By  on February 7, 2007

WATTENS, Austria — Swarovski wants to be more than a crystal.

The nearly $3 billion company is on a mission to maintain its dominance of the crystal market through innovation while diversifying into precious stones, beauty products and even wedding planning.

"This whole parent brand approach was really our starting point…to develop something which can go beyond crystal," Markus Langes-Swarovski, a member of the executive board and Daniel Swarovski's great-great-grandson, told WWD in an interview at corporate headquarters here.

"Business is not getting easier. There is competition out there, but we're working hard."

Swarovski crystals have adorned everything from Dorothy's red slippers in "The Wizard of Oz" to the back pockets of Seven For All Mankind jeans. The company, as multifaceted as one of its synthetic jewels, has managed to work with nearly every major designer today, including Giorgio Armani, Chanel, Prada, Yves Saint Laurent, Dolce & Gabbana and Alexander McQueen.

The firm's sponsorship of the Council of Fashion Designers of America Fashion Awards and its financial support of young designers have helped earn it style points. Nadja Swarovski, vice president of international communications, said the impact of these initiatives had extended far beyond that of traditional advertising campaigns.

"We try to create living examples of what can be done with the crystals," she said.

The company is planning a bevy of new initiatives to grow its business and boost name recognition. These include:

l Branching out into fragrances and color cosmetics. Langes-Swarovski said the company was talking to prospective beauty partners and that a deal could come this year. He went on to specify that a small beauty company would be the likely choice rather than a larger one with an already packed brand portfolio.

l Moving into higher-quality jewelry. Swarovski is considering using its gemstone subsidiary Signity to incorporate precious stones like rubies, sapphires and emeralds into its collections. This development is expected during the next one to two years.

l Staging the third edition of the flashy Fashion Rocks event in October. It will take place in London. The 2005 edition, in Monte Carlo, was also sponsored by Swarovski. The first edition was at Royal Albert Hall in London. A rock 'n' roll-theme Fashion Rocks jewelry collection is also in the works.l Launching a comprehensive wedding project early next year. Swarovski will work with wedding planners and designers to organize every aspect of the event, from sparkling gowns to crystal champagne flutes.

l A new marketing push. This is particularly important to the company, since "Swarovski" is often used as a blanket term for all things crystal. The company is introducing a new label — "Made With Crystallized Swarovski Elements" — that it hopes its partners will apply to individual items or display in their stores.

"We want to make sure that a consumer really can make a wise choice," Markus Lampe, Swarovski's senior vice president of marketing, said at a press presentation here.

With a history dating back to the Austro-Hungarian Empire, Swarovski established its link to the high fashion world early on. In 1931, it developed crystal-studded ribbons and in 1956, it worked with a young Christian Dior to develop Aurora Borealis, a shimmery finish for cut crystal. The designer link continues today.

"Their products are very high quality and they're shinier than the others," said Stefano Gabbana, who, along with his partner, Domenico Dolce, has an affinity for the glassy accoutrements. "We have used this material in a major way, not just as trim, which has given them a boost."

Swarovski crystals once were destined only for red-carpet gowns and evening bags, but designers are increasingly using them for sporty day items and accessories, prompting the company to create new application methods. Last year, Swarovski introduced a yarn containing crystal fragments that can be used in knits and embroideries. The company is working with Gucci and Louis Vuitton on a crystal application for leather.

"Ten years ago, it was not really something relevant to put crystals on casual sportswear, but this whole movement really opened up new possibilities," Langes-Swarovski said.

The company is responding to fashion designers' needs and the overall trend to minimalism by toning down the shine of some of its components in favor of milkier, pearl-like tones. Two of the company's most recent additions to its 140-hue portfolio were mint alabaster and rose water opal.

Langes-Swarovski said the overall market growth for crystal had begun to slow down, so innovation was critical for the company, which is based in a small town about 14 miles east of Innsbruck."We are still the market leader. We have the obligation to constantly…stimulate the overall appetite for crystal," he said. "Yes, of course, our competitors are profiting from that, but we are also profiting from that."

Langes-Swarovski, 32, heads branding and communications for the company, which has about 60 shareholders. Fond of talking as poet and businessman, he drops phrases like "the poetry of precision" and "turning destiny to sanctity" among his financial forecasts and snippets about the democratic nature of the brand.

"Our approach to luxury is a multilevel approach to luxury. It's an including approach rather than an excluding approach," Langes-Swarovski said. The company's jewelry collections offer a vast range of products, from an elasticized bangle fetching 15 euros (about $20) to an elaborate ruthenium-plated necklace with heliotrope, tabac and jet crystals for 3,200 euros ($4,160).

Swarovski isn't afraid to dwell outside the rarefied world of couture; its product range trickles down to kitschy fare like miniature figurines of angels and unicorns. Few brands are able to balance such a dichotomy, but the strategy seems to be working.

Swarovski's 2006 sales rose 8.9 percent, to 2.33 billion euros ($2.94 billion at average rates), and the crystal jewelry and component revenue was 1.74 billion euros ($2.19 billion) of the total. The company is aiming to reach 3.12 billion euros ($4.06 billion at current rates) in crystal sales by 2012.

Like founder Daniel Swarovski, who fled to this alpine village more than 100 years ago to safeguard his innovative crystal-cutting techniques from competitors in his native Bohemia, now part of the Czech Republic, his company is determined to keep its corporate secrets in the family vault. Only top executives are privy to the whole crystal-making process, which in company literature is described in almost mystical terms of fire, sand and water. Not even factory workers are allowed to learn more than bits and pieces of the production chain.

"We are really very exigent in protecting our know-how so there are not a lot of people who know the whole process — very few, actually," Langes-Swarovski said.

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