Bulgari S.p.A.

Lungotevere Marzio, 11
00186 Rome
Italy
39 6 68 81 01
Fax: 33 6 68 81 04 01

Public Company
Founded: 1884
Employees: 573
Sales: L385.3 billion (US$237.6 million) (1995)
SICs: 3911 Jewelry, Precious Metal; 2844 Toilet Preparations; 5944 Jewelry Stores; 5122 Drugs, Proprietaries, and Sundries; 6719 Holding Companies, Not Elsewhere Classified

Bulgari S.p.A. is one of the world’s leading manufacturers and marketers of luxury goods. From its traditional emphasis on the highest-quality jewelry and watches, the company has expanded into perfumes, silk scarves, and eyewear. Bulgari sells its fine wares via 31 company-owned stores and 18 franchisees as well as thousands of perfumeries, department stores and duty free outlets. Though the company went public in 1995, brothers Paolo and Nicola Bulgari—grandsons of the founder— continued to share a controlling 61.8 percent share of its equity. Their nephew, Francesco Trapani, has served as chief executive officer since 1981.

Company Origins Stretch Back to 19th-century Greece

Company founder Sotirio Boulgaris was born in 1857, the lone heir to an apparently long line of itinerant Greek silversmiths. Fleeing the violence and banditry endemic to mainland Greece at the time, Sotirio and his parents moved to Corfu, where they established a shop in the late 1870s. The young metalworker soon sought to find his own way in the world, and in 1880 settled in Rome, Italy. After operating a short-lived partnership, Sotirio founded a variety store featuring silver belts, buckles, bracelets, and buttons as well as tableware and antiques in 1884. By the turn of the century, the enterprising businessman had established outlets in St. Moritz, San Remo, Naples, Bellagio, and Sorrento. He Romanized the family name to Bulgari, and in 1880 bestowed that name on his bride, Eleni. Though he was putting in long hours to make the business a success, Sotirio found time to father two sons, Costantino and Giorgio in 1889 and 1890, respectively.

Around the turn of the century, Sotirio sold his budding chain of shops in order to concentrate on a single jewelry and silver business. In 1905 he purchased a shop at no. 10 Via Condotti in Rome, a location that would remain the Bulgari headquarters for the duration of the 20th century. The new outlet offered a more upscale selection of goods ranging from embossed and engraved silver serving pieces to decorative ceramics as well as gold and silver jewelry, often set with gemstones. Over the course of the first two decades of the 20th century, Bulgari gradually took on a more cosmopolitan air. Giorgio and Costantino had their first involvement in the family business during this period. By the time the Bulgaris resumed business after the interruptions of World War I, the company had completed its shift from an emphasis on silver to pricier bejeweled pieces.

The Second Generation Takes the Helm in 1930s

After Sotirio died in 1932, his sons undertook an extravagant remodeling of both the interior and the exterior of the Via Condotti store and formally changed the company logo to “BVLGARI,” an application of the traditional Roman alphabet. The L2 million project took two years and featured the pink and beige Italian marble that would become the worldwide hallmark of the firm’s retail outlets. Giorgio’s global gem-sourcing travels exposed him to the latest fashions in the then-Paris-based jewelry industry, while Costantino’s penchant for collecting ancient silver wares would later be a source of inspiration for the company’s adaptation of classical themes.

Having latched onto style trends emanating from Paris, Bulgari continued to follow the lead of what was then the world’s jewelry capital throughout the first half of the century. In the 1920s, Bulgari embraced Art Deco themes. In the 1930s, the company concentrated on diamonds set in platinum. Wartime restrictions and a general climate of austerity was reflected in a dearth of jewelry designs of the 1940s. When the company did produce a piece, it often featured yellow gold and few or no precious jewels. Though highly regarded for their craftsmanship, the Bulgari brothers continued to follow, rather than set, trends after World War II. In the prosperous years of the immediate postwar era, the jewelry house produced lavish settings of diamonds, emeralds, sapphires, and rubies in platinum. Floral motifs, many featuring en tremblant settings that moved with the wearer, were especially popular during this period.

The store’s marble-decked facade would be the backdrop of many a paparazzi photo in the postwar era, as celebrities from around the world were drawn to the Bulgari shop. The expanding clientele, which prior to the 1960s included Italian nobility; South American political figure Evita Perón; American businessmen like Nelson Rockefeller and Woolworth’s founder Samuel Henry Kress; and U.S. Ambassador to Italy Clare Boothe Luce, reflected Bulgari’s growing stature among the world’s high-class jewelry houses.

BVLGARI Style Emerges in 1960s

In the 1960s, Italian jewelers in general and the Bulgari brothers in particular began to break away from France’s fashion dictates to establish their own recognizable styles. The Bulgari mode of design that emerged over the ensuing decade departed from the French in several respects. In place of large, faceted diamond centerpieces, Bulgari began to substitute colored gemstones in a smooth, domed cut known in the industry as “cabochon.” Diamonds—often brilliant cut and/or pave set—became the supporting actors in these color plays. When choosing its stones, the jewelry house shunned the traditional emerald-ruby-sapphire trio, and instead began to choose gem-stones based more on their artistic contribution to the piece than their financial contribution. Smooth outlines and highly stylized forms in yellow gold would complete the Bulgari look. In their 1990 essay on the firm for The Master Jewelers, Charles M. Newton and Omar Torres aptly noted that’ The symmetry and proportions of Bulgari products are based more upon art and architecture than on nature—a factor which distinguishes the Bulgari jewel from that of the French masters.”

The family’s third generation, represented by Giorgio’s three sons Paolo, Gianni, and Nicola, took the helm in 1967. Eldest son Gianni earned a law degree and favored a playboy lifestyle—complete with a stint as a racecar driver—but was soon drawn into the family business and served as chief executive into the early 1980s. Paolo, the artist of the trio, has been called “one of the world’s foremost jewelers.” The Master Jewelers noted that “One of his greatest talents is his ability to translate his understanding of his family’s traditions into recognizably Bulgari jewels while continually moving forward with new and exciting forms and ideas.” Though Nicola, the youngest, has been characterized as the businessman of the family, he was also responsible for an important design contribution. An avid collector of ancient coins, in the late 1960s he revived their use in jewelry, dubbing them Gemme Nummarie, or “Coin Gems.” Bulgari’s most popular treatment featured coins set in heavy, open-linked, yellow gold chains, but the firm also produced rings, earrings, bracelets, and even tableware and gift items on this theme. The juxtaposition of patinated coins and highly polished precious metals would become a Bulgari hallmark.

International Expansion Begins in 1970s

The brothers established their first international outlet in 1970 in New York’s Pierre Hotel on Fifth Avenue. By the end of the decade, they had launched locations in Geneva, Monte Carlo, and even Paris. Bulgari’s jewelry designs of this decade were strongly influenced by the exhibitions of the treasures of Tutankhamen’s ancient Egyptian treasures. Indian motifs, particularly the “boten” (leaf), were also prevalent in the 1970s. The company’s purchase of a collection of carved Indian jewels, which were remounted to create new treasures, was a key to this in-house trend.

Though the company had made and sold pocket, lapel, and wrist watches throughout its history, Bulgari did not introduce a major collection of timepieces until the late 1970s. The simple lines of the “BVLGARI-BVLGARI” wristwatch, which featured a black face encircled by a gold band, would become the company’s most-recognized and highest-selling watch. Another important design was Bulgari’s snake watch, which evolved from the jewel-encrusted, Art Deco snake of the 1920s (its hinged head concealed a watch face), into a highly stylized coil bracelet set with an exposed face.

The 1970s were a period of great success for the company, a time when Bulgari enhanced its ranking among the world’s greatest jewelers through innovative designs. The firm’s patronage grew accordingly, expanding to include celebrities like Sophia Loren, Audrey Hepburn, Kirk Douglas, and perhaps the house’s best-known client, Elizabeth Taylor. Royalty from around the world shopped at the company’s showcases. Perhaps most tellingly, lesser jewelers began to copy Bulgari designs. At the end of the decade, outside observers pegged the company’s annual sales at US$50 million.

Company Perspectives:

Bulgari is on the attack. In Italy, we’re a legend —we don’t need to aspire to be anyone else because we’re at the top, but our goal is to expand both in quantitative terms and qualitative terms. The quantitative goal is easy: We want to sell more and be more profitable. But the qualitative goal is perhaps foremost. We have a prestigious role in the luxury goods industry and we want to become even more important in this sense. Our goal is to have a mix of products that will enable us to be present in several different markets.

Bulgari in the 1980s

Bulgari’s growth came to a halt in the early 1980s. According to published estimates, annual revenues remained at the US$50 million level through 1985, and the company did not open a single new retail outlet during the first half of the decade. Some sources blamed squabbling among the three brothers, and indeed, eldest Gianni resigned the chief executive office in 1985. Two years later, Nicola and Paolo bought out their brother’s one-third stake and prohibited him from using the Bulgari trademark. (Giorgio went on to chair global footwear giant Fila S.p.A.) In the meantime, they had asked a nephew, Francesco Trapani, to revitalize the business. The new CEO, who had first joined the company in 1981, guided an aggressive strategy for growth, opening new retail outlets in Milan (1986), Tokyo (1987), Hong Kong, Osaka, Singapore, and London (all 1988). Before the decade was out, the company had also launched new stores, in Munich and New York. Bulgari returned to Sotirio’s old summer haunt, St. Moritz, in 1990. Trapani also hired new designers, boosted advertising, and reacquired some franchised stores during this period of rapid growth.

Though the company remained firmly ensconced in the high end of the jewelry market, designs from the 1980s on were noteworthy for their increased “wearability” and the development of design themes. Before he departed the company, Gianni Bulgari reflected on this strategic shift, asserting in a 1981 interview for the International Daily News that “We are trying to change our image from one of a business only for the very rich to one designed for those of discerning tastes. You don’t have to be rich to like quality.” These two concepts fused to form a strategy that allowed Bulgari to expand its potential audience while maintaining the highest quality of design and execution.

The jewelry house introduced the first of several collections based on modular designs in 1982. “Parentesi” (parenthesis) featured several bracket-shaped elements arranged in a pattern. The individual elements could be combined in a seemingly infinite variety of ways to form rings, bracelets, watches, necklaces, and earrings. Bulgari made more or less expensive pieces of jewelry based on this design by executing the parts in more or less valuable materials ranging from polished steel and coral at the low end to fine gemstones and gold or platinum at the upper end. The point, however, was not necessarily to manufacture less expensive pieces—price tags averaged US$3,000 and ranged up to US$1 million in the mid-1990s—but to make fine jewelry that could be worn from day into night.

Trapani reflected on the strategy in a 1996 article for fashion magazine WWD, commenting, “We are becoming a jeweler that sells products for everyday use, not just special occasions. This is what has been driving our growth.” Periodic launches may also have introduced an element of planned obsolescence, as evinced by the parade of thematic collections that followed. In the 1980s these included “Doppio Cuore” (double heart, 1983), “Boules” (beads, 1986), “Gancio” (hook, 1987), and “Alveare” (beehive, 1988). These strategies succeeded in tripling Bulgari’s sales in the latter years of the decade, reaching an estimated US$150 million by 1989.

Diversification into Other Luxury Goods in 1990s

The firm continued to launch collections of modular jewelry in the early 1990s, introducing “Saetta” (thunderbolt) and “Spiga” (ear of wheat) in 1990; “Naturalia,” which featured stylized fish and birds, in 1991; “Celtica,” based on ancient Celtic motifs, and “Doppio Passo” (classical ballet) in 1993; “Chandra” (Sanskrit for moon) in 1994; and “Trika” (braid) in 1996. These patterns were virtually instant status symbols, highly recognized as Bulgari pieces.

Though Bulgari had long emphasized jewelry and watches, it had from the outset sold other goods, including silver tableware and giftware. In the early 1990s, CEO Trapani followed the lead of other major luxury goods companies that had parlayed their well-recognized and highly-respected brand names into highly profitable growth vehicles. It was not a foolproof process; Trapani had to take care that he did not devalue the venerable Bulgari cachet while seeking a wider clientele. After two years of research and development, the company launched its first fragrance, Eau Parfumée, a unisex scent based on green tea. BVLGARI pour Femme followed in 1994 and BVLGARI pour Homme in 1995. By the end of 1996, perfume was contributing 14 percent of annual sales and generating an estimated US$40 million (L63 billion). Bulgari launched silk scarves and neckties in 1996. That same year, the firm licensed its trademark to fellow Italian firm Luxottica for use on a line of sunglasses and optical frames. A collection of Bulgari leather goods, including handbags and other accessories, was slated for 1997.

New store openings increased Bulgari’s retail concentration in Europe (including the countries of the former Soviet Union), the United States, and Asia, and broadened its geographic reach to include the Middle East and Australia. From 1990 to 1996, the company added more than two dozen new shops. Trapani confidently forecast that the company would increase its distribution points to 70 company-owned boutiques, 300 independent watch retailers, and 5,000 perfume sales outlets by the end of the 20th century.

Bulgari’s sales increased from L154.3 billion in 1991 to L448.8 billion (US$268.9 million) in 1996, while after-tax net grew from L6.9 billion to L57.7 billion (US$34.6 million). The company went public on the Milan exchange in July 1995, selling out a 32.1 percent stake in only two days. Its stock performance reflected the rapid expansion of its bottom line. Shares rose from an offering price of L8,600 (US$5.32) to L36,000 (US21.44) in mid-1997 before a four-for-one stock split that June.

CEO Trapani was by this time the unquestioned leader of Bulgari. Beginning in 1996, the astute strategist was awarded for his service to the family company with a significant stake in its equity. And at just 39 years old in 1997, he seemed assured of the top position at Bulgari for years, and perhaps decades to come. Trapani was not at a loss for new growth ideas, either. In September 1995, he told WWD that Bulgari anticipated a strategic acquisition, noting that the firm sought “a company with a well-known name which might have fallen on hard times,” ironically adding, “We don’t want to pay a lot of money for it.” Industry analysts speculated that the purchase would focus on the high end of the apparel industry.