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News midsummer that Bolt Threads had halted production of its Mylo leather alternative requires the industry to rethink the importance of the ability to scale innovations.

MILAN – Fashion’s sustainability journey is multipronged and paved with innovation across materials and processes.

In the former category, the number of bio-based and low-emissions alternatives labeled as game-changers is countless. Yet innovation can only really thrive and leave a substantial mark when it’s at scale.

News midsummer that California-based material innovation company Bolt Threads had halted production of its Mylo mycelium (fungi’s root-like system)-based leather alternative, due to deteriorating macroeconomic conditions and hurdles in getting new funding sent a message about how buzz and business don’t always go hand-in-hand.

Stella McCartney was an early adopter of Mylo. She first started working with Bolt Threads in 2017, when she plied the material into a prototype of the brand’s signature Falabella handbag, which was featured in the Victoria & Albert Museum’s 2018 “Fashioned from Nature” exhibition. But it took her five years to finally take the innovation to retail, debuting last year 100 Frayme Mylo bags. In 2021 McCartney used the trademarked material for two not-for-sale pieces of clothing. Adidas, Lululemon and Kering followed in her footsteps.

The bio-based material is only one of many similar iterations, alternatives to leather, polyester, and even silk.

They include Piñatex, faux leather made of pineapple leaf fibers; Vegea, made of apple orchard and vineyard waste; Desserto, crafted from milled cactus leaves; Gucci’s in-house Demetra viscose and a wood pulp compound; Sylvania, the fungi-derived material manufactured by California-based start-up MycoWorks and endorsed by Hermès, as well as the silky Orange Fiber, the cashmere-like Spiber thread created via fermentation and extrusion processes using microbes and sugar, and Peelsphere’s fabric made of fruit waste and algae through advanced material engineering.

Data firm Vantage Market Research estimates that eco-fibers generated sales of $53.9 billion in 2022, a figure poised to almost double by 2030 with a compound annual growth rate of 7.8 percent.

However, embracing these innovations can be a gamble for apparel and designer brands, required to pour lots of money into them with little evidence on return on investment.

Many are inking partnerships and deals with textile and material innovators to help them forge ahead with research and development. Others, including Kering through its Milan-based Materials Innovation Lab, or MIL, are testing them in-house, providing feedback to help them achieve industrial scale.

Yet the number of established textile makers and start-up companies joining forces are still too few, their collaboration viewed as instrumental in combining the former’s business acumen and portfolio of clients with the latter’s innovative mindset.

Consumer insights consistently point to younger customers’ increased and increasing demand for sustainability, but too little data confirm those clients are willing to pay more for products using alternative materials.

Earlier this year, cotton specialist Albini Group introduced organic cotton obtained from regenerative agriculture, coming with a premium price tag afforded mainly by luxury brands. Its chief executive officer, Stefano Albini, was still hesitant about expanding the farming technique to regular cotton, fearing it would have little business traction.

Additionally, being vegan or avoiding the use of fossil-fueled resources doesn’t necessarily imply being fully sustainable or biodegradable. Bio-based materials often aren’t rid of synthetics entirely, even if in small amounts in the form of solvents, coatings or plasticizers. This leaves a big question mark on how to ease textile recycling, a priority not only for the industry but also for lawmakers.

Similarly, even if turning to agricultural waste as feedstock falls within the perimeter of the circular economy, experts are raising counter arguments that creating new materials isn’t always the best solution.

As the Netherlands becomes the third EU country to pass an Extended Producer Responsibility law, the block is set to move on new measures, but how effective these post-production "polluter pays" laws will be is murky.

The fashion and textile industry is the target of an ambitious overhaul in the European Union.

Over the summer, two new milestones were passed. Member state the Netherlands launched its long-awaited extended producer responsibility policy for textiles in July, making it the third European country after France and Sweden to hold brands responsible for clothing waste.

The new policy requires all manufacturers to provide collection points and enable sorting, recycling and reuse of the products they sell in the Dutch market, plus account for where that waste goes. Much of that will be done through a collective, with fees based upon how many pounds of textiles a company’s clothing sells in the country each year.

The law’s stated goal is to have at least 50 percent of textiles in the Netherlands to be reused or recycled by 2030, and 25 percent of the recycling to be fiber-to-fiber.

It’s a precursor to EPRs being implemented across the bloc. The EU’s executive branch, the European Commission, put forward its highly anticipated proposals to introduce mandatory EPRs for textiles in all member states under the European Union Waste Framework Directive.

The proposed rules would mandate each EU country must launch a separate textile collection program by 2025. EPRs, similar to the Netherlands’, are intended to shift the cost of collection, sorting, and end-of-life treatment away from the taxpayer onto the brands — a “polluter pays” system which will go toward waste management or investing in recycling programs.

“It will definitely increase how much textile is collected,” said Nusa Urbancic, chief executive officer of the Changing Markets Foundation, who noted that the majority of clothing waste currently goes in with the household trash. “The level of fees will really determine whether or not it acts as a deterrent, and the behavior of these companies.”

Fees will vary according to complex calculations based on material, weight, eco-certificates achieved, and size of the company, a scheme known as eco-modulation, similar to the current French system. But looking at France as an example, the EU itself notes that “EPR fees…make a very small part of the price of the product.”

It amounts to a few cents per garment, which brands can easily pass on to the consumer.

“[Higher fees] would encourage brands to actually improve their design, to improve the kind of clothes that they’re putting on the market and make better clothes potentially,” said Urbancic.

The European Commission’s proposal is part of a basket of new regulations that the European Union is pushing under the Strategy for Sustainable and Circular Textiles, from combating green claims to how products are designed.

The overarching strategy aims to have all textiles imported into the EU to be “long-lived and recyclable, to a great extent made of recycled fibers, free of hazardous substances and produced in respect of social rights and the environment” by 2030.

Critics of the proposed legislation say it doesn’t go far enough or address the sheer volume of stuff that brands produce each year.

While the new proposal is set up to deal with waste, there’s not much incentive at the beginning of the sales cycle of clothes that are widely dependent on these synthetics. “You have to look at the fundamental issue, which is the cheapness,” said Veronica Bates Kassatly, analyst and coauthor of “The Great Greenwashing Machine: The Use and Misuse of Sustainability Metrics in Fashion.”

She cited fossil fuel-based polyester as a major polluter all through its production and life cycle and its immediate impact on carbon outputs. “The precautionary principle requires us to do something about the volume of polyester,” she said.

The current European proposal calls for “realistic” recycling targets, without giving a concrete number, and doesn’t address the major issues that face recycling — that poly-blends are difficult to recycle, and direct fiber-to-fiber facilities simply don’t exist at scale in most places.

Much of what is currently collected is downcycled for industrial use, but only around one percent is made into new clothes, according to Changing Markets. Textiles that are recycled are turned into insulation or industrial uses — roughly about 27 percent.

Aside from a few small-scale or pilot programs, “the industry hasn’t really invested in textile-to-textile recycling. And with this legislation, we don’t really see that they have a huge incentive to invest,” said Urbancic.

Much of the current talk touts the benefits of recycled polyester, but as Kassatly pointed out, recycled polyester mostly comes from plastic bottles — not an old dress being made into a new shirt, as many consumers imagine. The current method is hotly debated as it takes plastic bottles out of the recycling stream, is energy-intensive and ultimately can’t compete on cost with pennies-per-pound virgin polyester. A tax would help level polyester’s playing field with natural fibers.

“If you had an environmental levy on all polyester that is not fiber-to-fiber recycled, it would automatically provide an incentive for someone to invest in developing it,” said Kassatly. She cited the success of recycled cashmere as an example.

The European proposal also sets out to address illegal exports of used clothes outside of the 27-country bloc, which is often labeled for reuse but results in being dumped in Ghana or Kenya, which are grappling with the sheer quantity of imported textile waste.

If Europe can no longer export its clothing or fiber-to-fiber recycle at the scale needed, “maybe that’s a great lesson that we’re going to get where we suddenly find we have these mountains of plastic clothing which nobody wants, if we suddenly find that we have to deal with our own mess and the volume that would pile up,” said Kassatly, citing photos and films of great clothing dumps from the Global South.

“It would be so beneficial if we could, through government policy and through environmental levies, increase the cost of clothing to reflect its true environmental cost,” said Kassatly. “There’s all these externalities nobody pays for when they buy an article of clothing.”

Multiple sources said the European Parliament is eager to push legislation through before next summer’s elections, even if data and targets are incomplete.

“It will give [brands] an opportunity to do better but it’s not going to change the fast fashion business model. It’s slow reform…but it is a significant step because Europe is such a big market. Lots of fashion brands want to sell here and they’ll have to comply with this law,” said Urbancic.

“Fashion has been the most unregulated industry in the world, and now it’s the first time that something is happening, finally,” said Urbancic. “I hope this will be strengthened even more, but it is a good first step.”

According to Morgan Stanley's estimate, around 1 percent of customers will account for as much as 40 percent of sales in some key luxury malls in China.

China‘s slower-than-expected economic recovery — dented by deflation woes, slow retail sales growth, rising youth unemployment rate and fragile consumer sentiment — means that most consumers will likely cut back on luxury spending to brace for trying times ahead.

Globally speaking, Bernstein believes that luxury spenders will likely sober up from a “post-pandemic euphoria,” or revenge spending, in the second half of 2023.

The trend is already apparent in the U.S. and Europe as sales continue to normalize. Bernstein expects the luxury market to grow at 13 percent this year and by 11 percent in 2024.

According to Bernstein, in China’s version of this post-COVID-19 reality, luxury growth will come from “rich, young and high-end Chinese luxury goods consumers.”

“The top-end consumers will continue to become more and more important, supported by a continued income and wealth polarization and a heightened effort by brands to lure them into their arms,” observed Bernstein’s Maria Meita in a recent research note.

The recent round of group travel resumption, including Japan and the U.S., means that more wealthy shoppers will soon flood retail destinations in New York, Tokyo, Paris and Milan. According to Bernstein, due to a 30 percent pricing difference and tax-free incentives, Chinese shoppers will allocate 50 percent of luxury spending abroad — but this is below the 70 percent before the pandemic.

Onshore spending remains crucial, but market realities mean brands and retailers will now orient marketing efforts around the ultra-rich. According to Morgan Stanley’s estimate, around 1 percent of customers will account for as much as 40 percent of sales in some key luxury malls in China.

“Many luxury brands have recognized the opportunity to focus on their VICs through sophisticated CRM [customer relationship management] programs,” said Jacques Roizen, managing director of consulting at Digital Luxury Group.

Roizen expects the growth in the number of the ultra-rich will fuel a “comfortable growth” for the luxury industry in the coming years.

“You rarely see brands talk about the Chinese middle class anymore,” observed Weiying Guo, associate director at Cushman & Wakefield.

“It is already widely believed that if your annual income is less than 3 million renminbi [or approximately $412,000], you are not the target audience anymore,” Guo added.

To scale up clienteling services, mega brands such as Louis Vuitton, Dior and Chanel have quietly opened VIP salons in key China markets.

Ultra-exclusive retail experiences are not enough. To lure in key shoppers, brands have been putting on exclusive trunk shows in far-flung locations and hosting exclusive dinners where clients can rub shoulders with celebrities.

Repeat runway shows, including Dior’s Shenzhen spectacle and Bottega Veneta’s Beijing showcase, are rounded out with clienteling initiatives where big-ticket orders are placed while sipping Champagne.

Flaunting exclusive experiences quickly became the new status symbol among the ultra-rich. An archetypical Hermès VIP refers to themselves by the nickname “horse breeders”; an elite shopper also takes pride in becoming a KOC, or key opinion customer, for the brand on social media.

To better cater to wealthy individuals outside of retail hubs such as Beijing, Shanghai and Shenzhen, luxury brands have extended their retail footprint to second-tier cities.

“Shoppers that are used to buying other premium brands usually quickly converted to buying luxury products,” according to Raymond Cao, general manager at David Plaza in Zhengzhou, a second-tier city in Central China. The shopping mall features top luxury players such as Louis Vuitton, Hermès, Loro Piana and Gucci.

Early next year, Chanel will open its first central China store at the Zhengzhou luxury mall.

“The wealthy customer base is eager to be educated by luxury labels. We are a market of over 100 million people, there’s a lot of potential,” said Cao.

For the first half of 2023, footfall at David Plaza increased 47 percent compared to the same time last year. Retail sales jumped 60 percent, driven by luxury sales.

There are obvious incentives for lower-tiered cities to attract luxury fashion brands. A luxury facelift doubles as proof of the city’s consumption vitality.

For example, Hangzhou government officials recently proudly revealed that sales at the city’s Chanel store, the only one in Zhejiang province, reached 1.8 billion renminbi, or $246.8 million, in 2022.

In the northern second-tier city of Tianjin, news quickly spread on social media that sales at its first Hermès store reached 30 million renminbi on the opening day. “Tianjiners are known for being untamed shoppers,” one zealous customer proudly proclaimed on Xiaohongshu.

Lawmakers propose legislation spurred by outbreak of infection at center of last year’s infant-formula shortages

WASHINGTON—Baby-formula manufacturers would be required to notify regulators about contamination in their products in a wider range of circumstances, under bipartisan legislation introduced Tuesday.

The legislation is aimed at preventing and quickly halting any future outbreaks of cronobacter, the bacteria that sickened four babies and fueled last year’s shortage.

The bill from the top two lawmakers on the House Oversight’s health panel, Reps. Katie Porter (D., Calif.) and Lisa McClain (R., Mich.), would require formula manufacturers to notify the Food and Drug Administration within 24 hours if they find out their formula is contaminated during tests taken in the facility, according to the lawmakers’ offices. Under the legislation, regulators would then have 72 hours to contact the baby formula maker after being notified of the contamination.

Currently formula makers have to test samples of formula before it is distributed to make sure it isn’t contaminated and keep records, but they aren’t required to notify regulators unless they have reason to believe formula that has already been shipped out to stores is contaminated, according to an FDA spokesperson.

The bill “empowers the FDA and holds the agency accountable for getting answers from manufacturers, to give parents peace of mind and to prevent another bacterial outbreak from devolving into a disaster,” said Porter, the top Democrat on the House Oversight Committee’s Health Care and Financial Services panel.

The legislation targets a rare bipartisan area of agreement from a committee whose GOP leaders have largely focused on investigating the Biden administration.

Lawmakers from both parties expressed outrage at a pair of hearings held earlier this year examining the baby-formula recall and ensuing shortages that fueled anxiety in parents of young children, including members of Congress.

“This crisis was preventable. We saw failures occur that should have never been possible, and we cannot allow them to happen again,” McClain, the chairwoman of the subcommittee, said in a statement.

Last year’s nationwide baby-formula shortage accelerated following a recall sparked by the hospitalization of four infants, including two who later died, who contracted rare bacterial infections from cronobacter after being fed powdered baby formula made at the same Abbott Laboratories facility.

Abbott has said that it doesn’t believe the four infant illnesses were caused by contamination at its plant and that investigations conducted by the FDA, the Centers for Disease Control and Prevention and the company itself didn’t find a definitive link between Abbott’s products and illnesses in children.

The FDA has also requested the authority from Congress to require manufacturers to report when formula tests positive for cronobacter, as part of the administration’s budget proposal.

Earlier this summer, federal regulators and state health officials worked together to strengthen data collection of cronobacter infections, adding them to the list of roughly 120 diseases tracked at the national level. That sets up a standardized process for states that choose to collect data around these infections to count them and send information to the CDC.