In a world unsettled by tariffs and geopolitical turbulence, a select cadre of international enterprises continue to distinguish themselves—generating resilient, defensive alpha amid pervasive market noise. Two such exemplars? Hermès and Essilor Luxottica. Elias Erickson, International Franchise Portfolio Manager, shares nuanced perspectives on these global icons. In fashion, as in investing, there is often far more than meets the eye.
In its highest form, luxury transcends utility. It embodies not merely product but permanence—an articulation of artisanal mastery, heritage, and cultural cachet. Hermès exemplifies this philosophy, epitomizing the qualities we prize in enduring franchises.
From its 19th-century genesis crafting bespoke equestrian harnesses, Hermès has evolved into a paragon of artisanal excellence—especially in leather goods, exemplified by the storied Kelly and Birkin bags.
Foremost, the enduring resonance of its brand constitutes a formidable intangible asset. Hermès is not merely a luxury house—it is a sanctuary of artisanship, where craft is not a technique but a credo. Extensive vertical integration, including the ownership of elite tanneries and company-controlled distribution, allows Hermès to sustain exacting standards and brand integrity across its value chain. Its hallmark—the hand-sewn saddle stitch—is a technique impervious to mechanization, safeguarding its artisanal heritage.
The Lindy effect posits that the longer a phenomenon endures, the greater its expected longevity. Nearly two centuries in development, Hermès' heritage continues to surpass that of contemporaries including Louis Vuitton and Gucci.
Equally compelling is Hermès’ ability to consistently balance strategic dichotomies: exclusivity and awareness, scarcity and scalability, consistency and breadth, and heritage with relevance. The company has successfully managed these paradoxes across multiple cycles—a unique feat supported by stable, multi-generational family ownership.
For Hermès, the judicious stewardship of its differentiated heritage has underpinned consistent compounding, even within a traditionally discretionary sector.
Vision care offers a compelling terrain for discerning investors: it combines the defensiveness of healthcare with the consistency of consumer staples. With approximately 60% of the global population affected by visual impairments—coupled with demographic aging and the ascent of premiumization—the sector's secular growth trajectory is robust. Franco-Italian juggernaut Essilor Luxottica (EL) commands a peerless position within this domain.
EL is the hegemon in frames and lenses, boasting a scale over fivefold that of its nearest rival and double that of dominant players in the contact lens oligopoly. Its expansive footprint underwrites superior capabilities in R&D, intellectual property, marketing, and distribution—amplifying its influence across both retail and wholesale verticals. This scale further propels its premiumization agenda and catalyzes innovation, notably in progressive and photochromic lenses.
In addition to its manufacturing dominance, EL owns venerable brands like Ray-Ban and Oakley, and serves as a preferred licensee for numerous luxury labels. Ray-Ban, in particular, has achieved an approximate 15% compound annual growth rate since 1999. The company’s offerings exhibit low price elasticity and infrequent purchase intervals, incentivizing retailers and independent optometrists alike to favor premium-tier products. EL has effectively set the benchmark for pricing across the premium eyewear segment, rendering imitation prohibitively difficult.
Moreover, EL is pioneering mass customization at scale, catering to nearly 300 million individuals annually with bespoke visual solutions. The company seamlessly merges scale with personalization—a rarity in physical product markets. Forthcoming innovations, such as the Ray-Ban Meta smart glasses, audio-integrated frames, and myopia interventions, underscore its formidable pipeline.
This is not a buy, sell or hold recommendation for any particular security.
