By Nancy Meyer
PLATTSBURGH, N.Y.-- Swarovski U.S. Holding's purchase late last month of Schonbek Worldwide Lighting creates a powerful combination of brands and products in the premium crystal market.
The move gives Swarovski, a crystal component supplier to Schonbek, entree into the high-end decorative lighting business with finished goods that it can target toward new markets. These include contract and hospitality businesses and other luxury projects domestically and abroad.
For Schonbek, the new owner provides a strong financial backbone and platform upon which to grow the 250-year-old company.
Swarovski U.S. Holding Ltd., with annual sales of $385 million, is a subsidiary of Swarovski International Holding, a $3.3 billion, multifaceted company based in Switzerland and Austria. Prior to the acquisition, Swarovski had 1,500 employees in the United States.
The marriage has been called a "perfect fit" by many inside both companies, as well as in the lighting industry, because both brands are marketed to the high end, both are crystal, and both are family-owned and operated by the fourth and fifth generations.
Schonbek had been in play for a while, and was considered a much-desired, albeit high-priced, takeover target, industry sources said. Swarovski and Schonbek officials had been talking for about a year, they confirmed.
Both characterized the acquisition as one motivated by growth opportunities.
Swarovski's executive board had outlined a strategic growth plan to target the lighting industry, and rather than build from the ground up, as the company did in the jewelry business, decided to purchase a market leader, said Daniel J. Cohen, a member of Swarovski's executive board, responsible for global strategic development. Cohen added that Schonbek is a "profitable company" that is poised for growth.
"We are fortunate at Swarovski; we really don't consider turnarounds," Cohen told HFN. "When our business is growing and profitable, you can afford to go for the industry leaders. It's nice when you have a healthy business, a motivated management team and are completely growth-motivated," said Cohen, a fifth-generation Swarovski family member.
"We both share a tradition of innovation and excellence, doing things in a traditional medium and cutting-edge kind of ways," said Andrew Schonbek, president and former sole owner of Schonbek. They have many similar values as a family business as it relates to employees, customers and an awareness of community.
"I'm just exceedingly excited about the future and building this brand and company," he added.
Schonbek is a vertically integrated manufacturer that still makes everything in its Plattsburgh facility, which will become the core of the Swarovski lighting business.
Schonbek has developed many proprietary production methods for which it holds utility patents, and designs and builds its lighting products from a raw materials level up to finished goods in its factory here, which employs about 450 people.
Andrew Schonbek will remain "very much involved" in the new entity, according to Cohen and Schonbek, first as interim CEO and then he'll return to a more creative role in the design, engineering and production process, while a professional management team eventually is put in place to steer the growth.
Cohen envisions positioning Swarovski as a contemporary lighting brand and keeping the Schonbek name for traditional styles, which is its heritage. If so, Schonbek's colorful contemporary Geometrix and DaVinci light-emitting diode fixtures would be rebranded. Meanwhile, Swarovski has a strong presence in Italy, which would be a good opportunity for Schonbek fixtures, Cohen said.
'Where we see tremendous opportunity is telling the cohesive brand story at retail, whether at a lighting showroom or at a Swarovski Schonbek showroom," Cohen said, alluding to the possibility of opening company-owned stores in the future. Swarovski currently has 150 stores in the United States and Canada, but they are small shops that sell fashion jewelry and giftware as impulse purchases and are not set up to include lighting. Cohen said there are no immediate plans to open lighting stores, but won't rule it out.
"A trained sales staff makes a huge difference. As we look at the lighting industry, we see a nice opportunity to upgrade the Schonbek presence at retail," Cohen said.
Additionally, he sees growth in the luxury contract and project business, particularly abroad.
"We see tremendous opportunity in the project and contract business, leveraging them against Swarovski's capabilities internationally," Cohen said. "We have tremendous contacts in the fashion and design community [but were] lacking the ability to take a great design idea and take it to finished product."