Diadora SpA

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Diadora SpA

Via Mazzini 20
Caerano di San Marco, I-31031
Italy
Telephone: (39) 0423 6581
Fax: (39) 0423 658225
Web site: http://www.diadora.it

Private Company
Incorporated:
1948
Employees: 500
Sales: EUR 300 million ($360 million) (2005)
NAIC: 316219 Other Footwear Manufacturing

Diadora SpA is a leading Italian designer and manufacturer of high-performance footwear and related apparel and accessories. Located in Caerano di San Marco, in the Veneto foothills of northern Italy (a historic center of footwear manufacturing in that country), Diadoras focus on the professional and competitive sports sectors has also made it a leading brand among serious sports amateurs as well. Diadora develops footwear and apparel specifically for sports categories including football (soccer), tennis, cycling, and athletics/running.

As part of its production, the company also works directly with athletes and teams, with sponsorships and contracts to design and supply footwear, uniforms, and other equipment and gear, including soccer balls and the like. The groups soccer sponsorships include such teams as AS Roma, Hannover 96, Scottish National, Sheffield Wedn, Napoli Calcio, Cobreloa, Hull City AFC, Kazachistan, Maccabi Tel Aviv, and Crystal Palace FC. Other team sponsorships include the Cannondale and Barloworld cycling teams. Individually sponsored athletes include professional tennis players, such as David Ferrer, Nicolas Kieler, Ivan Ljubicic, and Agustin Calleri; cyclist Damiano Cunego; runners Jane Saville, Alessandro Gandellini and Pascal Fetizon; and soccer players including Francesco Totti, Filippo Inzaghi, Martin Jorgensen, Eugenio Corini, Fabio Gallo, and Carlos Tenorio. The company also produces the official Italian referees uniform.

In addition to its sports footwear, Diadora produces a range of leisure footwear, the d.lux brand of fashion oriented footwear, as well as its vintage-style Heritage collection. Through its Diadora Utility division and brand, the company also produces work clothing and equipment. While the company maintains some manufacturing capacity in Italy, most of its footwear is produced by third-party manufacturers in Asia. The company also remains one of the most exclusive of international sportswear brandsthe company distributes its footwear and clothing through an exclusive network of just 70 specialist and 140 nonspecialist retailers. Nonetheless, the companys products reach more than 70 countries worldwide, and exports account for more than 50 percent of its sales. Acquired by Invicta SpA in 1998, Diadora sold that brand to backpack specialist Seven SpA in 2006. Diadora remains a private company with revenues estimated at EUR 300 million ($360 million) at the midpoint of the first decade of the 2000s. The company is led by chairman Massimo Barzaghi and CEO Enrico Mambelli.

FOUNDING A FOOTWEAR BUSINESS IN 1948

Diadora was founded by Marcello Danieli in Caerano di San Marco, in the Montello area of the Montebelluno foothills of the northern Italys Veneto region, in 1948. Danieli, a boy during World War I, left school early, as was the custom at the time, in order to take up a trade to help support his family. Danieli apprenticed as a shoemaker, at a time when the Montebelluno region had just begun to develop a specialty in that industry.

Control of the region had long been hotly contested between Italy and Austria, with each claiming the area as its own. After Napoleons defeat by the Austrian Empire earlier in the 19th century, the region had been placed under Austrian control; in 1866 the young Italian government took control of the area. The outbreak of World War I transformed the region, and especially the Montebelluno foothills, into a strategic front. To defend its control, the Italian army stationed several divisions of troops in the area, in order to patrol the highly mountainous area.

The topography of the area placed great demands on the soldiers footwear, leading the army to construct dedicated production facilities in order to supply troops with shoes, stockings and especially mountain boots. The local residents quickly proved themselves to be adept craftsmen, and were credited with Italys success in the regional war effort. Following the war, the regions craftsmen, including Danieli, extended production to civilian footwear, and gained a reputation throughout Italy for high-quality goods and craftsmanship.

Danieli proved to be a gifted shoemaker, and he worked steadily over the next decades, becoming one of the regions most highly skilled craftsmen. At the end of the war, Danieli, like many others in the traditionally impoverished northern areas of Italy, recognized the new opportunities represented by the devastation of much of Italys industry during the war. The necessity to rebuild created openings for new players to enter the market, and the northern region of Italy quickly established itself as the motor for the modern Italian economy. The regions new ambitions quickly led to disputes with the countrys southern regions, raising the specter of civil war. However, the unexpected victory of Italian cycling hero Gino Bartali at the 1948 Tour de France marked something of a turning point, reigniting a spirit of national unity.

The new climate encouraged Danieli to found his own company in order to produce mountain climbing boots. At the suggestion of a friend, Danieli named the company Diadora. Danielis handcrafted boots, which his wife helped create, quickly established Diadoras reputation for quality in the region. The rising interest inand increasing leisure time formountain climbing, hiking, and related pursuits enabled Diadora to expand its sales beyond the region, and through the 1950s the company became recognized on a national level for its boots.

In order to meet increasing demand, Danieli decided to industrialize parts of the companys production in the early 1960s. The development of press-molding techniques in the United States provided a major step forward for the footwear industry in general; at the beginning of the 1960s, Diadora acquired the rights to use this patented technology. Through the decade, Diadora greatly expanded its production, becoming a major footwear producer.

SPORTING FORM IN THE 1970S

Diadora also recognized the building interest in sports, and especially in skiing, as Italys economic boom in the postwar period brought about increases in leisure time and disposable income. In order to take advantage of this growing market, Diadora launched its own line of ski boots and après-ski boots. The companys proximity to many of Italys most prominent ski areas enabled it quickly to establish its reputation in this area as well. Diadoras recognition of the growing importance of sports to the footwear industry was highlighted by the adoption, in 1966, of a new logo. Called the five balls logo, the companys new identifying mark was specifically designed to evoke the five rings of the Olympics symbol.

COMPANY PERSPECTIVES

Diadora Today: Innovation and Style. Diadora has consolidated its presence on the international sportswear market thanks to the values of its testimonials and to the evolution of its products: always avant-garde in their style and technological innovation.

Toward the end of the 1960s, however, new innovations in ski boot design, and especially the introduction of plastic in their manufacture, placed the company at a crossroads. Danielis dedication to traditional handcrafting techniques suddenly made its ski boots obsolete. Danieli refused, however, to abandon craftsmanship in favor of plastic, and the company decided to abandon its ski boot production. Yet its sales of après-ski boots were not enough to support the company.

Once again, however, Danielis ability to recognize new market trends enabled it to prosper. The beginning of the 1970s marked the ascension of a new breed of international sports stars. At the same time, footwear trends were changing wildly, with the younger generation largely abandoning traditional footwear. Instead, the period saw more and more people beginning to wear sneakers, and sports shoes in general, all of the time. Marketing, and especially the sponsorship of prominent sports figures, played a major role in influencing consumers choice of shoe.

In order to tap into the trend, Diadora decided to expand its production to include sports shoes as well. The company decided to begin with developing designs for the tennis market. This sports field was undergoing its own dramatic transformation, as the introduction of televised matches had seen the emergence of the first true sports superstars. During the decade, Diadora scored a major coup when it signed a sponsorship deal with tennis legend Björn Borg.

Diadora next targeted the athletics and running circuit, developing its own line of high-performance footwear. The company received international attention during the Montreal Olympic Games in 1976, when Giuseppe Gentile wore shoes from Diadora for his record-setting gold medal in the triple jump. Like other sports shoe companies at the time, Diadora invested heavily in research and development in order to create ever more technologically advanced footwear designs. This investment helped the company penetrate the soccer market in the middle of the decade. By 1978, the company had signed a new sponsorship deal with Italian soccer great Roberto Bettega. That contract helped pave the way for the company to become one of the major footwear providers for the Italian soccer market over the next decades. Soccers enormous surge in popularity, and especially its ability to transcend national linesa trend that accelerated with the advent of satellite broadcasting in the 1990senabled Diadora to achieve global sales, and place its products in some 3,500 outlets throughout the world.

These changes were overseen, for the most part, by the second generation of Danielis, as Marcello Danielis sons Pierluigi, Roberto, and Diego took over as heads of the company. The new generation was less wedded to traditional manufacturing techniques, a feature that enabled the companys survival. The rise of such major global brands as Nike, adidas, and Puma had created an enormous shift in the global footwear industry. While many of these companies had increasingly shifted their business model from a base as footwear manufacturers to that of designers of branded footwear, others were simply branded footwear designers from the start. A hallmark of this new trend, which began within the booming sports shoe sector, was that production of the new footwear designs was largely performed by third-party manufacturers, especially in the Asian and other developing markets. Indeed, the introduction of new manufacturing techniques and materials had made certain aspects of productionwhich involved the use of highly toxic solvents and materials that were banned by many countries in the Westimpossible to carry out in developed countries. Unburdened by their fathers insistence on handcraftsmanship, the Danieli brothers carried out Diadoras own shift to outsourced production for its sports shoes during the 1970s.

KEY DATES

1948:
Marcello Danieli founds Diadora footwear company, producing handcrafted mountain climbing boots.
1960s:
Diadora adds industrial production facilities, including press-molding equipment, and begins producing ski boots and après-ski boots.
1970s:
Diadora exits ski boot production and begins producing sports shoes for tennis, running, and soccer.
1980s:
Company launches research and development partnership with Milan Bio-engineering Center.
1998:
Invicta SpA acquires Diadora from Danieli family and becomes Diadora-Invicta.
2006:
Diadora sells Invicta operations to Seven SpA and becomes Diadora SpA.

MERGER AND DEMERGER FOR THE NEW CENTURY

Throughout the 1980s and 1990s, Diadora continued to expand its range of sponsorships and sports disciplines. While tennis, running, and soccer remained the groups core sport shoe markets, the company also developed specific products for other sports, such as basketball, volleyball, motorcycling, fencing, and boxing. Another major sports category, that of cycling, also became a company feature during this time, starting with the sponsorship of Italian cycling great Moreno Argentin in 1983. The company added two new international athletics champions, hurdler Edwin Moses and runner Sebastian Coe, in 1984. Other prominent sponsorships included motorcycling champion Marco Lucchinelli, motor racing hero Ayrton Senna, and soccer stars Walter Zegna and Vincenzo Scifo. The company also entered the United States directly, establishing its Diadora America Inc. subsidiary.

Through the 1990s, Diadora joined in another trend, that of sponsoring entire teams. Among the earliest of these efforts dated from the early 1980s, when the company joined with Team Maclaren, of motor racing fame. In the 1990s and through the middle of the first decade of the 2000s, the company added a variety of new prestige contracts, such as with the Italian National Soccer Team, racing leader Alain Prost, and a host of soccer teams, including AS Roma, Hannover 96, Scottish National, Sheffield Wedn, Napoli Calcio, Cobreloa, Hull City AFC, Kazachistan, Maccabi Tel Aviv, and Crystal Palace FC. As part of these contracts, Diadora extended its range of production to include clothing, including uniforms, and other sports equipment and accessories, including soccer balls.

In the United States, however, the companys operations had been struggling. Finding itself outpaced by its far larger rivals, the subsidiarys troubles were compounded by continual changes in management. Indeed, through the 1990s, Diadora America went through five CEOs. By the end of the decade, Diadora America had been losing money for several years.

Back in Italy, Diadora appeared to be running out of steam, as the companys traditional focus on the Italian market had allowed it to become eclipsed by a number of new rising stars in the sports footwear market, as well as multinational giants such as Nike, Reebok, adidas, and Puma.

The company fortunes began to change again in the late 1990s. In 1998, the Danieli brothers agreed to sell the company to fellow Italian sports products group Invicta SpA. That company, founded in Turin in 1921, had come to specialize in the design and production of outdoor gear, especially backpacks, but also travel bags, footwear, and related clothing and accessories. Following the purchase, Invicta changed its name to Diadora-Invicta SpA.

Under new management, Diadora took advantage of the trend toward retro footwear styles by launching its own Heritage collection, reproducing designs from the companys early years. The company also extended its operations in the leisure and fashion footwear segments, including developing its d.lux footwear brand. These joined the companys dedicated workwear division, Diadora Utility, created in 1998.

The marriage between Invicta and Diadora did not last long, however. In 2005, the company announced that it had decided to sell its Invicta operations in order to refocus itself around the Diadora brand. At the same time, Diadora brought in a new CEO, Enrico Mambelli, who had previously been CEO of Gianfranco Ferre SpA. Mambelli had also previously worked for Nike Italy. Under Mambelli, the sale of Invicta was carried out in 2006, when that brand was sold to fellow Italian group and backpack maker Seven SpA.

Renamed Diadora SpA, the company focused its efforts on relaunching its brand name, and especially on an international level. As Mambelli told Sporting Goods Business: We want to be much more internationally oriented. We will work on an international vision, and while wed like to be perceived as Italian, Italy is not the only market. Backed by nearly 60 years of experience, Diadora appeared well-heeled for the race into the future.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Diadora America Inc.; Diadora Utility SpA.

PRINCIPAL COMPETITORS

Bata Ltd.; Nike Inc.; adidas AG; C and J Clark International Ltd.; Reebok International Ltd.; PUMA AG Rudolf Dassler Sport; Stride Rite Sourcing International Inc.; Tommy Hilfiger Footwear Inc.

FURTHER READING

Diadora Regroups Around New Prez, Footwear News, September 4, 2000, p. 2.

Leand, Judy, Diadora Brings Passione Totale to US, Sporting Goods Business, August 3, 2000, p. 22.

, Mambelli Appointed CEO of Diadora Invicta, Sporting Goods Business, December 2005, p. 15.

McKinney, Melonee, Diadora Back in Black, Daily News Record, August 20, 1999, p. 6.

Tompkins, Megan, Cannondale to Distribute Diadora Cycling Shoes in North America, Bicycle Retailer and Industry News, August 15, 2005, p. 8.

Wilhelm, Steve, Diadora Gets Foot Back in Door of Profitability, Puget Sound Business Journal, June 1, 2001, p. 6.