In January 2017, at the age of 81, Leonardo Del Vecchio announced the greatest deal of his life. His company Luxottica, founded in 1961, agreed to merge with Essilor.
Del Vecchio’s Milan-based Luxottica owns brands including Ray-Ban, Persol, and Oakley, and makes glasses for Prada, Armani, Chanel, and Ralph Lauren. It also operates outlets such as LensCrafters and Sunglass Hut.
The lenses in most glasses are made by Essilor, which was formed from the merger of French ophthalmic firms Essel and Silor in 1972. They invented the Varilux progressive lens, for which I am personally most grateful.
Regulators around the world have approved the merger, to form one titan: EssilorLuxottica. It will be worth about $62bn, have more than 140,000 employees, and sell a billion pairs of lenses and frames every year.
Oddly in this era of universal progress, our eyesight is deteriorating. We spend more time indoors goggling at tiny screens, and we are living longer, so up to 70% of adults need corrective lenses to see well. In the 1950s, between 10% and 20% of Chinese people were short-sighted. Now the proportion is more like 90%.
In 2018, an estimated 2.5-billion people, mostly in Asia and Africa, need spectacles, but have no means to have their eyes tested or to buy them. That will change as incomes rise.
Of course, sunglasses are appealing to everyone, even if their eyesight needs no correction. Del Vecchio figured out that while it only costs only a few dollars to make frames and lenses, fashion-sensitive customers are happy — happier, in fact — when paying 10 or 20 times that amount.
This is a staggering business opportunity. EssilorLuxottica is a must-have in your investment portfolio.
- Paul Theron from Vestact asset managers.
- From the September edition of Wanted magazine.