Will capitalism ruin Kapital?

The year 2024 ended with news that many indie fashion enthusiasts, especially fans of Japanese indie fashion, did not exactly welcome: the cult brand Kapital has entered the LVMH orbit through the acquisition of a majority stake in the brand by L Catterton, the private equity fund through which LVMH invests in independent fashion brands. The news resonated because Kapital represents a bastion of indie and alternative fashion, tied to a specific aesthetic as well as a highly rigorous production ethic. Over the decades, Kapital has built a cult following thanks to its intricate details, innovative dyeing techniques, and a fashion approach always unique and far removed from fleeting trends. Yet last year, the passing of founder Toshikiyo Hirata in April 2024 marked a crucial moment for the brand, as his son, Kazuhiro Hirata, who has been the brand's creative director for several years, took the reins of the family business. This business, besides the globally recognized brand, includes 10 stores in Japan, an e-commerce platform, four denim factories, and a dyeing facility. Now, with support from L Catterton, Kapital is expected to expand its retail network beyond Japan and enter international markets, joining the 275 brands (not limited to fashion) in L Catterton's portfolio, which also includes Birkenstock, Gentle Monster, Etro, Ganni, and A.P.C.. Moreover, among L Catterton's investments and LVMH Ventures' acquisitions, the Arnault group has developed a taste for collecting independent cult brands: in November, there was the case of Our Legacy, while in December, the Norwegian brand Db Bags followed, and in September Polène. Three years ago, it was the turn of Aimé Leon Dore, while in 2019, Gabriela Hearst and Madhappy joined. According to many, however, these acquisitions are nothing more than Faustian bargains that ultimately ruin the brands – but is that really the case?

It is undoubtedly true that independent brands need funding to grow – especially in a year when the crisis has hit the sector quite hard. Therefore, it is expected that with L Catterton’s involvement, Kapital will be able to reach an increasingly broad audience with fresh capital infusion and innovations in production and marketing. But at what cost? A Twitter user aptly summarized the issue: «LVMH will raise Kapital's prices and lower its quality», expressing the general concern about what will now happen to a brand that, for all its eccentricity, had always maintained a staunch commitment to quality and its artisanal processes. It is the classic case of an independent business falling into the hands of a large multinational – a modern archetype of commerce, which, even in the case of LVMH Luxury Ventures acquiring a minority stake in Our Legacy, prompted co-founder Jockum Hallin to give multiple interviews (at least two, with Highsnobiety and GQ) to communicate to fans, or rather reassure them, that «we will continue to run Our Legacy as we always have, only with a slightly larger toolbox». Indeed, it may be true that Arnault’s playbook is to reduce costs to increase net profits and then invest decisively in communication to stimulate revenue growth, but it is also true that, in its various functions, neither L Catterton nor LVMH directly manage the brands they acquire. Instead, they provide capital and “pressure” for growth. Another crucial point: in the same interview, Hallin explicitly clarified that the infusion of new capital would not lead to price increases.

Now, in the case of Our Legacy, for example, the co-founder made a point of communicating to the brand’s entire community that nothing would change and that the brand had been funded, yes, but not sold out. This was because the general sentiment among many independent fashion fans in response to such news is that fashion becomes, simply put, less and less independent – hence more commercialized, more profit-driven than authenticity-driven, and less focused on satisfying its community, which, in turn, could translate into healthy sales and even healthier growth. In Kapital’s case, for instance, the prevailing concern found among forums and online posts is that the brand will become just a producer of hats and T-shirts, focusing on best-selling and Instagram-friendly products rather than new designs. There’s also fear that it will lose the approach that made Japanese denim a global excellence or that costs will be cut during production, causing the brand to stray from its original unmatched excellence – the very thing its fans rely on and the cornerstone of its success. Of course, it’s not necessarily true that all is lost: the famous jeans brand Momotaro was acquired by Japan Blue Group three years ago, and while a soft rebranding did occur, online opinions on materials and quality remain solid. After all, it would be a poor investment for any new owner to fix something that isn’t broken. Ultimately, questions about Kapital’s new collections and quality will be answered over time – after all, you don’t change a winning horse.