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Can Kim or Rihanna fill their shoes? Or is the multicategory megabrand a legacy of a bygone age in fashion?

Ralph Lauren, Donna Karan and Calvin Klein once ruled Seventh Avenue from on high.

Can Kim Kardashian or Rihanna take their place?

Ralph, Donna and Calvin all built brands that were on a first-name basis with the entirety of fashion. They had the brand heat, reach and personality to build megabusinesses, setting the trends that put American fashion on the map and marching into multiple product categories around the globe.

Those brands — and their namesake founders — not only led fashion, but served as an aspirational target. They were the designers other designers wanted to be with the businesses other brands strived for.

As Ralph, Donna and Calvin have all developed over the years, they have become part of fashion’s bedrock. They are no longer the new brands taking over, but the establishment the next generation looks to overthrow or compete against.

There are other designer-namesake brands with scale and profile that followed that leading trio — from Tommy Hilfiger to Michael Kors and Tory Burch. They are all established, of similar ilk.

But where is the next generation?

Both Kardashian with Skims and Rihanna with Fenty x Savage have made a big splash with blowout successes in still very-focused offerings.

Whether or not they can grow really big — and stay big — is the question.

“These days where a sprawling multicategory brand will gain global traction are counted,” said branding expert Martin Lindstrom. “Just as the idea of truly global models, bands or artists are counted. The extreme media fragmentation, and a music industry where the Millennials hardly know the artists behind the auto-generated playlists streamed from Spotify — where the loyalty more is to the platform or the aggregator of the playlists than the actual artists, has spread into every corner of commerce.”

Lindstrom pointed to FashionUnited’s ranking of the most valuable global fashion brands, which was led by Nike, Louis Vuitton and Hermès, but in the top 30 included only one brand under 20 years old, German e-commerce player Zalando.

“Staying young is hard — being younger is even harder,” he said. “The concept of global brands is having an existential crisis. It is too hard for a brand to establish truly global appeal navigating the tough waters of aspiration, race, sexual preferences, gender, age, media usage, nationality — all while staying relevant at the same time.”

Lindstrom said Kim or Rihanna might succeed, but that few actors, reality stars and performers will truly make it.

“Most fail to translate their global ‘on stage’ appeal into a new category of [commercial product] — much harder than moving from the microphone to in front of the camera,” he said.

And while Kim and Rihanna and others have gigantic social media megaphones, they are shouting into an increasingly crowded and competitive space, where consumer attention spans are being spread particularly thin.

By all accounts, Skims shapewear and Fenty lingerie are both growing at an astounding rate. But at the same time they’re squaring up against a host of other brands making names for themselves, from ThirdLove to Parade and Sofia Vergara’s EBY and a host of lines from well-known names, including U.S. market leader Victoria’s Secret, which is back on track after its earlier stumbles.

Across beauty, ready-to-wear, swim and beyond, the story is the same.

“It’s easy to start a brand today, you could start one, I could start one, the barriers to entry are relatively low,” said Patrice Louvet, president and chief executive officer of Ralph Lauren Corp. “The opportunity is clearly there, you could sell your product online, you could have access to manufacturing relatively easily, you could advertise online relatively simply.”

That being the case, Louvet said the market was “super fragmented.”

“Many brands come and go,” he said. “There are a lot of brands that can probably get to several $100 millions, but then, when you have to pivot to $1 billion, you have to invest in a physical presence, you have to invest in digital capacity. We’re talking big dollars here.”

Lots of brands means lots of competition — for consumer dollars and consumer mindshare.

And then to build a brand like Ralph or Donna or Calvin, one has to not just break through, but stay on top. Consider the designers who were meant to be the next generation after those big three: Michael Kors acknowledged his business wasn’t “glowing” by the time it was was acquired by Lawrence Stroll and Silas Chou in 2003 and rebuilt. The Isaac Mizrahi business was just sold to brand management firm WHP Global at a $68 million valuation, while Marc Jacobs has seen years of ups and downs although it now is back on the growth track under parent LVMH Moët Hennessy Louis Vuitton. Even Donna Karan struggled after her IPO and acquisition by LVMH, eventually being sold to G-III Apparel Group, which stopped making the high-end Collection line, but reestablished the business. There are numerous other names who came and went across the ’80s, ’90s and Aughts.

Louvet said Ralph, Calvin and Donna all have a “very unique timeless point of view.”

That’s a rare quality and one that takes time to really show through.

“Is the positioning of Supreme timeless or are the values that underpin the brand broadly appealing and timeless?” Louvet wondered. “Is the clarity of purpose of that brand there?”

He left that as an open question, but made clear that he does indeed want there to be another megabrand.

“We actually hope it’s possible,” Louvet said. “We believe in entrepreneurship. We believe in innovation. We believe in constantly bringing interesting things to the customer, but it’s harder.”

Bringing the customers interesting things means more than just interesting product.

“I think Ralph sometimes is closer to a movie director than he is to a traditional apparel designer,” Louvet said. “It does start with a story and then the product is encompassed within that story, almost a prop within that story to bring the story to life.”

Once upon a time, it was easier to get that story heard.

“Back when Ralph and Calvin and Donna were building their businesses, and even when Michael [Kors] and Tory [Burch] were building their businesses, there was no social media, they dominated the press,” said Gary Wassner, CEO of factor Hilldun Corp.

“Think about Brooke Shields and Calvin Klein, we don’t even have supermodels anymore,” he said (although the Hadid sisters certainly rank up there). “Social media puts so much in front of us that we flick from one to the next and it’s very hard to maintain that position in social media forever. It wasn’t hard when you could dominate the press. It was centralized. We had gatekeepers who made sure those brands were front and center, those gatekeepers are gone.

“I don’t think we’re going to be creating any megabrands anytime soon, I think we’re looking to build brands to $250 million, $300 million, maybe $500 million,” said Wassner, who recently started working with private equity firm Brand Velocity Group to build its BVG Fashion & Apparel vertical.

The next generation brands are in many ways playing a very different game.

“In American fashion we might not see another Ralph, Calvin or Donna and Tommy in the near future,” said Robert Burke, CEO of Robert Burke Associates. “The traditional retail/wholesale model has totally changed…the same path that these big guys used doesn’t work any longer.”

Burke pointed to the host of New York designers who made the scene from 2000 and 2010, launching in rtw, adding a second line, laying in accessories and then footwear and then fragrance.

“It was too much too fast for them as well as the customer,” he said. “None of them emerged to the level of the big guys. At the same time, the big brands like [those at ] LVMH [Moët Hennessy Louis Vuitton], Kering, and Prada got much much stronger in their d-to-c relationship and also concessions with the department stores and their own retail.”

None of the New York designers of the Aughts ever successfully took on Ralph’s movie-director mode. Fashion, just like media, evolved and everything changed. The big screen in the theater is now overwhelmed by the little screen in the pocket.

That is where Kim and Rihanna rule, but is that enough?

Michelle Kluz, a partner in Kearney’s consumer practice who launched the luxury activewear brand Urban Savage, said the next would-be Ralph or Donna almost has to be a celebrity influencer before they can even think about a multicategory approach.

That’s a reversal from the ’80s, when Ralph, Donna and Calvin grew their businesses and, from that, gained cultural influence, she said.

“In order to build that kind of business [now], you have to have the cultural influence first,” she said. “Audience is king. Content is king. Product is not the only king anymore.

“Kim is not designing the product, she is the product,” Kluz said.

It’s a final product that very much is succeeding — Skims was valued at $3.2 billion in a fundraising round earlier this year.

But that success might simply be leading to a different place in a different industry.

“It might be a shorter kind of legacy, but it actually in some ways is bigger and has the capacity to more authentically extend into a wider [range] of categories because people are so much more spontaneous,” Kluz said. “How well did you really know Calvin Klein as a person? You didn’t.”

Nonetheless, Calvin built a big business that parent company PVH Corp. has developed further, driving revenues of $3.7 billion last year.

When Stefan Larsson, CEO of PVH, which also owns Tommy Hilfiger, laid out his broader vision for the company to analysts this spring, he did so from the same Manhattan space where Calvin Klein the designer used to hold his runway shows, making a point about the brands PVH is building on.

“Building the next Calvin Klein and the next Tommy Hilfiger has probably never been more difficult,” Larsson said. “If you compete with anything generic, generic products, generic consumer experience, generic brands, you’re going to get crushed. The next-generation consumers are already here. Gen Z is already leading the market.”

He also made clear that, in fashion, starting off with a leading position is a good way to stay ahead.

“We have the global consumer base, we don’t have to acquire that,” Larsson said. “We have a consumer globally in all markets that love our brands. We have an omnichannel presence in the marketplace, digital [and] store relationships.”

Kim and Rihanna have the clicks and connections with their followers but they still don’t have all that.

The French luxury house has hinted at a move into beauty. What might that entail?

PARIS — The buzz around Kering and its potential entry into beauty keeps amplifying. Will the French luxury conglomerate — or won’t it — take some of its activity back in house? And could other beauty acquisitions be in the offing?

A spokesperson at the company, whose portfolio includes Gucci, YSL and Balenciaga, had no comment. Yet, industry insiders believe the answer is “yes,” and that a shift might come sooner rather than later.

“Kering, and the luxury goods industry overall, have been on a one-way journey, that is taking back quasi full control of the brands they own,” said Thomas Chauvet, head of European Luxury Goods Research at Citi. “This started 20 years ago, with greater focus on directly operated retail distribution, buyback of franchisees and licensed business, rationalization of independent multibrand partners and conversion of wholesale doors in department stores into a concession model.”

Taking control over its beauty operations could be the next logical step. As others have shown, the do-it-all-yourself at-home model can pack a powerful punch.

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“[Kering brands’] competitors — Dior, Chanel and Givenchy — have everything — fashion, beauty, leather goods, jewelry, etcetera — under the same roof. It gives for sure more consistency, synergy and power to the brand,” said Eric Henry, president of the brand-building consultancy EH4B.

Kering has recently hinted at the idea of sharpening its focus on beauty, and industry experts think that could make good business sense, especially as the group now has a stronger balance sheet and net cash position with which to do deals.

“If they’re not finding transformational — or at least sizable — acquisitions in fashion or in jewelry, they will do something ad hoc while continuing to buy back shares,” Chauvet said. “Something a bit easier — internalize beauty, just like what they did with eyewear five years ago.”

Late last month, a Kering executive suggested the group is ready to explore beauty.

Jean-François Palus, group managing director, said during a conference call with financial analysts on July 27 that Kering has been encouraged by the success of its eyewear division, launched in 2015, for which it is targeting revenues of 2 billion euros in the medium-term.

“Regarding beauty, it is a natural extension of our brands’ territory, and you know that currently, we operate under a license model,” he said. “But our success with Kering eyewear demonstrates that we can create a lot of value for the brands, on the one side, and as a consequence, for the group, by taking some disruptive and innovative approaches.

“So beauty is definitely an area where we could contemplate some initiatives in the future, and all options are open,” Palus continued.

Kering is no stranger to beauty. Until the late aughts, the group, then called PPR, took a more hands-on approach to fragrance and cosmetics. At that time, PPR’s Gucci Group had a beauty subsidiary named YSL Beauté, which included fragrance and beauty brands and licenses, such as Yves Saint Laurent, Stella McCartney, Boucheron and Ermenegildo Zegna, before it was sold to L’Oréal in 2008 for 1.15 billion euros. Kering then retained ownership of the Yves Saint Laurent, Boucheron and Stella McCartney brands, and L’Oréal divested some of the holdings.

That YSL Beauté business was never huge. At the time of its purchase, the activity placed 29th globally, according to the WWD Beauty Top 100 ranking that reflected 2007 revenues. That year, the YSL Beauté activity generated sales of 649 million euros.

(In comparison, rival LVMH Moët Hennessy Louis Vuitton’s fragrance and beauty business — with brands such as Parfums Christian Dior, Guerlain, Parfums Givenchy and Parfums Kenzo — placed 11th, with sales of 2.73 billion euros.)

Today, the jewels in Kering’s crown are Gucci, whose beauty license is held by Coty Inc., and Yves Saint Laurent, still with L’Oréal. Industry sources estimate those generate sales of a half-billion euros and 1 billion euros, respectively.

Coty also operates the Alexander McQueen, Bottega Veneta and Balenciaga fragrance and beauty licenses. Interparfums runs Boucheron’s business in perfume, while Lalique Group develops Brioni’s fragrance business.

Among Kering’s other fashion and jewelry brands: Neither Pomellato nor Dodo has an active fragrance business at present. And the status of Qeelin, a fine jewelry company, in the beauty space could not immediately be learned.

During the analyst call, Palus declined to comment on the length of Kering’s existing beauty licenses, but it is believed none is set to expire any time soon. Industry sources estimate that the Coty-owned businesses have more than five years left on their meters, for instance.

Coty has been Gucci’s license-holder since it was purchased from Procter & Gamble in 2016, as part of a bigger deal. Wella and Escada Beauté had been former licensees, but it was Mennen that signed the first Gucci fragrance license in 1978. WWD articles from past decades repeatedly cite that the original license had a 50-year duration, which makes a possible expiration date be 2028.

A Coty spokesperson declined comment on speculations.

In the recent past — and prior to Sue Nabi becoming Coty chief executive officer in September 2020 — Kering had expressed dissatisfaction with Coty for failing to capitalize fully on Gucci in the fragrance and beauty segment.

“The potential is absolutely huge, and we are quite frustrated by the speed at which this potential is being exploited,” said Kering chairman and CEO François Henri Pinault in February 2020.

But Nabi’s appointment has seemed to portend a more harmonious chapter between the two parties.

“The management changes that took place at Coty have been positive overall,” Chauvet said. “It’s helped the relationship. There have been a few fragrance launches that have gone well.”

Meanwhile, Yves Saint Laurent’s fragrance and beauty business has been growing at L’Oréal. When the world’s largest beauty company acquired the license, the specific terms were not disclosed. However, the deals for YSL and Boucheron were described as lengthy and global.

When asked about the YSL license this week, a L’Oréal spokeswoman said: “L’Oréal’s licenses are very long term.”

She had no comment on whether Kering had approached L’Oréal to buy back the YSL license.

Coty’s agreement for the Bottega Veneta license dates from December 2009. Then in December 2010, Boucheron and Interparfums signed a global licensing deal for the creation and management of the jeweler’s new and existing fragrances. That 15-year contract began on Jan. 1, 2011.

When Coty sealed the $12.5 billion acquisition deal for 43 P&G brands, alongside Gucci, it snapped up the Alexander McQueen fragrance license for an undisclosed length of time.

Coty inked the scent deal with Balenciaga in October 2008, while Brioni’s tie-in with Lalique Group was announced in December 2019. It was said to run through the end of 2024.

How Kering might dive back into beauty is an open question. But the power of beauty is certain.

“Beauty is a great category for image and customer recruitment for luxury brands,” Chauvet said. That’s especially true for the younger cohort.

He likened beauty to the eyewear and sneaker segments, for instance. But while sneakers are developed in-house, beauty and eyewear are generally licensed out in return for the payment of a royalty fee, which makes these activities highly profitable.

Six years after Kering took back its eyewear business from Safilo Group SpA, it now knows how an entry-level category can grow in-house.

“That has given them confidence to complete a similar move in beauty,” Chauvet said. “It’s a way to better align the image and values of the core fashion business with the licensed business — whether that’s eyewear or beauty. It brings more control, from product design to marketing all the way to the quality of distribution. Medium term, this could be accretive to cash profit.”

Richemont subsequently took a stake in Kering eyewear, and that led to cross-selling opportunities on the platform with various brands.

Some industry experts believe Kering’s beauty focus will be centered on Gucci, rather than on the group’s entire fashion and jewelry brand portfolio. But if Kering buys the rights back from Coty before the license is up, it would make strategic sense to do the same for Kering’s other brands there.

What a license buyback would cost is anyone’s guess, industry sources say. Alongside the valuation, there are other elements to be factored in.

There might, for instance, be a service agreement, if Kering were to opt not to manufacture products in-house from the get-go. It could internalize just front-end marketing and communications at the outset, and keep production with Coty, for example.

The beauty business is a specialized one — of a different ilk from fashion.

“It’s two different worlds, two different cultures,” said Joël Palix, founder of boutique consultancy Palix Unlimited. “You need a team of executives from beauty, and you need a certain autonomy.”

The beauty business is famously difficult to crack without an industry partner.

Burberry is a case in point. The fashion brand took its beauty business back in house at the end of 2012 from Interparfums — with which it had launched color cosmetics in 2010 and numerous fragrances in prior years. Burberry paid 181 million euros, exclusive of receivables, inventories and other assets to do so.

Burberry then launched its in-house beauty division with much fanfare on April 1, 2013. However, just a few years later, it decided the activity was better outsourced.

In April 2017, Burberry said it had signed a license with Coty to accelerate the growth and development of its beauty business. The exclusive agreement was to take effect starting October 2017.

Burberry had established beauty as one of its main business pillars, along with fashion and accessories. The company widely touted the strategy as a way for it to upgrade the positioning of its fragrances and reap more profits, drastically slashing the number of fragrance outlets that carried the brand in the U.K. It even had plans for a premium skin care line. Burberry also wanted to market its beauty products with fashion and accessories, which it felt the brand could not do with a licensee.

Burberry said in a statement at the time it would lead “on creative elements of the beauty business,” while benefiting from “Coty’s deep beauty industry expertise and first-class global distribution.”

One company that’s been highly successful in unifying and leveraging its brands’ fashion and beauty businesses in-house is Puig. The Spanish group has actively been building a strong portfolio of labels that seamlessly trade in both realms, and use synergies for storytelling and other brand-building elements.

In 2016, for instance, Puig acquired the Jean Paul Gaultier fragrance business, after having already owned a majority stake in the designer’s fashion activity for four years.

Puig chose not to outsource the Dries Van Noten fragrance and makeup line, which it created from scratch with the designer, whose fashion label the group owns. The result was totally in sync with Van Noten’s fashion image.

Puig has, as well, managed to take a relatively small fashion brand — Paco Rabanne — and build a top-selling worldwide fragrance business for that.

Critical mass is key in the beauty industry.

“Taking Gucci alone and trying to make it a beauty brand on it own raises challenges,” Palix said. “You need to have the infrastructures, the companies in each country. You don’t want to go through distributors, because it would actually be going backward. You need to do it in a big way — or not [at all].”

He believes that if Kering is really interested in shifting its beauty model, that should be done in a short period of time — two to three years, tops. And the activity would need to generate upward of 1 billion euros in sales fast.

“Or else it’s not going to work,” Palix said.

The beauty business could include a major acquisition at its core, beside Gucci. And Kering possibly has already been looking.

Industry sources say the group was interested in acquiring Byredo, which was snapped up by Puig in late May, for instance. And there were reports a few years ago that Kering was eyeing The Estée Lauder Cos. Inc. as a potential takeover target, but the reports were never confirmed and no deal ever came to fruition.

Acquiring a beauty brand or brands unrelated to its fashion portfolio could help Kering build up certain skill sets, such as those pertaining to manufacturing or distribution. Learnings could also be obtained through setting up a joint-venture partnership.

There’s little doubt that Kering’s fashion brands could have a strong presence in fragrance and makeup, but some experts question whether skin care is a natural fit.

“There’s a limit to how much you can stretch a fashion brand,” said Chauvet, who added in skin care, a brand needs more scientific credibility, and that it’s not as much of an accessory as perfume or color cosmetics.

“I don’t think Dior, Chanel, Yves Saint Laurent or any other fashion brand has made a real statement in skin care,” said one industry source, who requested anonymity.

Another believes for Gucci, skin care is less important than fragrance and makeup, and that the real priority is to better align those with the brand’s fashion.

Makeup is trickier to enter than fragrance as a category. Still, Hermès International successfully launched itself into color cosmetics in the recent past.

In fragrance, McQueen and Bottega Veneta are among the sleeping beauties, and Kering could, for instance, try to whip up a similar lather of excitement for Balanciaga’s perfume business as it has for the brand’s fashion.

“It hasn’t translated into fragrance yet,” Palix said. “Making Balenciaga a more edgy fragrance brand could be an interesting step.”

Central bank intervenes after consumer and factory activity in July fall short of expectations

China has cut interest rates in an effort to shore up growth as the world’s second-biggest economy is buffeted by repeated lockdowns and a worsening property downturn.

The People’s Bank of China on Monday reduced the medium-term lending rate, through which it provides one-year loans to the banking system, by 10 basis points to 2.75 per cent, the first cut since January. Analysts polled by Bloomberg had expected the PBoC to leave the rate unchanged.

The decision highlighted deepening anxiety in Beijing as it tries to combat a months-long decline in consumer demand triggered by its drawn-out zero-Covid policy, as well as the fallout from cash-strapped property developers and slowing global growth.

Despite Beijing’s plans to inject hundreds of billions of dollars of stimulus to boost growth, China’s economy only narrowly escaped a contraction in the second quarter.

Official statistics released on Monday reflected worse than expected consumer and factory activity as the pace of the country’s economic recovery drags.

Retail sales, an important gauge of consumption, rose 2.7 per cent year on year in July while industrial production, a growth driver earlier in the pandemic, was 3.8 per cent higher. Analysts had forecast rises of 5 per cent and 4.6 per cent, respectively.

Experts expect China’s economic slowdown to prompt looser monetary policy and fiscal stimulus, but some are pessimistic about the scale and pace of Beijing’s response.

“China’s growth in [the second half] will be significantly hindered by its zero-Covid strategy, the downward spiral of the property markets, and a likely slowdown of export growth. Beijing’s policy support could be too little, too late and too inefficient,” said Ting Lu, Nomura’s chief China economist.

Analysts also noted that Beijing’s central bankers had been reluctant to lower rates amid concerns about rising debt and inflation.

“But the PBoC seems to have decided it now has a more pressing problem. The latest data show lacklustre economic momentum in July and a slowdown in credit growth, which has been less responsive to policy easing than during previous economic downturns,” said Julian Evans-Pritchard, senior China economist with Capital Economics.

Xi Jinping’s zero-Covid policy — which institutes strict lockdowns wherever outbreaks of the virus are discovered — is inflicting further strains on the outlook.

Several Chinese cities, including Haikou on the southern island of Hainan, as well as Urumqi in the western Xinjiang region, have imposed or extended lockdown restrictions in some areas, with cases rising nationwide over the weekend. The Hainan lockdown has sparked small-scale protests among tens of thousands of travellers who have been left stranded in the tourist destination.

In Shanghai, authorities are testing the use of drones to ensure residents scan their health codes when they enter buildings. The health code is recorded on a compulsory smartphone app that determines whether individuals can travel based on their exposure to Covid-19.

Constructive Bio plans to reprogramme microbes to make new materials from drugs to biodegradable plastics

Scientists in Cambridge have set up an ambitious synthetic biology company which will rewrite the genetic code of bacteria, enabling the microbes to make a vast range of new materials, from drugs to biodegradable plastics.

Constructive Bio, as the start-up is called, is a spinout from the Medical Research Council’s Laboratory of Molecular Biology. A scientific team there led by Jason Chin discovered how to add new chemical letters to the code of life, by which the DNA in genes tells cells to make specific biological molecules.

Reprogramming bacteria in this way could lead to microbial factories capable of making novel materials that are not accessible in other ways. In contrast, the latest “gene editing” methods, such as Crispr, manipulate the existing genetic code but do not create new code.

Following disclosure of the discovery in a scientific paper last year, Chin co-founded Constructive Bio to commercialise it, with a $15mn seed funding round led by Ahren Innovation Capital completed in June. The company has negotiated an exclusive licence with the MRC to exploit its patents on the technology.

Constructive Bio is developing two platform technologies, Chin said. “One is the ability to build a synthetic genome from chemically synthesised DNA, which has broad implications in terms of being able to build organisms that do all sorts of useful things.

“The second is the ability to use these reprogrammed organisms to encode the sequences of completely synthetic polymers, which could be drug-like molecules all the way to new plastics and electronic materials. There are whole classes of new molecules that simply don’t exist today, which would have entirely bespoke and differentiated properties,” he added.

Alice Newcombe-Ellis, founding partner of Ahren, said: “The issue for the company will be what to focus on because there is such a broad, vast market it could go after. The application that I’m most excited about is the ability to programme polymers to be biodegradable. Most of the plastics available today originate from oil and are very hard to degrade.”

Since the dawn of life on Earth, DNA has had four chemical letters — abbreviated to A, T, C and G — which the cell reads in groups of three to make amino acids, building blocks of proteins. But many of these triplets are synonyms, coding for the same amino acid.

Chin and colleagues took advantage of this redundancy in the code, giving some triplets an entirely new meaning while allowing their synonyms to make all the amino acids essential for life.

“By taking inspiration from nature and reimagining what life can become we have the opportunity to build the sustainable industries of the future,” said Chin.

Besides the ability to make new materials, the synthetic bacteria are resistant to viral infection because viruses cannot replicate within cells that have unnatural DNA. This property could also be a big business opportunity for Constructive Bio, said Newcombe-Ellis.

The company’s reprogrammed microbes are based on E. coli, the species used to make many protein drugs including insulin. The bioreactors in which therapeutic proteins are produced today are very susceptible to contamination by phages (bacterial viruses), significantly reducing yield — a problem that could be overcome by incorporating synthetic DNA.

“The dairy industry presents another large potential market because it is particularly affected by the phage problem,” added Ola Wlodek, chief executive of Constructive Bio. The company is setting up labs at Chesterford Research Park outside Cambridge.

Sir Shankar Balasubramanian, professor of medicinal chemistry at Cambridge university, said the company’s technology “allows the exploration of a chemical space in a way that is not possible with existing methods and has truly transformational potential. The development and commercialisation of these technologies at Constructive Bio is incredibly exciting.”

**Reminder: earlier on Aug 14th, US Congress delegation, led by Senator Markey, arrived in Taiwan on a two-day visit

The world’s biggest listed oil producers are posting blockbuster results as inflation bites consumers

Saudi Aramco broke its quarterly profit record set in May, as soaring energy prices driven by Russia’s invasion of Ukraine deliver windfalls to refiners.

Net income at the state-backed group rose to $48.4bn in the second quarter, a 90 per cent year-on-year increase and its greatest earnings since listing in 2019.

The Saudi oil company kept its dividend unchanged at $18.8 billion for the third quarter and said it is progressing on oil and gas expansion.

“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential,” said Aramco chief executive Amin Nasser in a statement.

The world’s biggest listed oil producers, including ExxonMobil, Chevron and BP, have all posted huge earnings after a surge in commodity prices fuelled by the Ukraine war and a rebound in post-pandemic demand. Most have boosted shareholder payouts.

The high profits are putting increasing political pressure on the oil majors, as high energy prices threaten to spark public blowback. President Joe Biden said in June that Exxon was making “more money than God”.

Brent crude, the international benchmark, has dropped from $120 in June to near $98 on Friday.

Saudi Aramco’s shares, which are listed in Riyadh, have risen more than 25 per cent this year.

US and other Western powers have been pushing to increase oil production to offset high prices at the pump but Opec has warned of the “severely limited availability of excess capacity” after years of under-investment and mismanagement.

Earlier this month, Opec and its allies agreed to one of the smallest oil production increases in the group’s history, with Saudi Arabia working to appease its western allies without using up its unused capacity.

Saudi Arabia, the world’s largest energy exporter, had said it would increase production only if there was demand.

Warning of longer-term consequences for business in Europe’s largest economy

Germany must cut its gas use by a fifth to avoid a crippling gas shortage this winter, its top network regulator said, as businesses and households brace themselves for Europe’s biggest energy crisis in a generation.

Klaus Müller, head of the federal network agency (BNA), will be in charge of rationing gas supplies if Europe’s largest economy suffers a winter energy crunch. “If we fail to reach our target [of 20 per cent gas savings] then there is a serious risk that we will not have enough gas,” he told the Financial Times.

Müller said Germany would also need about 10 gigawatts of extra gas supply from other sources to make up for the missing volumes from Russia — largely liquefied natural gas from countries such as the US. That represents about 9 per cent of its current gas consumption.

He said Germany will also have to rely on imports of gas from other European countries.

Müller also warned that the longer-term cost of ending Germany’s dependence on Russia would be a “very high gas price” that could have big consequences for business.

“Some production could move away from Germany because gas has become too expensive,” he said. “And that’s a difficult thing to happen.”

Germany has feared a looming fuel crisis since Russia’s gas giant Gazprom throttled supplies through the Nord Stream 1 pipeline in mid-June, citing technical problems. The main conduit for delivery of Russian gas to Europe is operating at just 20 per cent capacity.

The decline in deliveries has pushed up gas prices, with the European benchmark rising from around €66 per megawatt hour at the start of the year to €206 (as of Friday afternoon). It has also played havoc with Germany’s attempts to fill its gas storage ahead of winter, when demand rises.

Germany has accused Russia of “weaponising” its energy exports, as part of a backlash against sanctions imposed over Russian president Vladimir Putin’s war in Ukraine.

Over the weekend, Germany’s economy ministry ordered all companies and local authorities to reduce the minimum room temperature in their workspaces to 19 degrees C over the winter.

Berlin has already reached the second stage of a three-part national gas emergency plan. If it reaches the final stage, which would entail the rationing of gas to industrial customers, the BNA would have to decide which companies could no longer be fully supplied.

Müller admitted that being responsible for a decision that would affect thousands of businesses was taking its toll. “It’s like having the Alps on my shoulders,” he said. “But it’s all about making the best of a bad situation.”

He said the BNA was doing “a lot of detective work” to establish which companies should be prioritised in any rationing.

“You need to try to figure out what effect cutting off the gas to certain companies will have on the supply chain for critical products, what the consequences will be for jobs, for production, for value chains,” he said.

“If you take things like packaging and logistics, these are companies making containers for critical goods like medicine and food.” These, too, could be considered “systemically relevant”, he said.

The same also applied to the glass and ceramics industries, he said.

Key to Germany’s preparedness this winter is the amount of gas it is able to put into storage. Tank operators are required by law to bring levels up to 75 per cent by September 1, 85 per cent by October 1 and 95 per cent by November 1. Müller said the first target was achievable — levels are currently at 74.4 per cent — but the other two were “much more ambitious”.

Gazprom-owned Rehden, Germany’s largest gas storage facility, is still only 52.3 per cent full. With Rehden “we still have a long way to go to fill [it] up,” said Müller.

He warned that even if all tanks are filled they will only have enough gas for about two and a half months if Russia halts supplies altogether — and only provided it is not an unusually cold winter.

“We need enough for at least two winters, not just one,” he said. “And it’s not a good option to empty gas storage at the expense of next year.”

Germany wants to wean itself off Russian gas by the summer of 2024 and ministers have scoured the globe to secure shipments of liquefied natural gas (LNG). 

The country has chartered several specialised ships known as floating storage regasification units (FSRUs) that can turn LNG back into gas and feed it into the German pipeline network. Two will go into operation at the start of 2023. It is also building three permanent LNG terminals.

Yet experts warn that finding enough LNG will be a challenge. According to the International Energy Agency, LNG export capacity additions are set to slow in the next three years, a consequence of declining investment in the mid-2010s and construction delays.

Müller said the 2024 goal for ending all Russian energy imports depended on “a lot of unknowns” but was “feasible” provided Germany had six FSRUs operating, received additional gas from its neighbours and reduced industrial consumption.

If it comes to a gas emergency in the winter, Germany’s government has made clear that private households will be protected from a cut-off of supply. But Müller warned they still didn’t “have the right to consume huge amounts of gas”.

The authorities had, he acknowledged, no way of making residential consumers use less of the fuel. But “I think people will do what they did during the pandemic: they’ll stick to the rules, even when no one is actually enforcing them,” he said.