este in the southwest of Uruguay on the Atlantic coast. The popular Brava Beach is known for its strong surf as well as ‘The Hand’, a giant sculpture of five fingers.
Manantiales swim shorts aren’t pants – let’s make that clear – and come in six solid colours and three prints (the Horizon Collection) and are designed in Uruguay and manufactured in Portugal. Their classic swim short (retailing from c.£150) is available from their store in Manantiales or via the firm’s website.
They are a swim short that is elegant enough to take you anywhere – from swimming to horse riding or hiking and, to an asado (barbeque), party, lunch – even cocktails on shore or on a yacht. Think of it as a Saville Row suit yet combining the comfort and familiarity of your favourite cashmere jumper.
Born in London, Serhal, worked previously to establishing Marané as an analyst in London at Citigroup within mergers and acquisitions covering TMT and was at Goldman Sachs in the investment bank’s emerging market fixed-income team.
But one wonders just how much of a wrench it was to turn her back on a well-paid career in the world of high finance. It couldn’t have been an easy decision one suspects to start the venture.
Speaking to Forbes, Serhal, who holds a BA in Spanish with Management from University College London, reflecting said: “It was definitely a decision that I didn’t take lightly. I had passed the challenging formative years and was at a strong point in my career. The industry is addictive, the fast pace, the ever changing environment, the pay… it’s not easy to walk away.”
She added: “Not only that, I was talking about a major career change, everything I had learnt would no longer be relevant. I was starting from zero on every level. I now often tell people that had it not been for my time in investment banking and for the tools I picked up and the discipline the job requires I don’t think we could have made Marané a reality.”
Despite all this, Serhal felt very strongly that if she wanted to embark on the challenge and take this risk, it was a case of “now or never.”
Aquilina remarking said: “I knew I wanted to start my career in finance. Since I was seventeen I had internships in various areas including hedge funds and investment banking. So, when I finished my Masters it was naturally the first place to move to.”
Luxury Swimwear Market
Asked if Serhal believed that there was enough room for a new entrant like Marané in the luxury swimwear market, she said: “The market has definitely become more saturated since we started designing. There are main players, Vilebrequin and Orlebar Brown have been well established in the past few years, and new brands such as Frescobol Carioca were only recently breaking into the market. Now there are over a dozen specialized swimwear brands on Mr. Porter and Matches, for example.”
Having said this, the duo felt there was “still room to innovate” not only in the construction of the short (excluding their bonded seam), but also in the types of prints available. In Marané’s case their prints are watercolour painting sublimated onto fabric.
In the past there was “definitely a clear distinction in terms of style and proposition” Serhal pointed out. Until the entrance of Orlebar Brown, Vilebrequin had a monopoly of the high-end swim wear market, offering one particular (elasticated) style, with unique prints and a few bold colours.
“There weren’t really many brands competing with Vilebrequin on the level of quality – dedicated specifically to swim suits for many years- and subsequently price point,” Serhal said.
She added: “Other dedicated brands such as Mc2 Saint Barths, Sundek and Robinson Les Bains were present, but not offering the same level of quality and coming in at a lower price point.”
“Luxury swimwear was synonymous with Vilebrequin, and that is definitely no longer the case. Orlebar Brown really changed the game in this sense bringing back tailored style shorts. This re-introduced a level of elegance and refinement in swim wear, which showed other brands that there was large scope to play with in terms of style and cut.”
It also showed the monopoly could be broken, and that customers were interested in varying their swimwear selection. Importantly too they were willing to pay a higher price for it.
“Nowadays you have new brands coming in at this higher price point offering original prints or offering a new take on a tailored cut or focusing on highly functional quality shorts,” said Marané co-founder, who visits Punta del Este on a regular basis.
Luxury On Water
Continuing on from the theme of luxury swimwear, another former investment banker Fiona Pool, CEO of ultra-luxury yacht maker Hunton Yachts, who worked at Goldman Sachs and Credit Suisse, is on a mission to expand production at the British-based business to “40 to 50 yachts a year” over the next five years. Her vision is to grow the firm’s revenues to the $50m mark annually by tapping the international market for luxury yachts.
The luxury yacht market today is huge, ranging from the small niche luxury brands such as Hunton to the large super yacht builders.
Even if one only looks at Hunton’s segment of the market there are many different styles, price levels and offerings. In the U.S. where boat ownership is the highest in the world, the range of product offerings is diverse, from a $50,000 wake boat to a Riva at $1.6m.
In respect of the market Pool said: “Some clients really want to go distances with their boat so having one that is good offshore is critical, whereas some others just want to use them as a day boat and not really go anywhere specific. There is a broad range of styles so I do think most tastes and budgets are catered for.”
Having founded two successful luxury fashion businesses, Pool intends to “revolutionize the luxury yacht industry” in the same way other British heritage brands have done over the last decade. As a British product with pedigree, until recently Hunton had never been effectively marketed outside of the UK. But things are changing.
Pool has recently restructured the business, outsourcing production in the UK and is launching new models for 2017. The new flagship will be a luxury 55ft performance cruiser, with two cabins, each with their own bathrooms and a fully equipped galley. True to the Hunton DNA, this will reach speeds in excess of 50 knots.
Hunton are also launching a new 45ft day boat. The lines and handling will be similar to the current XRS43, but there will be significantly increased space in the cockpit and interior. She is also introducing a center console, which will have the option of outboards or inboards.
With the firm’s 45ft model priced at around $850,000 and the new 55ft commanding a price tag in excess of $1.5m they are clearly geared for the ultra-high-net worth market and individuals with discerning tastes who seek an exclusive yacht that is unique in the marina.
On any reservations Pool had as to leaving the investment banking industry she said: “I had left banking once before to pursue other interests in the art and design world, so when I left the second time I knew a more entrepreneurial role was right for me. There have certainly been challenges that are very different to banking. But the desire to grow a brand and a business has been my driving force.”
The opportunity to come into an existing company with a great heritage founded in 1979 by power boat racer Jeff Hunton, then be able to really make it her own and set her strategy for the future was what attracted Pool to the role. Hunton Yachts are produced to exacting standards by skilled craftsmen in Hampshire, England, using the finest materials and likened to be akin to an Aston Martin or a Bentley of the sea.
“My passion was not necessarily in the yachting world,” Pool acknowledged, who was also a former Head of High Yield Sales & Trading at Bank of America in The City of London. “But I have always had an inherent appetite for design and this coupled with the chance to turn the business around and grow it into an international brand is what drives me forward.”
As to the luxury yacht market and whether there was enough room for a niche British brand like Hunton to thrive, she remarked: “Definitely. Even though there are many small boat builders in the world, what Hunton encompasses is unique in the industry. We are one of very few brands that were borne out of a racing pedigree, so we have stellar performance and sea worthiness.”
“Added to this is our quality of finish and attention to detail that is more akin to a super yacht than a 45ft day boat. We build in small numbers for the true connoisseur. I think this combination leaves us uniquely positioned in the market. On top of that British design and engineering has long been admired the world over so our international clients love the ‘Britishness’ and the exclusivity that owning a Hunton brings.”
“Added to this is our quality of finish and attention to detail that is more akin to a super yacht than a 45ft day boat. We build in small numbers for the true connoisseur. This combination I think leaves us uniquely positioned in the market. On top of that British design and engineering has long been admired the world over so our international clients love the ‘Britishness’ and the exclusivity that owning a Hunton brings.”
Last year Hunton was looking to bring in another strategic investor to help the company realize its strategy on a global scale and there have been on-going discussions with investors from Asia, Europe and the Middle East.
The only questions that now remain are where you might be taking your summer holidays, with what luxury swimwear apparel and on which yacht. I hear the temperature in Punta del Este is fairly pleasant in March and gets up to a high of 26 degrees Celsius.
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