Kevin Baker, entrepreneur and founder of luxury gifts brand Thomas Lyte, says that mass production is devaluing the luxury industry. That's why he's just spent £1m on the silversmith that mends the FA Cup.

Almost all luxury goods brands avoid owning factories. Most are selling off manufacturing plants and outsourcing, often to the Far East, and becoming “virtual manufacturers”.

That's why the £1m acquisition of Essex Silver, the nation’s most respected rare-metal workshop, by luxury gifts brand Thomas Lyte, merits attention.

“It is rather unusual,” says Thomas Lyte founder Kevin Baker. “Everyone else is getting rid of in-house facilities. Mappin & Webb, Asprey and Alfred Dunhill are all laying off their silversmiths. We are the only firm looking to expand in this way.”

So what’s the strategy? “There is a problem in the luxury goods industry," says Baker. "The big brands are powering towards the bottom of the market. Dana Thomas wrote an excellent book about this malaise called Deluxe: How the luxury industry lost its lustre. It’s about the way luxury has gone from something rare and treasured to something ordinary and mass-produced. Customers don’t know who designed the product or where it was made. We at Thomas Lyte want to ensure our customers know who designs our products and who makes them. We need to control production. It’s about an old-fashioned return to making exquisite goods.”

The purchase is particularly ambitious as Thomas Lyte is still quite small. Founded in 1995, initially to sell Aquascutum branded products, London-based Thomas Lyte employs 24 people selling corporate gifts such as crystal decanters and wooden backgammon sets. Turnover is £3m and so far all products are designed in-house but made under licence.

Essex Silver has a client list to die for. “The best known would be the FA Cup, which has its repair work done at the workshop. When you can say that the Football Association trusts you with its finest asset you gain tremendous credibility," says Baker.

The full story will be published in the next edition of Real Business.

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