Inflight Magazine of Brussels Airlines

Business trends

Boyd Farrow rounds up what’s happening in the business world across Europe

Drawing board

Solar Powerhouse

Albert Prinz of Thurn and Taxis, one of the world’s youngest billionaires and a keen racing driver – he holds the European Lamborghini Cup – hopes to add to his legend by building the world’s largest solar farm in Bavaria. The €115m project could generate huge earnings in green electricity sales for 26-year-old Albert’s family, who already own several castles and breweries. The family plans to build solar panels across 1.9 million m2 of land, equal to 280 soccer fields, in the town of Harthof near Straubing – bang in the middle of Europe, 110km from Munich, 190km from Prague and 290km from Vienna. The farm would provide up to 65 megawatts of peak power. “Even in the Sahara, there are no areas with topography as capable as here,” Stefan Stehl, a representative for the family, told the FT Deutschland. But Prinz’s plan to draw power from the Bavarian sun has run into resistance from local citizens, who object to having such a large solar farm set up right in their backyard. Indeed, the solar farm would stretch from the Harthof border 3km towards the neighbouring town of Alburg. Despite a petition to block the solar farm, the Straubing City Council voted to approve the project, which would bring in around €1m of taxes to the city from the €18m annual electricity sales the family hopes to earn.

Drawing board

All sewn up

Since its launch in 2004, Swedish denim obsessive Örjan Andersson’s Cheap Monday label has been one of the most in-demand brands, offering premium denim at relatively affordable prices. Along New York’s Bowery, London’s Shoreditch and Berlin’s Mulackstrasse, the Cheap Monday skinny jean has become the only skinny jean to own. What’s more, the fashion press frequently gushes about queues regularly gathering outside Andersson’s Weekday stores in Stockholm, Gothenburg and Hamburg each time the latest models (jeans, that is, not totty) are unveiled.

Now, having expanded into the realms of T-shirts and sunglasses, Andersson has decided to open his first ever standalone Cheap Monday store. But, obviously, someone as against-the-grain as he is (this, after all, is the man who produced tight jeans with tapered legs when everybody else was making bootcuts, dahling), has eschewed his native Stockholm, let alone the winking lights of New York or London. In fact, the new 400m2 store, which offers complete Cheap Monday collections plus a screen printing studio producing limited-edition prints, is actually in Copenhagen. While this may seem sacrilegious for Swedish hipsters, it is highly unlikely that the Cheap Monday store concept will not be replicated this year. In March 2008, the label’s parent company Fabric Scandinavien, which reported an annual turnover of €40m, was bought by the decidedly unskinny H&M Group.

Growing gains

Bean counting

For more than 80 years the Belgian company Godiva has been synonymous with luxury chocolates and €350m of its gold boxes are sold at more than 10,400 stores worldwide. But now, while sticking to its original recipes, the company is going mass market, with its new Gems line, substantially lower-priced bags of treats which are available in supermarkets on both sides of the Atlantic. The company says that Gems, which are also available on Godiva’s recently redesigned website (godiva.com), will help double Godiva’s revenue by 2014. Already, the bags which start at €5 for 12 to 18 truffles, solid chocolates, or caramels, have grown to 10% of sales in its 423 stores since their debut last September. The expansion of Godiva’s business only became possible because of the support of its new owner, Yildiz Holdings, a privately held food company based in Istanbul that paid €575m for Godiva last year. Since then, Yildiz has spent €45m on new stores, ad campaigns, website redesign, and entry into emerging markets such as China. The down-market move seems to fit today’s times. While consumers have sworn off many luxury goods, they are still treating themselves to lower-priced impulse purchases like chocolates. Godiva isn’t abandoning the high-end market, however. Indeed its Origine Belge Collection is only available to big spenders in Belgium and France.

Not really…

Italian

He may sound like an Italian designer or even a raffish mafia don, but Massimo Dutti is actually a Barcelona-headquartered menswear company, which is cutting a dash along an increasing number of high streets throughout Europe. The chain is one of seven owned by €10bn Spanish retail giant Inditex, which is well known for exporting its brand Zara to more than 1500 stores in more than 70 countries. With some industry observers wondering if Zara has reached saturation point – and rivals such as Barcelona-based Mango and Topshop in the UK stepping up expansion – Inditex is spending a lot of money on Massimo Dutti, where items cost 30-40% more than in any of its sibling stores. Indeed, during the financial turmoil of the first half of 2009, Inditex opened 18 Massimo Dutti stores – exactly the same number as were opened during the same period in 2008, and also added childrenswear to the mix.

It is perhaps a measure of the confidence that Inditex has in Massimo Dutti’s future that four of the six European countries targeted for new openings next year are in Eastern Europe, where one might suppose shoppers would gravitate towards fewer frills. Massimo Dutti is also gaining momentum in Spain, Greece and Belgium. But Indititex is eyeing a far bigger prize, namely the largely unexplored Asia-Pacific region, particularly China, where the image of a slickly-suited Italian, implicit in the name, may help boost sales.

Radar

Family plot

A Rome bank has come up with a novel solution to the thorny old problem of how to replace older workers with younger, cheaper ones. The answer: to make the jobs hereditary. Under a pact signed with unions late last year, 76 employees of BCC di Roma must take early retirement but they will get a choice: they can either receive a payoff or leave their job to a son or daughter (or indeed any relative up to great-nieces and nephews). The three-year agreement, which comes into force on 1 January, stipulates that those put forward by their relatives must prove “they possess the requirements” to do the work. The move has not found universal backing; Milan-based newspaper Corriere della Sera called it an attack on “one of the most important means with which to try to build a more open economy: social mobility. The Organisation for Economic Co-operation (OECD) says less than 18% of people born into the poorest quarter of the Italian population move up to the next-poorest 25%. Italy also fares badly in the variation in earnings from one generation to the next, partly because of the difficulty faced by Italians from poorer backgrounds in gaining a university degree. Yet, whether formally or informally, in Italy many positions are handed from parent to child. A recent study found 44% of architects and 42% of lawyers were the children of people who had practised the same profession.

Italy’s intelligentsia are more concerned that Silvio Berlusconi has five children.

Radar

Time for protection

Switzerland’s government has proposed far tighter rules to define the “Swiss-made” label as it seeks to protect the country’s reputation for quality goods from watches to cheese. The government is clamping down on abuse of both the commercial valuable “Made in Switzerland” tagline and the white-on-red Swiss cross logo, which are regularly used by foreign companies looking to add lustre to their products. The government says abuse has risen considerably as the “Swiss brand” has become more successful and consumers are willing to pay up to 20% more for certain Swiss goods. Fake products from Asia, particularly China, are a a major problem for Swiss watchmakers such as Swatch Group, Rolex and Richemont, all based in Geneva. The new rules, which will go to parliament for approval next year, would require that 60% of the manufacturing costs of industrial products are accrued in Switzerland. The watch industry, which currently demands at least 50% of a timepiece’s mechanics must be made in Switzerland, is now stipulating that this should rise to 80%, which is the same as the proposed amount of raw materials used in processed food like cheese. Exceptions will be made, however, for raw materials such as cocoa which are not found in the Alpine country – which will presumably be a huge relief to the Toblerone guys.

Fast tracking

Into the black

While the economy struggles to recover from the deepest slump in a generation, its vast shadowy counterpart has contracted at a much slower rate. The study by the UK’s public accounts committee estimated that more than £2bn (€2.1m) of revenues were lost annually as a result of tax dodging by 2 million people and said the detection rate of evaders was only 1.5%. Significantly, cash in circulation had continued to rise in spite of the GDP slowdown. Notes and coins in circulation have risen throughout 2009, driven by demand for £20 and £50 notes, according to the Bank of England. Nevertheless, the relative size of the UK’s underground economy – about €180bn according to International Monetary Fund forecasts – remains substantially lower than that of several other OECD countries. In Greece and Italy, illicit activity amounts to 25% and 22% of economic output, respectively. Meanwhile, the US, Switzerland and Austria have the smallest black economies relative to GDP, at 7.6%, 8.3% and 8.5% respectively.

Upgrade your trip

Sony’s solution to protecting your PC

Anyone paranoid about someone breaking into their hotel room, cracking their safe, grabbing their laptop and getting their hands on, er, your precious spreadsheet detailing how much your department is spending on IT outsourcing, might like to know about the latest word in corporate espionage. Obviously fingerprint recognition for your laptop is straight out of the first Bourne film, which is why you’ll be needing Sony’s latest gadget – the world’s smallest and lightest USB finger vein reader. Yep, instead of reading your fingerprints, this little beauty will read your hands or finger vein patterns to decide whether or not to grant you access to your device or data. The compact (70×14.5×58mm) FVA-U1, weighing just 33g, went on sale in Japan last month but it will be rolled out internationally soon. There is no word yet on a similar device for drunk travellers which can read the veins in your nose. www.sony-europe.com

Why are we here?

Pricing tractors online

While it’s tough being a retailer anywhere at the moment it is particularly tough to be a retailer in Russia. Under proposed changes to the bill on trade, which State Duma deputies hope will slow down inflation, all shops and their suppliers may be required to publish their prices and mark-ups on the internet. Unsurprisingly, Russia’s retailers are not overjoyed about the proposed changes, introduced ahead of the bill’s key second reading in December, and wail it would mean releasing their commercial secrets. The changes, which essentially force a company to disclose its purchase prices, will apply to everything from socially important goods to technologically sophisticated home appliances, everyday homeware, furniture and cars. The initiative was proposed by the sinister-sounding United Russias Institute for Economics and Legislation, according to Deputy Yevgeny Fyodorov, who chairs the Economic Policy and Entrepreneurship Committee. The changes are designed to fight intermediaries, since it will be immediately apparent from the information posted online where the biggest price hikes are happening, Fyodorov told journalists: “The logic is simple: If you want to be involved in commerce, you should understand that it must be transparent in terms of information. The law on trade would ban all bonuses, except for ones based on volume sold, and even that would be limited to 10% for Russian goods. For socially significant products, it would be prohibited altogether.

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