Exceptional, June - December 2014


Where time is a luxury

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Chopard Co-president Karl-Friedrich Scheufele reflects on how he fused his personal passion with business know-how to lead the luxury Swiss watch and jewelry brand to new heights.

This year will mark the 25th time Karl-Friedrich Scheufele has competed in Italy’s iconic Mille Miglia classic-car rally — a 1,000-mile romp from Brescia, in northern Italy, down into the center of the country to Rome and back, all on rural roads. Each time, his participation has gone without serious incident — with one exception.

That year, Scheufele was barreling down a country road, with his wife in the passenger seat, when the car hit a patch of oil at a roundabout. Scheufele lost control of the vehicle as it went into a brief tailspin.

”Thankfully, that was the only time anything like that happened,” Scheufele says, instinctively knocking on the surface of an elegant sculpted wood desk to avoid tempting fate. “The car spun, and for a moment there was nothing I could do. When it stopped, my wife and I looked at each other in shock.”

And then? “Well, then we just continued,” he says casually. Scheufele is not a man easily distracted from his goals.

Surprisingly, his goal was not always to run Chopard. His father, Karl Scheufele III, at the time an ambitious young goldsmith and watchmaker from Germany, acquired the famed 154-year-old luxury watch brand in 1963.

When the deal was made, Karl-Friedrich Scheufele was only five years old. But nobody ever pushed him to join the family company.

Visit ey.com/familybusiness for more information on the importance of succession planning.

The younger Scheufele at first entertained an interest in more artistic pursuits in design and art. He did a jewelry apprenticeship for a time. He traveled and developed what would become a lifelong passion for classic cars (his first car was a bright yellow convertible Volkswagen Beetle, though he soon upgraded to a 1962 Porsche 356).

He also became interested in business, which he studied in Lausanne, northeast of Chopard’s current headquarters in the Geneva suburb of Meyrin. “Over time, as I started learning more about the company, I realized it could easily combine these separate areas of interest,” he says.

Chopard could offer me a chance for creative expression, and at the same time it was a business.
It turned out to be an ideal fit.

Once he came on board in 1985 as Co-president with younger sister Caroline, the company was transformed as Scheufele’s single-minded focus locked in. Within a few years, Chopard expanded into high-end jewelry (Caroline oversees this part of the company).

Soon after, it became one of only a small handful of Swiss watchmakers to make its own L.U.C. mechanical movements (named after company founder Louis-Ulysse-Chopard) when it opened a new division in Fleurier in 1996. The company was also an innovator in opening up its own branded boutiques that feature both the line of timepieces and fine jewelry, first in Hong Kong and now dotting Asia, Western and Eastern Europe, and the Americas.

“The combination of watches and jewelry is not so common,” he says. “But it gives people two reasons to come into one of our stores. And in terms of production, I think the jewelry experience has helped make our watches more beautiful, and the watchmaking experience has helped make jewelry production more precise.”

Under its new co-presidents, the company also began to engage in a series of high-profile — and highly personal — sponsorships. First, in 1988, came the Mille Miglia classic-car rally in which Scheufele is now a veteran participant. The company even produces a special limited edition watch to commemorate the Mille Miglia each year.

A decade later came France’s famed Cannes Film Festival, where the prestigious Palme d’Or (the festival’s top prize) was designed by Caroline Scheufele and is crafted each year by hand in the Chopard workshops. Finally, a dozen years ago, Chopard became the official timekeeper of the Grand Prix de Monaco Historique, another classic-car race held in the tiny principality of Monaco on the south coast of France.

Being part of the family doesn’t entitle you to anything.

“All our sponsorships are personal, based on a specific connection we have with the event,” Scheufele says. “We participate personally, which is probably not very common. I participate in the Mille Miglia, for example, and my sister spends 10 days a year in Cannes. She’s there for the whole festival. This is characteristic of what we do. We get involved.”

Along the way, the company has thrived. Scheufele repeatedly talks about the advantages of being a well-run private company: the ability to make decisions quickly and to focus on long-term vision rather than short-term profitability. He says many family-run companies suffer from allowing bloodlines to turn into a kind of entitlement.

But that does not happen at Chopard. “Being part of the family doesn’t entitle you to anything,” he says. “Family must prove itself like everyone else, and we all abide by the rules we have put in place.”

It is a winning formula that, not surprisingly, has attracted the interest of multinational companies looking to acquire Chopard’s unique market niche and more than CHF800m (US$915m) a year in sales. Scheufele is coy about specifics, saying that, while the company listens to offers and the topic of undertaking an IPO to raise funds has come up on occasion, none of that has ever been considered too seriously.

“The company is on sound financial footing, and so there is no real need to raise capital through markets,” Scheufele says. “But some of these discussions have actually led us to reorganize the company in a more modern way.  We wanted to be as professional as a publicly traded company without listing shares on the stock exchange. So today we can say we operate as a public company, though we are still a family-owned concern.”

The company is vertically integrated and one of a small handful of companies in Switzerland that oversees every step of the watch’s evolution: from the production of the nearly microscopic parts of the watch’s internal mechanisms to the way the products are showcased and sold.

“We place a lot of importance on craftsmanship, a part of the process that many other companies outsource, and on the distribution side, we decided early on not to use independent distributors,” he says. “This gives us a tremendous amount of control over quality and image.”

The test of time

Scheufele is a well-known collector. He collects watches (almost exclusively Chopard watches or antiques), classic sports cars like those used in the Mille Miglia rally and wine, where he prefers the great reds of Bordeaux and Burgundy.

“Collecting helps give you an understanding of what lasts, what stands the test of time,” he says. “I take pride in thinking that a watch we make today could be a family’s prized possession for 30, or 50, or even 100 years.”

It is not a surprise that Chopard embraces cutting-edge technology — “We use sophisticated computers connected to milling machines that would have been unimaginable when I did my apprenticeship,” Scheufele recalls — but the connection with the past is at least as important. The private Chopard museum where Scheufele often sits, with its beautiful wooden furniture and collection of classic timepieces that in a few cases date back to Scheufele’s grandfather, is a source of pride in the company.

“We’re actually building a new museum, 30% larger, so that we can display more of our collection,” Scheufele says. “It’s important. We should look to the future, but one should never forget the past.”