Benetton's Diversifications

When Edizione bought the various sports equipment brands, it believed that there was a synergy to be derived. But with hindsight, it appears that things were more complicated. Mike Bizner (Bizner), Benetton Sportsystem's winter sports director at the time, later explained, "After buying at the height of the market, there was a tremendous pressure to create an 'umbrella' of sorts.'Finding the right synergy' between these brands became a big deal. However, there were multiple false starts in searching for those synergies. Like Fibre Tube skis." The perceived synergy between Prince and Kastle did not materialize and, in fact, dealt a major blow to Kastle's brand value...

Initially, all the sports brands that were acquired were managed by Benetton sportsystem, which was held by Edizione. It was then, in 1997, sold to the Benetton Group, which was also held by Edizione. At the time, many financial experts expressed the opinion that the only reason the sale was made, was to reduce Edizione's debt. "The deal boils down to using Benetton Group cash to cover the debt upstairs", said a Milan-based investment banker.

However, the Benetton family maintained that it was a fair deal. In addition, they believed that the Benetton Group's vast retailing experience in the clothing business would benefit Benetton Sportsystem...