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Benetton (Italy)

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Benetton became one of the world's best known clothing brands in the late 1980s, largely as a result of striking and often controversial advertising campaigns which sometimes seemed to have only minimal relevance to the stylish but generally conservative clothes they represented. Instead Benetton's advertising served principally a platform for the worldview of Luciano Benetton, a leading member of the company's founding family which, in typically Italian style, has accumulated substantial interests in numerous sectors other than fashion. In the early 2000s, for example, the Benettons were instrumental in funding the takeover of Telecom Italia by tire and cable maker Pirelli. Other interests range from airport and motorway catering and retail services to farming. Clothing now accounts for 15% or less of the family business. The Benetton fashion chain remains an important global business, but in recent years has lost much of its customer base to rivals such as Zara and H&M or to mass-market acceptance of more expensive luxury brands.


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Brands & Activities

Benetton's public image has slipped considerably in recent years, as a result of intense competition from rivals H&M and Inditex, while negative reactions from its retail estate have prevented the group from running the sort of in-your-face marketing for which it was once renowned. In fact, the group's unconventional license-based retail system, which allowed it to grow so rapidly in the 1970s and 1980s, has proved more of a liability than an asset in recent years, limiting Benetton's control over its public image and slowing the introduction of new lines. Over-dependence on Europe for both revenues and manufacturing has also dented the group's performance.

Nevertheless, Benetton remains Italy's best-known mass-market fashion brand, as distinctively Italian in its style and ethos as The Gap is American. It is most famous for high quality knitwear and brightly coloured casual apparel. The group's main brand is United Colors of Benetton (UCB), which extends across womenswear, menswear, childrenswear and underwear collections, and has also diversified into such areas as home furnishings, kitchen accessories, baby products, toiletries, perfumes and watches (all licensed out to other suppliers). The main label is supported by underwear and swimwear brand Benetton Undercolors. In 2005, the group also launched a range of girls' and teenage clothing in partnership with toymaker Mattel under the brand name 'Barbie loves Benetton'. The apparel featured four looks themed to the cities of London, Paris, New York and Stockholm, as well as special Christmas line Helsinki. Mattel launched two limited edition Barbie dolls with matching ranges of miniature clothing. Reacting to intense competitive pressure from H&M and Zara, the business adopted a new strategy in 2007, launching four seasonal collections rather than the traditional two, and it delivers a smaller selection of new styles almost monthly.

Benetton is supported by a small group of other brands. The best-known of these is Sisley, positioned as a higher-priced upscale label. Sales are around €330m. Originally launched in Paris in the late 1960s as a denim range, it was acquired by Benetton in 1972 and relaunched in the 1980s as a fashion brand. There were also two very much smaller niche brands, Playlife leisurewear and Killer Loop snowboarding apparel. They were discontinued in 2015. A string of sports equipment brands acquired during the 1990s, including Nordica ski boots, Prince tennis rackets, and skating label Rollerblade, were sold in 2003.

Benetton and its sister labels are sold in 120 countries, through around 5,000 mainly freestanding outlets. Until recently, virtually all Benetton's shops were operated by independent companies. According to a system established by the group in the 1970s, storeowners do not pay any fees to use the Benetton brand, nor any royalties on sales. Instead they buy the clothing at arm's length as it were from the group. As a result, the range of clothing varies widely from shop to shop, with licence holders largely granted the freedom to select whatever stock they feel will sell to their local market. Increasingly the group has begun to establish outlets of its own in order to exert greater control over its public image, and to maximise retail revenues. So far, however, only around 250 stores are directly owned by the group, including 50 megastores. Manufacturing is organised through a network of around 20 mostly group-controlled factories in Italy, eastern Europe and Tunisia. The most noticeable change has been its effective withdrawal from the US. The group now has only around 10 outlets there, compared to 600 in the mid 1980s.

The company is a major sponsor of sporting events, particularly in Italy. The group also owns and sponsors the Sisley Volleyball, Benetton Lions and Benetton Basketball teams in Treviso. Colors is the group's bimonthly fashion and culture magazine, established in 1990 under the direction of Tibor Kalman. It is managed by Fabrica, an in-house communication and design agency which handles all the group's marketing as well as numerous third-party projects.


After hitting €2.1bn in 2001, Benetton Group's revenues drifted steadily lower, reaching a low of €1.7bn in 2004. After that there was slow but steady growth back to a little under €2.2bn by 2008. For 2009, though, sales slipped back 4% to €2.05bn, and have steadily declined since then, slipping below €2bn again in 2012. Sales have steadily fallen since then. In 2014, the group's activities were reorganised, with all clothing production demerged into a separate company, Olimpias.

For 2015, Benetton Group reported revenues of €1.53bn with a net loss of €46m. Around 36% of sales were made in Italy and another 38% in the rest of Europe. The Americas contributes less than 4%. Clothing production by Olimpias contributed sales of €392m, but most of this was an internal cost to Benetton.

Another decline in 2016 reduced revenues to €1.37bn.

Other Interests

The Benetton family's various business interests are managed through holding company Edizione. Until recently, this held a 67% stake in the Benetton clothing business, and the remaining shares were publicly held. In February 2012, following publication of Benetton's disappointing 2011 results, Edizone made an offer to buy back all the public shares and take the business private once more. The offer valued the entire business at around €835m. By the end of the year Edizione had reacquired 100% of the business.

Benetton is dwarfed within Edizione by other businesses, mostly majority controlled. Autogrill, for example, is the world's biggest provider of catering services for travellers, with sales of €4.9bn in 2015. It has operations in 31 countries, with over 4,200 points of sale, mostly within motorway service stations, airports and railway stations. By virtue of its footprint, it is Italy's biggest fast-food operator, with 30 of its own proprietary brands including Ciao, Spizzico and Acafé, and regional licenses for around 20 third-party brands including Burger King, Starbucks, Outback Steakhouse and Chick-Fil-A among others. It has subsidiaries in more than 30 other countries, including HMS Host in the US. It also manages in-flight catering for British Airways, among other airlines. Edizione has just over 50% of the business, held via subsidiary Schema 34. A small number of shares are quoted.

The family also has significant interests in infrastructure companies. These are grouped under the umbrella of subsidiary division Sintonia, which has a controlling 30% stake in Atlantia, Italy's largest manager of toll-based autoroutes and highways. Known until 2007 as Autostrade, the company manages, either directly or through associated companies, a road network of over 3,800km, with 240 service areas. Grandi Stazioni, in which the group has a 33% stake, manages a group of Italy's leading railway stations. Edizione also owns and manages substantial real estate assets in several Italian, European and American cities, as well as major agricultural enterprises in Italy, Argentina and the United States. The group also indirectly controls the airports for both Florence and Rome. Combined revenues for Atlantia were €5.3bn in 2015.

The group also has numerous minority investments in partners such as Hermes, L Brands, Il Sole 24 Ore and insurance giant Generali. In 2013, the company's non-catering retail operations were demerged as a separate entity. This has tax-free shopping franchises in airports in 19 countries under the World Duty Free brand. Sales were almost €2.1bn in 2013, nearly half of that from the UK where it has exclusive licenses for Heathrow and Gatwick airports. In March 2015, Edizione agree to sell its stake in WDF to Swiss rival Dufry for €3.6bn.

Combined revenues for Edizione in 2015 were €11.45bn.

Until 2007, the family also controlled a 20% shareholding in Olimpia, an investment company which was in turn the biggest shareholder in Telecom Italia. Olimpia was acquired that year by a new holding company which includes Telefonica of Spain as well as several Italian companies. The family swapped its 20% stake in Olimpia for an 8% holding in the new investment company, known as Telco. However that holding was reduced steadily, and the Benettons sold their remaining shares at the end of 2009.

Until 2013, the Benetton business was still run by founding siblings Luciano, Gilberto, Carlo and Giuliana Benetton. Long-time chairman Luciano retired in 2012 after 47 years heading the company, passing over that role to his son Alessandro, previously executive deputy chairman. In Spring the following year, the three remaining original founders resigned from the board and were replaced by Christian Benetton (son of Carlo), Sabrina Benetton (daughter of Gilberto) and Franca Bertagnin Benetton (daughter of Giuliana). Having overseen the privatisation of the Benetton business in 2013 and restructuring of its operations, Alessandro Benetton resigned as chairman in May 2014 to be succeeded by non-family member Gianni Mion, also vice chairman of family holding company Edizione. Alessandro Benetton returned to his prior role as chairman of private equity fund 21 Partners, as well as a seat on the Benetton board alongside his cousins. A continuing decline in Benetton's fortunes led to the return of Luciano Benetton in 2018 as executive president, and also the reappointment of Oliviero Toscani - who had been responsible for the brand's controversial advertising in the 1980s and 1990s. Gilberto Benetton is chairman of Edizione Holding, and is responsible for the family's other investments. Carlo Betazzo is general manager of Edizione. The youngest of the four Benetton founders, Carlo Benetton, died in 2018.


The Benetton business was conceived in the 1950s in northern Italy by four children struggling to make ends meet after the untimely death of their father. Giuliana Benetton was a talented seamstress, and in 1955 her three brothers Luciano, Gilberto and Carlo agreed to sell some of their toys to buy her a new knitting machine. Eldest sibling Luciano left school to begin selling her brightly coloured pullovers and cardigans to local retailers. Gilberto and Carlo joined the company after they left school in the late 1950s, and the family business gradually began to grow, supplying department stores now rather than simply local shops. In 1965, the four siblings established Benetton as a partnership, acquiring a small factory in their home town of Treviso a year later. The first Benetton shop opened in 1968, and further stores followed, with increasing speed, over the next few years. In 1969 the family bought a ruined 16th century palazzo near Venice, Villa Minelli, and over the next fifteen years restored it with loving care to eventually become their corporate HQ. The business continued to expand and by 1975, there were more than 200 Benetton outlets in Italy. That year the group acquired Paris-based Sisley, gradually establishing it as a second, more upmarket label.

At the end of the decade, Benetton took its first steps into the US, opening five test stores. When these proved a success, the company leaped wholeheartedly into the market, opening 600 stores in North America over the next six years. In 1983, it was the first Western retailer to move into communist Europe, opening its first shop in east Germany. In 1986 a separate company, Edizione Holding, was established to manage the family's shareholdings, and that year around 11% of the shares in Benetton were floated to the public. (A further tranche was floated in 1994).

Meanwhile Edizione began acquiring stakes in other clothing businesses. In 1987, it took over ski equipment manufacturer Nordica, followed by tennis equipment maker Prince in 1988. In 1989, the holding company bought 50% of British sports car maker TWR (sold in 2001), as well as Rollerblade, the company which had devised inline skating a few years earlier. However, the clothing business was beginning to suffer, especially in the US, where the now numerous franchisees were facing fierce competition from each other as well as from fast-expanding rival The Gap. A more serious threat was the company's increasingly flamboyant advertising, devised by Luciano Benetton and his new creative director Oliviero Toscani.

Launched in 1984, the core concept of the company's advertising was "All the Colors of the World", the idea that people were all the same beneath their religious and racial badges. The first incarnations of this theme were a series of images of children of all nationalities playing together. However, with Luciano's endorsement, Toscani gradually began extending the brief to tackle more controversial issues. In 1985, the flags of what were then culturally opposing countries were juxtaposed, for example Greece and Turkey, Argentina and Great Britain, the US and the then-USSR. In 1986, the same idea became more explicit in an image of a young Jew embracing a young Arab. In 1989, for the American market, one ad pictured a black woman breastfeeding a white baby, while another showed two male hands, one black, one white, handcuffed together.

Gathering confidence, Benetton and Toscani ramped up the shock tactics for the 1990s, under newly adopted slogan The United Colors of Benetton. A photograph of a nun kissing a priest (in 1991) was surprising but acceptable; the same year a poster of a newly-born baby trailing its uncut umbilical cord generated a storm of protest and was banned in several European countries. A year later, an photograph of political campaigner David Kirby surrounded by his grieving family just after he died from AIDS pushed the global community concept too far. Few magazines and newspapers agreed to publish the ad.

In 1993, the store supported the Clothing Redistribution Project, a global scheme to pass on used clothing to poor countries, with a poster image of Luciano Benetton, completely naked and covered only by the caption "I want my clothes back". In 1994, a new poster featured the blood-stained T-shirt and trousers belonging to a soldier killed during the Balkans conflict. This led to a storm of protest from Benetton's own retail license-holders, who claimed that, far from supporting sales, the campaigns were actually driving customers away. The group was later forced to take a group of its German retailers to court when they refused to pay for clothing, claiming the shock-value marketing was putting them out of business. The message from both retailers and the press appeared to get through. Benetton's advertising was noticeably more restrained over the next few years. The "Faces" campaign which ran from 1997 simply portrayed a range of multi-racial teenagers, with shock tactics conspicuous by their absence.

In 1998, Edizione's sports clothing businesses, by now amalgamated as Benetton Sportsystem, were sold to the main group and rebranded as Benetton Playlife. That same year the group agreed a deal to sell its branded clothing through mass-market Sears stores in the US. The joint promotion appeared to be working well in 1999, but after several years of low-profile marketing, Benetton was preparing to unleash another high-controversy campaign. In 2000 a new series of ads was launched to protest against the death penalty in the US by featuring sympathetically photographed full-face portraits of death-row convicts. The campaign caused a storm of protest, and Sears dropped the Benetton range altogether. Finally realizing that he had overstepped the mark, Luciano Benetton agreed to dismiss Toscani as creative director. At the same time, following similar moves by arch-rivals The Gap, Benetton began shifting from its traditional smaller retail outlets to multi-level megastores.

By then clothing had come to represent only a small part of the Benetton family's business interests. Under Gilberto Benetton's careful management, Edizione had invested widely in other sectors, taking advantage of a series of privatizations by the Italian government in the late 1990s. In the 1995 privatization of IRI, Italy's huge state-owned industrial conglomerate, Edizione bought large stakes in GS supermarkets (later sold to Carrefour) and Autogrill, the country's main motorway service business. The group also invested in Italian mobile phone start-up Blu. In 1999, Autogrill became the world's biggest motorway services group with the purchase of US-based Host Marriott Services.

However the group's most daring move was its involvement in the takeover of Telecom Italia. Having dabbled for some time in the telecoms market, the family began negotiations in 2001 to take a stake in the debt-crippled national operator and its parent company Olivetti. Initially the group supported TI's hard-pressed chairman Roberto Colaninno, but switched sides mid-year to back a takeover by Pirelli chairman Marco Tronchetti Provera. A joint venture company part-owned by the Benetton family acquired control of Olivetti, and therefore in turn Telecom Italia. Gilberto Benetton was subsequently appointed vice chairman of Telecom Italia.

In 2002 the group was forced to resolve growing problems in its sportswear division. Misguided attempts in the late 1990s to force several separate businesses to work under shared management and sales teams led to a steep decline in their fortunes. Nordica and Prince both lost their leadership of their respective markets, while Rollerblade slipped into losses. In 2003 the Nordica mountain sports and Rollerblade skating brand were sold to Tecnica group, and Prince tennis rackets to US investment group Lincolnshire Equity.

Last full revision 28th September 2016

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