The Italian company Loro Piana is under scrutiny for practices that allegedly harm an indigenous community in the Peruvian highlands responsible for harvesting the world’s most expensive wool from vicuñas. Questioned by a member of the US Congress, the luxury brand denied any wrongdoing.
A Bloomberg report last week on the collection of vicuña fiber in Peru has held Loro Piana accountable for failing to adhere to ethical standards and support local communities. This controversy expanded beyond Peru’s borders, but the luxury goods company refuted the allegations.
An ancestral practice under threat
In the province of Lucanas, in the Ayacucho region of Peru, one of the country’s poorest local communities harvest the world’s most expensive wool.
They uphold an ancestral tradition known as Chaccu, a name originating from Quechua, the language spoken by the Incas and now one of Peru’s three official languages. This custom involves the pursuit, capture, and shearing of vicuñas, symbolic animals of the region similar to alpacas. Alpacas are the domesticated descendants of this wild animal whose fur serves as protection against the harsh conditions of the high plateaus of southern Peru, characterized by severe winters and scorching summers.
Loro Piana, an Italian luxury clothing company belonging to the LVMH group, sources its wool from vicuñas, the most expensive in the world. It is the world’s largest and one of the few buyers of this raw material. The company alone sources around 45–50% of Peru’s fiber production, according to a 2018 report by the International Trade Center.
However, this centuries-old practice is now embroiled in controversy, entangling cultural traditions with economic interests.
A sentiment of exploitation
A recent investigation by Bloomberg unveiled troubling aspects of this endeavor.
Depending on the value of the dollar, the Lucanas community that harvests vicuña fiber receives a mere 280 dollars for each kilogram of fiber collected. In contrast, a coat made from the same material, such as the brand’s famous Harlan Coat, sells for a staggering 33,425 dollars.
Responsible for collecting the revenues from the sale of “the wool of the gods”, the indigenous community council must also decide on their distribution.
With the prices charged at the Lucanas community, the council first pays the foreign workers a modest daily wage of 20 dollars, leaving insufficient funds to pay the rest of the community, for which some members work for free.
In poignant testimonials, Abraham Yari Huaman, a vicuña technician, denounces the chronic and dwindling underpayment and lack of recognition of their work in the face of harsh climatic conditions. Andrea Barrientos, aged 75, laments, “We’ve worked for them, for the authorities. But not for ourselves.”
A state of dependency exacerbating the situation further
Faced with this sense of exploitation, Loro Piana has benefited from an exclusive agreement signed with the Peruvian government and indigenous communities since 1994. The agreement pertains to the purchase, processing, and distribution of vicuña fiber, securing a steady source of income but, at the same time, ruling out any possible competition in a market with few buyers.
In 2008, the brand also acquired a vast tract of land in the Peruvian Andes for 160,000 dollars to create a private nature reserve, enabling the luxury brand to operate directly and depend much less on the indigenous community. The Italian label’s purchase led to the installation of 12.5 kilometers of fencing to keep the vicuñas in captivity, with the initial objective of increasing their population by 50% each year.
In its communication, LVMH asserts that Loro Piana provides “constant care for the environment, biodiversity and local communities”. Contacted by Bloomberg, the company claims to respect strict ethical standards and to support local communities economically by stimulating demand for vicuña fiber.
This view is contested by Peruvian researchers, notably Omar Siguas, a teacher-researcher at the National University of Huancavelica specializing in wildlife management and conservation. Siguas contends that the practices lack a positive impact on the living conditions of the indigenous populations, their environment, and the vicuñas.
The report by the International Trade Center also refers to the weak negotiating position of indigenous communities, who derive no tangible economic benefit from their participation in the trade.
Processing vicuña fiber locally and nationally would be a viable economic alternative, creating jobs and more income for the community of Lucanas, according to the National Forestry and Wildlife Service (SERFOR).
However, spinning this delicate fiber requires high-precision technology that only the major international textile groups can afford. Most of the raw fiber is exported to Italy.
A duty of care?
As the European Union recently reached an agreement, championed by Italy among others, for a duty of vigilance, mandating companies to identify and rectify environmental and labor rights abuses within their operations and supply chains, the issue has transcended Peruvian borders. This development sparked the concern of Robert Garcia, the first American-Peruvian member of the United States Congress.
He demanded explanations in a letter sent on Tuesday to Loro Piana chairman Antoine Arnault, the son of LVMH CEO Bernard Arnault, and its managing director Damien Bertrand. The letter highlights discrepancies, such as Pier Luigi Loro Piana, now 72, who sold most of the shares in the company founded by their father with his brother in 2013, claiming that the Lucanas community was paid at least 400 dollars a kilo.
In 2024, the 280 dollars for a kilogram of fiber translates to just over 1,000 Peruvian soles for the locals. However, in 2014, when the value of the sol was at its highest in the last 20 years, 400 dollars enabled them to receive 1,100 soles.
By continuing to receive 400 dollars, the local community would see a 43% increase in remuneration.
Nevertheless, they would still have experienced a 34% loss in income in local currency over ten years, despite the constant purchase price in dollars, due to fluctuations in exchange rates.
In an email to Bloomberg about the US politician’s letter, Loro Piana points out that it has helped preserve the vicuña population for three decades.
“We have also increased our investments in irrigation, education, and infrastructure in Peru in recent years, and are committed to dedicating additional resources to benefit local populations in the future,” the company said.
This response was criticized particularly on social media, with people accusing the company of narrative-building and merely reiterating information already available on their website, rather than providing substantive answers to the questions raised.
In 2015, LVMH boasted that the vicuña was “a species saved by Loro Piana.”
Between 1994 and 2012, the vicuña population throughout Peru surged from 66,500 to 209,000 head, according to estimates by the General Directorate of Forestry and Forest Fauna, with the population doubling after 2000.
The problem of remunerating local people does not seem to be exclusive to the Lucanas community, and can also be found in other countries traversed by the Andes, where vicuñas live.
A regional study carried out in 2022 by the Argentine government’s National Council for Scientific and Technical Investigation estimated that “Andean communities receive around 3% of the value generated by the vicuña fiber chain”.
In 2013, Loro Piana expanded its operations in Argentina by obtaining the shearing rights to 85,000 hectares of land. Under this agreement, the company assumed responsibility for the management and growth of wild vicuña populations. Production in the country primarily comes from private ranches affiliated with Loro Piana and other private enterprises.
