The Fall and Rise of Empires

Giovanna Battaglia Engelbert, Swarovski's first creative director
Der Spiegel (The Mirror)   No.51  18.12.2021
Swarovski:  Fragile legacy 

The decline of the Swarovski brand


Tyrolean tribal feuds

Photograph:  Giovanna Battaglia Engelbert, Swarovski's first creative director


The Swarovski clan made a fortune with its glitter accessories. But the fifth generation is doing everything to gamble away the legacy.

There is a dream world that Ernst Daberto walks through on this day. A room full of snow with a glittering tree in the middle, the branches made of 150,000 crystals. A glass piece of eternity. Daberto, 54, head of the Swarovski works council, rarely comes to the jewellery manufacturer's chambers of wonder in Wattens, the headquarters of the glittering dynasty in Tyrol. He strangers with the beautiful appearance. Diagonally across from the company headquarters, where the glasses usually glow and the crystals are cut, some machines are standing still. Nobody is there to serve them. Swarovski has fired many employees, and the company is now looking for capable people again. "We had warned about it," says the works council, "nobody cared." Daberto has been with the company for 32 years. During that time, he says, "a back and forth" has been increased and then dismantled again and again. Sometimes cheaper goods were produced, then more luxurious ones. Now, however, the dynasty seems to be completely lost. The Swarovskis are bitterly arguing about where to direct the company. In the struggle for power, the individual tribes even go to court against one another. "Peace never returns there," says Daberto: "The Swarovski spirit, trust, that no longer exists." Swarovski's fifth generation is about to gamble away its heritage and reputation. For years she has been looking in vain for concepts to lead the crystal company to old size and old profits. The shareholders have already warned that crystal production at the headquarters was in acute financial need. The family has not received any dividends for two years. The 126-year-old company is in danger of slipping away from her. As a last resort, Markus Langes-Swarovski, the most important owner with a fifth of the shares, risked the clan split in July

The 47-year-old great-great-grandson of the company founder, actually known as in need of harmony, requested the departure of company boss Robert Buchbauer, 55, and CFO Mathias Margreiter, 49, both also great-great-grandsons, by letter at the end of the year. The numbers "are worrying," he wrote, accusing them of "management errors." The duo does not succeed in "leading the team adequately". Last and this year "our losses add up to 600 million euros". Langes-Swarovski wants to put the company in the hands of an external professional. The idea is not new, but it kept failing. This time Langes-Swarovski doesn't want to be put off anymore. He openly threatens Buchbauer: If "another attempt is made" to enforce other resolutions, he writes, "there will be (further) disputes". In fact, Buchbauer and Margreiter have resigned from their top operational jobs, but they are still on the board of directors - and it is in control. Now Swarovski is waiting for headhunters to find a new top employee who dares to work in a company that is ruled by clan members. The sacred rule that executive posts and the board of directors are reserved for the family still comes from company founder Daniel Swarovski. A group with a turnover of 2.5 billion euros and around 80 family shareholders can no longer be controlled in this way. Especially when there is constant intrigue. Ex-CEO Buchbauer, for example, recently bundled the crystal and jewelry business under one holding, thereby depriving another part of the family. Since then, this branch of the clan has been fighting legally against the loss of its shares. Swarovski, the company's father, started a fairytale-like rise in 1895 with the first machine for crystal cutting, which made the glass particularly sparkling. After his sons Alfred, Fritz and Wilhelm, the tribes are still divided up to this day.  The eighties became the big time.  Rhinestones on T-shirts or jeans were popular, and Swarovski became a symbol for glitter. To this day, the Tyroleans keep a secret about their grinding technology. The company held a quasi-monopoly for a long time. Its crystal stars adorn the Christmas tree at New York's Rockefeller Center, while Swarovski supplied the glass shoe for Disney's »Cinderella«. From this comfortable position one looked down at the cheap copies from the Far East. In doing so, the family overlooked the fact that they had long been living on the myth. The rivals had learned, and quickly. Even Swarovski's top managers could no longer distinguish some goods from their own production from models from the competition. A whole host of companies from Asia and Egypt are also producing glass stones today. There are also competitors from Europe, such as the fashion jewelry company Pandora, known for its silver bracelets with collectibles. The Danes grew close to their rivals, with double-digit profit margins. "Swarovski has rested too long on its aging clientele," says Count Victor Dijon von Monteton, consumer goods expert at the consulting firm Kearney. "They can't get anywhere near the new customers, the Millennials, Generation Z." The Austrian group no longer "stands for anything special," says the consultant October, the family gathered in the Marienkirche in Wattens on a sad occasion. She commemorated the late Gernot LangesSwarovski, who until 2002 had been at the helm of the group for more than three decades. When his son Markus spoke about the deceased, participants report, he told of a trip with his father and of a knowledge that he gave him: that the greatest mistake in life is not to make a mistake. However, there shouldn't be too many. When the leadership was split years ago, each branch of the family created its own empire. Four marketing departments and three sales teams were created, and the administrative apparatus expanded. Markus Langes-Swarovski founded the jewelry brand Cadenzza, while Buchbauer founded the Lola & Grace label. It looked like they were trying to prove to each other who's the better. Both failed, the lines were discontinued. Swarovski emphasizes that there has never been competition.

Today it is probably clear to everyone that things cannot go on like this. For the first time, external expertise has therefore moved into the holding company's board of directors, including ex-SAP board member Luisa Delgado. Close confidants of the family doubt whether that is enough to ensure more independent control. Also because the previous CEO Buchbauer clung to power for far too long. Buchbauer comes from the FritzZweig, in spring 2020 he was appointed sole CEO. Markus LangesSwarovski from the more powerful Alfred line, Daniel Cohen from Wilhelm-Strang and marketing woman Nadja Swarovski, also a Fritz, have more or less voluntarily withdrawn. The search for an external boss began in the summer of last year - a project that was abandoned in the fall. Buchbauer said he was unable to find his own successor and wanted to remain Swarovski boss. This message seemed like a threat to the workforce at the main plant in Wattens. Buchbauer lost a lot of trust with her. He wanted to relocate the further processing of the crystals to Vietnam within six months, which was completely impossible so quickly, the plan was canceled. Then Buchbauer announced that it would cut 1,800 jobs in Wattens and many thousands worldwide. More than 1000 employees in Tyrol left the company with severance payments of up to 26 monthly salaries. Too many, as it now turns out. There is a lack of know-how. It is difficult for Swarovski to recruit new people or bring old ones back. In the past, the applications were received in batches, says works council Daberto, today it is different. It may be because of the poisoned corporate culture. Critical employees were sorted out, independently thinking executives left, complains one manager. The teams concerned had not even been discussed in advance about the planned job cuts. The result: Swarovski can no longer adequately supply even its own shops. It doesn't help that Buchbauer has appointed street style star Giovanna Battaglia Engelbert as the Group's first creative director. Engelbert breaks with the delicate crystal chains, her creations are colorful and opulent. "Jeff Koons goes to a candy store" is one of her lines. The head of a large jewelry retailer worries that the leap is huge: "Our buyers were shocked." Swarovski even wanted to remove strong products from the range, but then cashed the plan. The new collection should have been introduced gently. It is successful, claims Swarovski. With it he makes more than a third less turnover, complains the dealer. The bombastic look may work in metropolises, but hardly in smaller cities

People who don't go from club to club. Members of the family also criticize the new collection as being too bulky and exaggerated. This is too radical for older customers. Apply the “Codes of Luxury”, explained Buchbauer in a letter to employees in September. The aim is to create an »affordable luxury brand« with a »crystalline lifestyle«; people want to be able to participate in »a wonderland of expression« in the appropriate shops. In the newly designed "Wonderlab" shops, the jewelry hangs on colorful walls in individual boxes. Swarovski also hopes for a renaissance of the figurines, the glued together crystal figures that many collectors used to find. The 14 centimeter high crystal superman costs 400 euros, a bull 1300 euros, the 20 centimeter tall mermaid Arielle 13,000 euros. "There are people who like it," says works council Daberto. If the new strategy doesn't work, things will be tight for Swarovski. The old loose crystal business has shut down. Swarovski announced thousands of business partners at the end of 2020 because the glass stones from Wattens should only be seen in particularly high-quality fashion. This decision has more than halved sales in the division from around 500 million euros most recently. The jewelry has to compensate for this minus. Even the businessman Markus Schöler from Kaufbeuren received the notice, his company Görlach was one of the most important resellers of Swarovski and in the meantime lost a large part of the turnover. Schöler's grandfather was once a glass cutter in northern Bohemia, like Daniel Swarovski, the families know each other. He had good reason to be mad. Instead, he sits in his company under a candlestick full of crystals and grins. Up to a dozen Swarovski customers came to see him every day for alternative glass stones, he says. And Schöler can deliver. He has built up his own crystal collection, it's called Aurora, made by selected companies in Asia and cheaper than Swarovski: the orders "went through the roof". His aurora stones already glittered on bags and belts at Dolce & Gabbana, they adorned shoes from the luxury brand Christian Louboutin. Now Prada is presenting a collection with its rhinestones, as is Gucci, Burberry will follow soon. They no longer have to adorn themselves with the Swarovski brand.


[This article is translated with Google Translate - for the original article, or to obtain an officially translated version to your own language, see here: