BRIO AB

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BRIO AB

BRIOgaten 1
SE-283 83, Osby
Sweden
(464) 791-9000
Fax: (464) 791-4724
Web site: http://www.brio.se
Public Company
Incorporated: 1884
Employees: 1,052
Sales: SEK 1.41 billion (1997)
Stock Exchanges: Stockholm
SICs: 5092 Toys & Hobby Goods & Supplies; 3944 Games, Toys & Children’s Vehicles; 5945 Hobby, Toy & Game Shops

BRIO AB is a century-old toy company based in Osby, Sweden, with subsidiaries in North America and Europe. The family-run company operates in several child-related business areas. BRIO is best known for its line of wooden trains and preschool toys which are sold by 14,000 stores in 34 countries. With a market share of about 40 percent, BRIO is the largest supplier of wooden toys in the world. In the Nordic region (Sweden, Norway, Finland, and Denmark), BRIO is the leading toy wholesaler, distributing both its own BRIO brand toys and a wide range of imports including products from such large American toy manufacturers as Hasbro, Tyco, Mattel, and Fisher-Price. The company also manufactures a line of baby carriages and high-chairs that are marketed primarily in the Nordic region. BRIO’s Lek & Lär division, operating in Sweden, Norway, and Finland, distributes daycare and school equipment through a mail-order catalogue. Other ventures include the manufacture and sale of Alga games, a toy wholesaling business in Poland, and a promotional toy licensing company.

Company Origins at the Turn of the Century

The roots of the BRIO organization are traced back to 1878 when 17-year-old Ivar Bengtsson invested his savings of 77 riksdaler (the Swedish currency of the time) in the purchase of woven slatted baskets to sell in neighboring Denmark. The youthful venture was a success, and by 1884 Bengtsson and his wife, Sissa, were operating a small basket factory out of their cottage in Boalt, just outside Osby, Sweden. By 1902 the basket company required larger facilities, and the company was moved to Osby, an expanding community in the province of Skåne. Osby’s position on the main railway line in the country made it an excellent location for the growing wholesaling concern because it allowed Bengtsson to distribute his products across the region.

With its new location and facilities, the Ivar Bengtsson Basket Company was able to greatly expand its product line. The 1907 catalogue lists more than 170 articles available for order. Among these items was the Góinge Horse, a traditional wooden pull toy. This small, painted horse on wheels marked BRIO’s first entry into the wooden toy business that would become the company’s hallmark product line.

In 1908, at the age of 47, Bengtsson decided to turn his business over to his sons, Viktor, Anton, and Emil Ivarsson. Although the three boys were still young, Bengtsson hoped that by giving them the management of the company they would be dissuaded from joining the waves of Swedish youths who were then immigrating to the United States. His ploy worked. The boys stayed in Sweden, and the company name was changed to BRIO for Bróderna Ivarsson of Osby (Ivarsson Brothers of Osby). The company continued to expand its range of product offerings so that by 1914 the BRIO catalogue offered 6,000 items for sale by mail-order and traveling salesmen. Product types included toys, ceramics, glass, and porcelain among other diverse merchandise. BRIO also opened a small retail shop, called the “15-öre Bazaar,” to sell the company’s products directly to Osby consumers.

BRIO Brands and Barbie, 1930-70

BRIO opened a new phase in its history in 1930 when the bold BRIO trademark was painted onto the side of two wooden cars distributed by the company. The development of the BRIO brand would become key to the growth and development of the company over the next 70 years. Some five years later the company lent its name to a line of baby carriages manufactured by another Osby firm but distributed by BRIO. By the mid-1930s, when BRIO was officially incorporated as a limited liability corporation, the company was employing 150 people and had achieved annual sales of SEK 4.3 million. BRIO’s product line had begun to focus on the wooden toys and baby carriages that would become the core of the company’s business.

Although BRIO had been placing its brand name on products distributed by the company since the 1930s, it was only after World War II that BRIO began its own manufacturing concern with the opening of a baby carriage factory in 1947. By the late 1950s the postwar baby boom had come into full swing and BRIO baby carriages became one of the best-selling brands in the country. This success was cemented in 1959 with the introduction of the Sylvana model, the first baby carriage in the world to be equipped with a fully-welded collapsible frame.

BRIO toys received worldwide recognition with the introduction of the BRIO Labyrint in 1946. The wooden maze toy, with its distinctive tilting box, was distributed throughout the world during the 1950s and 1960s and was largely responsible for the original dissemination of the BRIO brand name. Following the success of Labyrint, BRIO began to expand its line of wooden toys for the domestic and international markets. The 1950s saw the introduction of Bygg-BRIO, a wooden construction toy that was the predecessor to BRIO MEC, and, most significantly, the BRIO Wooden Railway, which was to become the best-selling wooden railway in the world and BRIO’s most popular toy ever.

The 1960s were marked by growth in BRIO’s importing and wholesaling business, which increased dramatically in 1963 when BRIO obtained the Scandinavian distribution rights to a new American fashion doll, Barbie. The attraction of this small plastic doll to little girls was apparently universal as total sales for BRIO jumped by over 30 percent in a single year thanks to the Barbie phenomenon. In 1964 the company set up new subsidiaries in Denmark and Finland, followed six years later by a Norwegian subsidiary, largely in order to distribute the fashion doll. Although sales for Barbie tapered off in following years, the doll remained a substantial part of the BRIO import unit through the 1970s and a factor in the company’s sales in Norway through the 1990s.

BRIO Wooden Toys for the Export Market, 1970-90

While in the domestic and Nordic markets the center of BRIO’s business was toy wholesaling and baby carriages, beginning in the 1970s the export of BRIO brand wooden trains, construction toys, and preschool toys to the rest of Europe and North America became a substantial contributor to total revenues. Previously, BRIO toys had been exported via distribution agreements with toy wholesalers but in 1974 small subsidiaries were opened in the United Kingdom and Germany mainly in order to market the company’s wooden toys.

It was the opening of the American subsidiary BRIO Corp. in 1977, however, that changed the nature of BRIO’s toy business. BRIO Corp. was largely the product of its president, Peter Reynolds, and his determination to create a market for the company’s high-quality toys. Reynolds began his career as a salesman for a variety of British food distributors but had moved to Milwaukee when he was hired by a British jigsaw puzzle company that was one of the five agents for BRIO products in the United States. When that company went bankrupt in 1975, Reynolds persuaded BRIO to let him use the Milwaukee warehouse to establish a U.S. subsidiary.

From the start, Reynolds had his own approach to the marketing of BRIO’s wooden toys, believing that they would sell only because they were truly good toys and that his job consisted of convincing parents that good toys were important to their children’s development. Key to Reynolds’s marketing philosophy was his insistence that the small retail stores that had traditionally sold the wooden toys were the best venue for promoting good play value. Even after sales of BRIO toys started to take off in the United States, Reynolds refused to market his product to the large superstores like Toys “R” Us that were taking over the American toy retail industry. This strategy allowed BRIO Corp. to maintain a close relationship with the owners of small toy boutiques who did not have to worry about price undercutting by the big chains.

The relationship with small toy stores was crucial to the marketing of BRIO toys because it permitted Reynolds to run educational campaigns instructing salespeople about the benefits of the products. “We need people who’ll tell the story, not just show [the product].” Reynolds told the Seattle Times. The story that Reynolds wanted told was that BRIO toys promote good play by catering to the “whole” child which includes the child’s physical, social, and intellectual development. Reynolds’s campaigns also stressed the value of the high-priced BRIO toys. “BRIO-trained retailers are able to educate customers about the concepts of open-ended toys and playthings as an investment. For example, a $50 set of wooden blocks is both open-ended and an investment because it captures the child’s attention and imagination in different ways over the years. Such a toy, if played with for five years, costs only $10 a year—a wise, long-term purchase,” Reynolds wrote in a column in Playthings.

Company Perspectives

BRIO’s business concept is to market products to children and families with children, in which play, activity, company, development/stimulation and entertainment are the dominant elements, and in which care of, and attention to, the child are at the center of focus. BRIO branded products are targeted mainly at infants/young children in the BRIO business areas of play, moving/transport of children and child day care. In all these areas, the hallmarks of BRIO products are detailed consideration to quality and a focus on, and awareness of, the needs of children.

Reynolds had to convince not only store owners and parents about the importance of good play but his bosses in Sweden as well. “They didn’t really understand the importance of play. Consequently, they didn’t understand the value of their toys,” he explained to the Milwaukee Journal. If Reynolds’s philosophy had not sold the parent company on the merits of his approach, his results would have. When Reynolds started the U.S. subsidiary, sales of BRIO toys in the United States were under $4 million and accounted for only a negligible percentage of BRIO’s total sales. By 1991, U.S. sales had mounted to $14.6 million and represented over 50 percent of BRIO wooden toys sold worldwide. Reynolds’s approach to marketing was adopted wholeheartedly by BRIO AB, which began to actively promote the “good play” value of the company’s wooden toys.

In 1985 a Canadian subsidiary, BRIO Scanditoy, was opened to further grow North American sales. Under the direction of Kate Baldwin, BRIO Scanditoy adopted the same approach to marketing that had spelled such a success for BRIO Corp., emphasizing the company’s relationship to the toy boutiques that sold BRIO products. Canadian sales reached about five percent of BRIO’s wooden toy sales by the 1990s.

Domestic Growth in the 1980s-90s

In addition to growth in the export of BRIO’s wooden toys, in the Nordic region the company’s toy and baby carriage business continued to expand. In the early 1980s BRIO AB won the distribution rights to the American board game Monopoly from Sweden’s leading game company, Alga, and then proceeded to buy the Alga subsidiary from the Bonniers Company outright. In the mid-1980s BRIO obtained the rights to a number of very successful promotional toys, including Trivial Pursuit and My Little Pony, as well as reaching a distribution agreement with General Mills toys. The combined sales of these products caused the company’s total income to rise to a record SEK 68.3 million on sales of SEK 1.008 billion in 1987.

The management and ownership of BRIO AB had remained in the Ivarsson family throughout the century. In 1985 the balance of ownership changed somewhat when the company issued an IPO of shares on the OTC market of the Stockholm Stock Exchange. This offering came in conjunction with a share offering to employees that saw 60 percent of BRIO employees buying a stake in the company.

In the 1990s a number of new BRIO brand product introductions, including plush toys, bath toys, and child-sized gardening tools, along with a 1992 distribution agreement with Hasbro, created record income of SEK 85 million on sales of SEK 1.52 billion in 1994.

After the impressive results of the early 1990s, the company suffered a decline in sales towards the mid-1990s. A sharp drop in the Swedish birthrate coupled with the loss of the Hasbro license damaged the company’s baby carriage and wholesale business in the Nordic region, and in 1997 BRIO suffered a net loss of SEK 28 million, the largest loss in the company’s history. Restructuring costs involved with the purchase of Plasto Bambola, a maker of high-quality plastic toys, also added to the company’s financial difficulties. By 1998 it appeared likely that the general restructuring of the worldwide toy industry, which was undergoing dramatic consolidation, would force BRIO to make changes in the company’s toy wholesaling business. The timelessness of the BRIO brand wooden toys, however, virtually guaranteed the viability of the company into the next century.

Principal Subsidiaries

BRIO Leksaker; BRIO Toy; Alga; BRIO Barnvagnar; BRIO Lek & Lar; BRIO A/S (Denmark); BRIO OY (Finland); BRIO AS (Norway); BRIO Ltd. (U.K.); BRIO Wonderland Ltd. (U.K.); BRIO Corp. (U.S.); BRIO Scanditoy Inc. (Canada); BRIO SA (France).