Amid the brand’s global expansion, Ganni has launched a new material partnership with biotech company Rubi Labs, announced at the Global Fashion Summit in Copenhagen this week. The collaboration is slowly being integrated throughout Ganni’s supply chain.
The 23-year-old brand is focused on reducing its carbon footprint by 50% by 2027 through various initiatives, including decarbonization by installing solar panels in its Portugal factories, carbon insetting and using alternative materials. Ganni became a B-Corp organization in 2022 and debuted an alternative materials initiative called Fabrics of the Future in June 2022 to test and scale innovative materials. The materials include mycelium-based Mylo leather and Circulose, or lyocell made from worn-out clothes.
The latest of its alternative material pilots is with Rubi Labs, a 3-year-old California-based startup that uses fermentation and other biochemical processes to turn carbon dioxide into cellulose. This can then be used to make lyocell yarn. This innovative material cuts the need for virgin material inputs and avoids deforestation, which has been an issue with other cellulose material projects.
Rubi Labs raised $8.7 million in additional seed funding in March 2023 for a six-month phase of its testing pilot with brands including Ganni, Reformation and rental platform Nuuly. Its total funding so far sits at $13.5 million, with H&M and Patagonia as its strategic partners. Partnerships with lower price point brands like Ganni are allowing for the materials to be tested and scaled at a faster rate. For Ganni, it’s an opportunity to see how new materials perform in its supply chain. Ganni is positioned as a contemporary mid-range brand, with prices between $100-$400.
Nicolaj Reffstrup, the co-founder of Scandi-cool fashion brand Ganni, has long stressed his embarrassment to be a part of the carbon-intensive fashion industry and aimed to show fellow brands a more sustainable way of doing business.
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“Ultimately, our dream is to replace all conventional fabrics with innovative new materials that have a climate-positive footprint,” said Reffstrup. “The ambition is that, by 2025, 10% of all our materials will be innovative new materials coming out of Fabrics of the Future, our lab for textile projects.” Reffstrup also wants to install carbon capture equipment along Ganni’s supply chain and capture its own carbon to turn into the materials that it sells.
Ganni doesn’t invest money directly into these startups. Through Fabrics of the Future, it trials their materials’ usability for brands while gaining early access to innovations. The first step is analyzing their capabilities. “We test products across a wide range of parameters, like permeability, as well as their look and feel and their potential to scale,” said Reffstrup. “We also test how the material is configured: Is the material in sheets or rows, and how well does it fit into your supply chain and price points?”
The second step is about developing innovative products using the materials via their ideal application. “For something like Mylo leather, you might want to do a wallet before you do a jacket or skirt to make sure it is suitable,” said Reffstrup.
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The third step is going to market with and marketing these materials. “This step is about entering into offtake agreements and guaranteeing a certain amount of volume at a given price,” said Reffstrup. Offtake agreements are agreements between a brand and a manufacturer about how much material the brand will buy. “Indirectly, we support these startups by paying for a premium product that we could source elsewhere for a lot cheaper and scaling that instead.”
Ganni has been focused on expansive global growth through an omnichannel approach involving retailers and wholesalers. It entered the U.S. through a branded store in fall 2022 and opened its latest store in March 2023, in L.A. It has also recently expanded into China and Australia.
“In order to build a substantial business, we’ve had to build a global footprint,” said Reffstrup. “We have stores from Shenzhen in China to L.A., and that means the business model is somewhat complex. We saw the U.S. [business] grow substantially last year, whereas Europe was struggling a bit more. And then by the end of 2022, China started to pick up, so [revenue] balanced out well through our omnichannel approach.”
In its most recent 2022 earnings report, Ganni confirmed 34% growth over 2021 revenue, with a 14% growth in adjusted EBITDA for the year. The North American business grew 53%, compared to 2021. Ganni has continued to focus on its core categories of ready-to-wear, with 100% of the RTW offering now made using certified responsible materials. The brand’s accessories business makes up 29% of its total sales and is fueled by a focus on collaborations. In June, it collaborated with sunglasses brand Ace & Tate.
“Last year, we delivered steady growth despite a lot of challenges, but we were caught [risking] margins as it was a very complex market to navigate,” said Reffstrup. “It was hard to predict where growth would come from across geographic territories, but also across channels. We’ve lowered our ambitions slightly for this year. I think it’s going to be a gap year for most brands.”
