DIESEL: HIGH-OCTANE PLANS

Byline: Samantha Conti

MOLVENA, Italy--Don't let the ad campaign, with its necking sailors, naked airline stewards and inflatable rubber women fool you. Diesel, the Italian jeanswear company whose ads can make your hair stand on end, is all business.
In Europe, the $339 million company is a well-known label. But in the U.S., where it does about $15 million in sales, Diesel's awareness level is limited to the fashion-forward crowd who appreciate its take on denim and related sportswear.
Now, however, the company is poised to expand in America, with a growing account list, a 14,000-square-foot megastore set to open on Lexington Avenue in New York next February and a goal of increasing its $15 million U.S. business to $100 million in four years.
Despite the laid-back air at its Molvena headquarters, where the average age is 25 and only the accountant wears a tie, Renzo Rosso, Diesel's 39-year-old owner, has plenty of big ambitions for the company. In a recent interview, he said ego drives him more than money, and his goal is to make Diesel the world's number-one jeans manufacturer. Of course, he has a long way to go. Levi Strauss & Co. rang up sales of $6.07 billion in 1994, while Lee and Wrangler are units of VF Corp., where total jeanswear sales last year came to $2.5 billion. That figure includes VF's Girbaud business, but Lee and Wrangler by far account for most of the volume.
Nevertheless, Rosso and the company's commercial director, Maurizio Marchiore, who sports silver bangles and torn jeans, see Diesel as the latest generation in the family of Lee, Wrangler and Levi's.
"All three have a philosophy and have contributed to the development of denim. And they all know how to construct a good, solid pair of blue jeans. We see ourselves in the same family," Marchiore said.
Part of Rosso's plans to conquer the market is a carefully plotted assault on the U.S. market. Three years ago, the company had to build its U.S. reputation from scratch after Russ Togs, which held the license to produce and distribute Diesel apparel in America, filed for Chapter 11.
The time has finally come for its big U.S. debut. The Diesel New York store scheduled for a February 1996 opening will be at 770 Lexington Ave., on the northwest corner of 60th and Lexington, catercorner to Bloomingdale's--as well as across the street from a large Original Levi's shop, Rosso noted with a smile. He said Levi's is Diesel's biggest competition in Europe.
The firm also plans to have its U.S. headquarters on the 13th and 14th floors of the building on Lexington. Within two to three months, the company will open its fifth U.S. showroom, in Chicago. Diesel currently has showrooms in Miami, Los Angeles, Dallas and Manhattan. The company also has a warehouse in Queens, N.Y., that supplies the company's 300 retail accounts.
As for the ad campaign, which seems part Fellini and part Grateful Dead, Rosso said he wants it to change minds as well as sell goods.
"We try through our advertisements to create an antidote to all the automation--to make people think and laugh. We hope people see the ads and say: 'Damn! What a great story, what cool people. I want to be like them."'
The ads, put together by Diesel's creative team and the Swedish agency Paradiset, have taken on issues such as gun control, smoking and Third World immigration.
In an ad of a few years ago, a buxom young woman straddles a big cigarette. There is a small black skull and cross bones in the corner of the ad. The ad reads: "How to smoke 145 cigarettes a day," and asks, "Why stop at bronchitis when a faster heartbeat and a shorter life are just around the corner...that sexy cough and stunningly bad breath will win you new friends everywhere."
In a more recent eye-catching effort, a nude airline steward wearing only his uniform cap and necktie serves refreshments to stunned passengers in a plane that looks as if it's about to crash. Passengers are screaming and objects are flying around the cabin.
Despite their quirks, the ads appear to be working. Diesel's 1994 turnover of $338.8 million (550 billion lire at current exchange) was up 22 percent from 1993 and up nearly 50 percent from 1992. Rosso said he aims to pump up worldwide sales by the year 2000 to a trillion lire--or about $616 million.
Rosso stressed that he doesn't tone down or change Diesel's apparel for the American market.
"Like news and music, fashion has to be the same in every part of the world. That is why we stock our American warehouse with all the same merchandise that is in our Italian warehouse," Rosso said.
Prices are set to be uniform throughout the world, with a pair of basic jeans retailing for about $89.
Rosso added that it took three years to "train" Diesel's American accounts into placing their orders his way. He asks them to order the twice-yearly collections seven months in advance, instead of the usual two or three months.
He offers clients 1,000 to 1,200 pieces to from which to choose each season and offers options on fabric and color. Diesel's clients include Bloomingdale's, which took on the line for this fall, Macy's, Urban Outfitters, New York's Antique Boutique and Fred Segal in Los Angeles.
Diesel produces five lines--Diesel Modern Basic; Diesel Females; Diesel Kids; Diesel Accessories, which includes a limited number of shoes and underwear, and 55 DSL, the newest line, which features fashion looks in activewear, including snowboarding and skateboarding clothes.
The fall/winter 1995/1996 collections hang on racks made of plumbing piping in the company's airy showrooms and include shiny electric orange jeans made from viscose and cotton, hot pink corduroy jackets, snap-front psychedelic shirts in pink and orange, and shiny baby pink miniskirts.
And while Diesel's main product is denim, the jeans could hardly be called basic. The models include such ideas as Fellow, which the company says is "good on girls and for men who want that flat Sixties/Seventies look." Then there's Phazer, which has a higher waist and slightly tapered leg "for girls who say 'no' to that extra-tight fit."
Another part of Rosso's grand scheme is to launch a select series of licensed products. Late last year the company came out with Diesel Shades, a line of sunglasses with names like Porno Star, Nose Job, Popgun and Atomic Sun. Safilo SpA, an Italian company, is the licensee. A Shades ad campaign features a group of leggy nurses--in sunglasses--and manic doctors terrorizing a patient. Marchiore said Shades are available in selected U.S. stores that carry the apparel line and will have a bigger national launch in September.
Two months ago, the company announced Diesel Perfume, a unisex fragrance that will be available throughout Europe in September. BBF Cosmetique SpA, also an Italian company, has the license. Diesel has not decided how or when it will release the scent in the U.S.
In all his licensing ventures, Rosso said, his priority is image control.
"We made it a point with the perfume and Shades licenses to have total control over product, marketing and communication. The only thing our licensees do is produce and distribute," Rosso said. He added that he was looking for a company "whose mentality is similar to Diesel's" to produce a complete footwear line.
Rosso has had a long time to think about the jeanswear business. He was a founder, with Claudio Buziol and Adriano Goldsmith, of Replay, another big Italian jeanswear company.
He left that company in 1978 to found Diesel, which originally just produced sportswear for other firms. At the beginning of the Eighties, Diesel began to produce its own line, and in 1985 Rosso bought out the company's shareholders and became Diesel's sole owner. Rosso, who is proud of the fact that he built Diesel from scratch, says he would like to keep the business in the family. His eldest son, Andrea, an 18 year-old with a mane of long dreadlocks, has already begun to work for Diesel, traveling to Indonesia, where the company has seven factories to produce some of its apparel.
About 70 percent of Diesel clothing is produced in Italy and the rest is sourced in Greece, North Africa and the Far East. While Diesel exports to some 72 countries, Marchiore said the bulk of turnover is generated in the European market.
Diesel apparel is distributed through subsidiaries and a network of importers. In South America, Diesel has a series of licenses with companies to produce and sell the apparel, but it is in the process of terminating them.
"We want complete control over the products," Marchiore said.
Five percent of turnover goes back into the company's ad campaign, and representatives in each country are required to buy some local advertising. In addition to the print campaign, there are ads on MTV and European music stations.
Rosso and Marchiore are proud of their ads, which, they say, are not "too shocking" or "facile" like Benetton's.
"We are targeting modern people, people who want to be inspired--not manipulated or told what to do," said Marchiore.
That philosophy also applies to the way the company is run. A team of 15 designers from Sweden, Holland, France, the U.K. and Italy creates the collections. Marchiore said the system works well because Diesel is not dependent on a sole designer.
"We also like our designers to know they are free. If one needs to leave for a while to find themselves, they are free to do so and the company can still move forward," he said.
"I have never worked for people who gave me so much freedom and trusted me so much," said Magnus Ehrland, a Swedish designer who works for the company. "Rosso comes into the showroom, slaps you on the back and looks at what you are doing. You get the feeling that his treatment of you comes from the heart, that he is not phony."
Ehrland also created the wacky, kitschy interiors for Rosso's Pelican Hotel in Miami Beach, a small operation of some 25 rooms that's a side venture for the jeanswear maker. It's a place where each room has its own name and theme, such as Power Flower, Bang a Boomerang and Some Like It Wet.
Meanwhile, Rosso said he's proud of the world he created.
"We want people to put on a piece of Diesel clothing in the morning, look at themselves in the mirror, and say "Damn, don't I look good with this thing on!"

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