Vicuñas are wild camelids roaming the Andes. Their ultra-fine hair is spun into some of the world’s most expensive fabric. A luxury house like Loro Piana sells a vicuña sweater for about $9 000, but the indigenous communities who corral and shear these animals often receive less than $300. How does that happen?

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1. From Andes to Runway

Vicuñas are protected species; they can only be shorn once every two years. Indigenous communities perform chaccu—a traditional roundup that takes hours of chasing and corralling—to collect the fibre. The raw fleece is sold to middlemen or directly to companies like Loro Piana, which is the world’s top buyer of raw vicuña fibre and top seller of vicuña garments. The fibre is then spun, woven and ultimately marketed as rare luxury.

2. Asymmetric Bargaining Power

In theory, high retail prices should translate into high pay for the people at the start of the supply chain. But supply chains often feature an imbalance: powerful brands set prices, while small-scale producers have little leverage. A Loro Piana executive admitted to Peruvian officials that the company doesn’t know whether indigenous herders are compensated for supplying fibre used in $9 000 sweaters. Some workers reportedly didn’t get paid at all for chasing and corralling vicuñas.

3. Wage Theft and Opaque Supply Chains

Critics call this exploitation: herders risk injury and expend labour, yet may not see any share of the profits. Loro Piana says it deposits payments into community bank accounts and lets communities distribute the funds. However, without robust oversight, funds can disappear before reaching workers. The company’s own code of conduct requires suppliers to pay “wages sufficient to meet basic needs,” yet audits and transparency remain limited.

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4. Value Distribution and Ethics

This case illustrates value distribution: how money moves (or doesn’t move) through a supply chain. Luxury prices often reflect brand power, marketing, and scarcity rather than labour costs. When the retail price is thousands of dollars but the producers get a tiny fraction, economists talk about asymmetric bargaining power and monopsony (a single buyer dominating suppliers). Such gaps spark debates about ethical consumption and calls for brands to ensure fair compensation.

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5. Why It Matters

Vicuña sweaters aren’t unique—similar dynamics exist in coffee, cocoa, and gemstones. Understanding supply chains helps consumers make informed choices and pressures companies to adopt fairer practices. As luxury expands into digital goods and NFTs, the question remains: who benefits when something is marketed as rare and expensive?

Fun Fact: Vicuña fibre was once reserved for Inca royalty. Today, companies like Loro Piana hold that role of gatekeeper, with exclusive rights to export and process the fibre.