Now the intimate relationship between family and company is undergoing a wrenching change. After World War II, the Benettons were one of the new clans who began to crack the circle of elite Italian business families long dominated by the Agnellis, who owned Fiat. Over the decades they established themselves as members of that elite and then as leaders, proving that family firms can break out of their home markets by developing into of Italy’s most recognized global brands. The Benettons dared to change with the times, diversifying into profitable roadside restaurants and tolls while other clans stood still.
Now they are again charting the way for Italian capitalism by handing their life’s work over to professional managers, something the Agnellis, the Pirellis and certainly the Tanzis of Parmalat have been loath to do. The family still owns two thirds of the company, but only Luciano still holds a formal post. “They are really leading the way for others,” says University of Bologna political scientist Gianfranco Pasquino, who calls Benetton “an Italian company of modern times.”
Benetton has had a string of outside CEOs. One took it public in 1986, one bought up sports-equipment companies like Nordica, and one sold them off again. But the four siblings ran the show, and several of their 14 children entered the company. Now they are getting out for real. One year ago they hired a new CEO, Silvano Cassano, a former executive with Fiat and Hertz, and hung up their knitting needles. “We’re at a very important passage now,” says Luciano Benetton, recalling the early struggles in an interview at Villa Minelli, the renovated 16th-century Venetian summer residence that is Benetton’s headquarters.“I do believe this is a more modern structure that can bring in fresh ideas.”
Benetton made its name with shock ads featuring things like the bloodied uniform of a Bosnian soldier, or an AIDS patient at death’s door. The share price quadrupled during the 1990s to 24 euro in 2000. Then it went too far in the United States, with a campaign using death-row inmates, and Sears pulled out of a plan to open hundreds of boutiques. At the same time, new rivals like Zara of Spain and H&M of Sweden were cutting into its share of the youth market in Europe. Benetton’s stock price had slipped back to 6 euro just before Cassano joined.
The new CEO traveled the world for his first months, grilling shop owners and customers. They told him Benetton needed to focus on heritage and quality. Already an R&D powerhouse, with high-tech logistics and machines that can make a seamless sweater, Benetton is testing a new “color fusion” dying technology. To cut costs, Benetton makes garments first and dyes on demand, instead of knitting with colored yarn. Cassano solicits bids on each collection from factories in China, but so far, none has passed the scrutiny of Benetton quality testers, who are blind to where samples come from. For image repair, he lured Joel Berg away from H&M as art director, and the next wave of ads will have an inoffensive environmental theme.
As in many family companies, the Benettons are not obsessed with market opinions. Last year, says Cassano, analysts fretted that Benetton had too much cash and not enough debt. Then came the Parmalat scandal; now they complain about Benetton’s debt. “The chairman lets me focus on what needs to be done to keep this company going for another 100 years,” he says.
In December, when Cassano revealed his four-year turnaround plan, analysts complained it wasn’t bold or fast enough, and the stock has remained stuck at about 9 euro. He argues it is “prudent,” and his main shareholder agrees. “We’ve always felt we are sellers of fashion products before we are sellers of stocks,” says Benetton. Judging by the record of family companies in Europe, there’s a good chance he will be both once again.
