Swarovski Crystal

August 3, 2006
Is Shine Losing Its Luster?
By ERIC WILSON
WHEN Swarovski, the century-old Austrian maker of fine crystal, gave a party this spring for the Council of Fashion Designers of America, tens of thousands of sparkling crystals filled pools on a Manhattan rooftop. When Jennifer Lopez showed her first runway collection last year, the catwalk glittered with a carpet of Swarovski crystals. And at the Academy Awards, when Charlize Theron wore Gucci (2004) and Whoopi Goldberg wore Hush Puppies (2002), the Swarovski crystals attached to them were given equal attention by Joan Rivers.
Over the last decade, the name Swarovski has become widely recognized as the brand of crystals that provide the sparkle on Oscar gowns, trendy iPod covers and Paris Hilton’s crystal-crusted cellphone. For many people who had never given much thought to crystals, confusing the multifaceted beads with, say, sequins, “Swarovski” is now inextricably tied to fashion. The company has achieved this prominence by showering designers with financing — it is the main sponsor of the fashion council’s annual awards — and by persuading hot designers to embellish their collections with its crystals.
For anyone who may have missed the message that Swarovski has arrived as a luxury brand, the company introduced an $11 million advertising campaign in fashion magazines this month with models painted as the mythical Three Graces, swathed in a kaleidoscopic mist of crystals. But this climax may have come at an inopportune moment. A headline from Harper’s Bazaar, on a page opposite the Swarovski ad, sums up the more somber mood of clothing for the fall season: “So Long, Sparkle.”
After a decade of what could be described as crystal madness, during which Swarovski’s sales doubled to 2.14 billion euros, or about $2.73 billion, the company is facing a series of threats. The dark and moody direction of many of the fall collections would suggest that difficult times lie ahead for makers of rhinestones, beads, sequins and other sparkly fare.
Perhaps a greater challenge is the rise of less expensive crystal made in Czech Republic, as well as mass-produced stones from China that can cost about one-tenth of the price of Swarovski.
“There has been a general lessening of bling and overglitzed clothes,” said James Mischka, who with his partner, Mark Badgley, designs the Badgley Mischka evening-wear line. Mr. Mischka said that many companies have switched to Czech crystal in recent seasons, although Badgley Mischka continues to buy stones from Swarovski because of its quality and reputation. Even so, they purchased fewer crystals for fall styles like a $6,275 jewel- and crystal-encrusted evening dress, as they sensed the trend for less adornment.
“To make the collection new, you have to move in a different direction,” Mr. Badgley said. “We certainly did beading and embroidery, but not as much as we normally do.”
IN the mid-20th century, when Swarovski began producing crystals for Christian Dior, Elsa Schiaparelli and Coco Chanel, the company was the major supplier for designers; it was able to produce an intricately faceted stone thanks to precise cutting machines invented in 1892 by Daniel Swarovski, the founder.
Throughout most of its history, Swarovski did not publicize its involvement with designers, even though the company made the crystals that adorned Judy Garland’s ruby slippers in “The Wizard of Oz” and those that gave the sparkle to the white Jean Louis dress that Marilyn Monroe wore when she sang “Happy Birthday” to President John F. Kennedy.
Instead, beginning in the 1970’s, Swarovski became known for crystal-making of a less voguish variety: crafting miniature animals sold as keepsakes to collectors, who display their enchanted mermaids and dancing dolphins in mirrored glass cases.
When designers rediscovered crystals in the late 90’s as embellished styles replaced the austere look of minimalism, a fifth generation of Swarovskis was entering the family business, with ideas for reshaping its image along the lines of rejuvenated luxury labels like Louis Vuitton and Gucci. Nadja Swarovski, a great-great-granddaughter of Daniel Swarovski, and a vice president of the company, wooed designers early in their careers, including Zac Posen, Proenza Schouler, Narciso Rodriguez and Alexander McQueen, by financing their fashion shows in exchange for the designers’ using Swarovski crystals on their clothes.
At the annual Council of Fashion Designer awards, the company gives $10,000 cash and $10,000 worth of crystals to the winners of awards for new talent — typically, in men’s, women’s and accessories design. It has paid for designers to visit its factories in Wattens, Austria, where Swarovski produces a billion crystals each week and operates a rather curious company museum shaped like a giant who lives inside a mountain.
As a result of its fashion initiatives, sales of Swarovski crystals have increased by more than 10 percent each year, said Markus Langes-Swarovski, a member of the executive board and a cousin of Ms. Swarovski. The company also makes binoculars and industrial equipment, but its figurines and fashion crystals are the fastest-growing division, representing 73 percent of total sales.
While sales have not slowed, the company’s share of the fashion market has dropped to about 60 percent from a near monopoly, which the Swarovskis attribute to competition from other companies. This has also been a problem for other fine crystal makers like Baccarat and Waterford, specializing in glassware and ornamental objects.
Synthetic crystal itself is fairly uncomplicated to produce: a combination of quartz sand and water melted at high temperatures. Its value as a luxury commodity comes from the perception of its quality and design — in other words, marketing. The harder part is staying in fashion, and the life cycle of the trend may have been accelerated by a glut of inexpensive crystals cheapening the value of those on the high end.
“As our competition is growing, so are we,” Ms. Swarovski said. “That just means there is an increased demand worldwide for crystal. At this point we have been able to stay at the forefront in terms of sales because we have a competitive advantage — namely, our brand name and our quality.”
While the Swarovski name adds a certain prestige to a designer gown, it also raises the price. A band of crystals from the factory, made up of thousands of stones, can cost more than $200 a yard. Marc Bouwer, an evening-wear designer, said that 70 percent of his gowns include some type of crystal embroidery or brooch, though the gowns are far less extravagant than in years past. He uses Swarovski crystals for some designs but also buys from other companies offering quality crystals at more competitive prices.
“Those days of glittering from head to toe are passé,” Mr. Bouwer said. “Now we use crystals as hints to punctuate a certain drape along the cleavage or the back of a gown.”