Guy Degrenne SA

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Guy Degrenne SA

Route dAunay
501 Vire Cedex
Telephone: (+33) 2-31-66-46-18
Fax: (+33)2-31-66-45-96
Web site: http:

Public Company
Incorporated: 1948
Employees: 2,142
Sales: EUR 142.29 million ($134 million) (2000)
Stock Exchanges: Euronext Paris
Ticker Symbol: GDE
NAIC: 421220 Home Furnishing Wholesalers; 327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing

Guy Degrenne SA is one of Europes leading manufacturers and distributors of table service items, including stainless steel cutlery, porcelain, as well as silver and gold jewelry. Cutlery represents some 50 percent of company sales, which include sales in the companys own 15-unit retail store chain, and more than 70 shop-in-shop boutiques. The company, which also sells to hospitals, restaurants, and other institutional customers, is the European leader in the cutlery category and French leader in tableware overall. Guy Degrennes porcelain items generate nearly 23 percent of sales, while gold and silver goods add a further four percent. The company markets its products under three brand names: Table et Couleurs for the entry level; Guy Degrenne, which targets the mid-range market; and Létang Remy for the high-end sector. The company also operates a subsidiary, Guy Degrenne Industries, that manufactures kitchen equipment and tableware for the institutional market. The company operates production facilities in France, Hungary and Thailand. At the turn of the century, Guy Degrenne has been steadily building its international sales, which account for more than 30 percent of its 2000 sales of EUR 142 million. This effort has been aided by its 2000 acquisition of the cutlery subsidiaries of Austrias Berndorf, the leading manufacturer for the Austrian and Swiss markets, and by the 2001 marketing and distribution agreement with Hackman Groups Designor, of Finland. Guy Degrenne SA is quoted on the Paris stock exchange and led by CEO and chairman Bertrand Déchery.

From Horseshoes to Flatware in the 1950s

The Degrenne family had a long history as blacksmiths in the Manche area of the Normandy region of France, where cutlery productsespecially kniveshad been crafted as early as the sixteenth century. The earliest smiths were itinerant craftsman, molding knives and other cutlery items and adding tin-plating services at customers homes and farms. As craftsmen began to adopt industrial production techniques, the town of Sourdeval became a center of a new ironworks industry.

In 1932, Emile Degrenne, who had been working as a blacksmith, bought a factory in Sourdeval, converting production to the manufacture of iron grillwork, supports for shoeing horses, and other items. Degrenne formed a partnership with Henri-Maris Lorence, the following year. Lorence brought Degrenne a new line of products from his former employer, the Moncel company, and the company converted its production to that of cutlery and other tableware products.

French cutlery production was generally considered of low quality compared to the flatware coming from the Netherlands, Germany, and Belgium. As a consequence of this disparity in quality, the production of Degrenne and Lorence, like other French cutlery makers, was generally limited to finishing activities. The flatware itself was usually manufactured in Belgium, then polished and otherwise finished in France. Rather than compete for the home table service market, Degrenne and Lorence turned to the institutional market, building up a strong customer base among restaurants, cafeterias, and similar outlets.

The outbreak of World War II cut off the companys suppliers. Degrenne and Lorence attempted to fill the gap by adapting new materials, such as iron and copper, launching the company into the full-scale fabrication of cutlery items. At the end of the war, Degrenne and Lorence parted company and Degrenne reformed the company, now bringing in his sons, Guy and Raymond. Degrenne created new tools and equipment using the armor from the many tanks that had been destroyed during the battle of Normandy. The company was also quick to adopt the new material that was revolutionizing the tableware market, that of stainless steel. The family established itself as Degrenne Fils in 1948. It was oldest son Guy Degrenne who was to lead the companys developmentand eventually give it his name.

Forging Market Leadership for the 21st Century

Under Guy Degrennes leadership, the company began to diversify and innovate. With control of the complete production process, Degrenne was now able to control the quality of its products, establishing a name for itself not only within the institutional circuit, but increasingly in the consumer market as well. By 1958, the company expanded beyond silverware to add more and more flatware and then table service items, and in the early 1960s, Degrenne experimented with new production processes, launching its monocoque, a single-hull knife, in 1963. The company was steadily imposing itself as one of the leaders in its home market. In order to support its growth, Degrenne built a new factory at Vire, in Calvados, in 1967. At the beginning of the 1970s Degrenne introduced another popular product, champagne buckets.

Degrennes breakthrough came in the early 1970s. In 1974 the company rolled out its first advertising campaign. The spots featured a history of Guy Degrenne, referring to the companys chief as a cancreFrench term for school dunceand describing Degrenne as a student who preferred drawing silverware and tableware designs to listening in class. The campaign proved extremely successful in France, elevating the company to one of the countrys best-known brands. The long-running campaign was acknowledged by the award of the 7 dOr. Degrenne followed up this success with the launch of a new line of silver-plated cutlery in 1975.

By the early 1980s, Degrenne was one of the top French silverware manufacturers. The company reinforced this position in 1981 with the acquisition of J. Simon, based in Quingey. Three years later, Degrenne acquired new stature with the purchase of Létang et Rémy. That acquisition enabled the company to extend its range into the high-end market. The company went public that same year, listing on the Paris secondary market under the Table de France name. The newly public company not only had newly expanded operations, it also had a new line of products, the Couverts Couleurs line, launched in 1984.

After 40 years at the head of the company, Guy Degrenne sold out in 1987, turning over 98 percent of the company to a FFr 175 million leveraged buyout organized by an investment group headed by Bertrand Dechery and Gérard Zink. The company was renamed Guy Degrenne SA and taken off the public market (the remaining two percent of shares continued to be listed on the Parisian over-the-counter market until 1995).

The new influx of capital brought by Déchery and Zink enabled Degrenne to begin to diversify its product line and pursue an international expansion program. The companys first diversification was into the related porcelain industry, in order to allow Degrenne to offer a more complete range of tableware items, especially for the lucrative wedding-list market. The company first purchased a porcelain works in Limoges, then a second facility in Hungary. In 1988, Degrenne acquired cutlery manufacturer Seed. This purchase gave the company the production volume and expanded product line to enable it to enter Frances hypermarket sectorthe countrys largest retail market. The companys new management also helped Degrenne make steady sales gains. From FFr 350 million in 1987, the company sales grew to FFr 540 million by 1990. That years introduction of a new line of gold-plated and lacquered products gave new boosts to the companys sales, which, despite the long-lasting economic crisis in France, reached FFr 612 million by 1995.

By the end of 1996, Degrennes management had paid the FFr 175 million debt incurred with the leveraged buyout and prepared to step up the companys further development. Dechery and investment partners had already begun by opening up the companys capital to new investors, notably Consortium de Réalisation (part of Credit Lyonnais) and Lazard, which each acquired 20 percent, and Credit Lyonnais itself, which bought six percent of Degrenne. In December 1996, the company announced its intention to return to the Paris secondary market, selling more than 15 percent of its shares. The new offering was meant not only to allow the leveraged-buyout partners to cash out on their investment, but also to finance the companys newly ambitious growth plans.

Company Perspectives:

We have a vocation: to propose the beautiful and useful for all occasions and place within reach all products that are esthetic, functional, and durable. It is this ambition that leads us to web creativity and industrialization on a daily basis. We have a trade: that of Table Service, that of the refinement of the pleasures of the table. It is this demand that brings us to work with several materials in order to offer the robustness of steel, the brilliance of silver, the colors of porcelain, and the transparency of crystal. We have an objective: to innovate, yet and always, in order constantly to modernize a traditional craft through the talents of our stylists and designers, and also through technology and the care of all our workers in order to guarantee a quality beyond reproach. We have a will: to explore the paths of excellence in all we undertake, to master quality, competitiveness of price, and service at the level expected by our clients, to whom we are loyal. We have a sense of engagement and responsibility. More than 1,000 employees, uniting all of the creative, industrial and commercial expertise of the porcelain and silver crafts, ready to meet the challenges of quick response, flexibility, and respect for deadlines, know that they are working together toward the same goal: to service and satisfy our clients.

As it approached its fiftieth anniversary, Guy Degrenne SA sought not only to continue its investment in its growing porcelain business, but also to continue its diversification into such areas as glassware and decorative tiles. The company also sought to boost its international sales, which, by the mid-1990s, accounted for only about 20 percent of its total sales.

The company was also developing a new distribution concept, the integrated boutique. Launched toward the end of 1996, the companys store-in-store concept presented the companys full line of products in a sales space ranging from 30 to 50 square meters. The company targeted the vast multi-brand wedding gift store marketwith more than 1,000 stores in Francefor its new boutique. By the end of 1996, Degrenne had already opened six boutiques, with plans to open more than 50 by the end of 1997. This project was given a boost by the successful re-introduction of Degrennes shares on the public market at the beginning of 1997. The company continued to roll out its network of in-store boutiques, although more slowly than originally planned. By the end of the year, the company had opened 30 store-in-stores. While the company continued to target this market, with plans to open up to 100 boutiques by the end of 1998, it had in the meantime begun developing a new retail concept.

By the second half of the 1990s, the multi-brand boutiques, traditionally located in Frances town centers, had seen their sales strength undergo a long decline. If, at the height of the 1980s, this circuit had been valued at some FFr 4 billion in sales per year, most of its sales had been driven by the wedding-list market, which reached a height of 200,000 wedding lists in the mid-1980s. The decline of French interest in weddings, as more and more couples, backed by new legislation, opted to forego marriage, led to a drop in wedding lists to just 120,000 by the middle of the 1990s. Aggravating this decline was the arrival of new competitors, such as Habitat and Ikea, which, coupled with steady market share gains made by the countrys hypermarkets, had captured growing portions of the domestic market.

Degrenne saw a new opportunity to assert itself on the retail scene. Between the networks like Habitat and the hypermarkets, there is room for a new concept, Dechery explained to Les Echos. That new concept was the launch of the companys own retail network of self-standing Guy Degrenne stores. Offering the full range of Guy Degrenne, Table et Couleurs, and Létang et Rémy brands, the new retail stores also gave the company the opportunity to come closer to its customers, particularly with the offering of workshops in creating table settings, painting porcelain, and related subjects. The company tested two 100-square-meter stores in 1997 before proceeding with a full roll out in 1998. By the end of the decade, the company had opened 15 retail stores both in France and throughout Europe.

International sales were meanwhile gaining steadily, reaching 27 percent of the companys sales of FFr 687 million in 1997. Those operations were boosted in 1998 as the company entered a cooperation alliance with famed Christofle to combine their product ranges to pursue the booming hotel and institutional markets in Asia and the rest of the world. The company also began shifting much of its industrial activity outside of France, notably to a production facility in Thailand for its hotel and other institutional production, and to Poland, while converting its home-base Vire facility to value-added products. By 1999, the companys international sales had grown to more than one-third of total sales.

Nearly all of the companys growth had been internal. In 2000, the company moved to generate growth externally. In May of that year, Degrenne acquired the tableware subsidiaries jointly owned by Austrias Berndorf group and retailer Table Center. The purchases, which gave Degrenne control of Berndorf Austria and Berndorf Switzerlandthe leading manufacturers of cutlery in those marketsalso gave it four Table Center retail stores. With this acquisition, the company cemented its place as Europes leading cutlery manufacturer. At the same time, its growing porcelain operations had enabled it to capture second place in Frances tableware sector, behind leader Bernaudaud.

Degrenne continued to target international sales growth in 2001, expanding its retail branch internationally. In June of that year the company made a new move to assert itself on the European scene when it signed a distribution agreement with Finlands Hackman group and its kitchen utensil subsidiary Designor. The agreement called for Designor to market Degrennes products in its Scandinavian base, while Degrenne took over distribution for the Scandinavian utensils leader in France. These moves were certain to help prove that the former dunce Degrenne had become one of Europes smartest tableware manufacturers for the twenty-first century.

Key Dates:

Emile Degrenne buys foundry and factory in Sourdeval and begins production of grillwork and horse-shoeing equipment.
Degrenne forms partnership with Henri-Maris Lorence and begins production of tableware products.
Degrenne and sons Guy and Raymond incorporate the new company as Degrenne Fils, concentrating on stainless steel silverware production.
The company expands production to include a wider range of tableware items.
The company builds new factory in Vire.
The companys first national advertising campaign is a huge success.
The company acquires J. Simon in Quigley, France.
The company acquires the high-end brand Létang et Rémy, launches its Couverts Couleurs line, and goes public on the Paris stock exchange secondary market.
Guy Degrenne sells company in a leveraged buyout led by Bertrand Déchery, who makes the company private again.
Under its new ownership, the company acquires a porcelain factory in Limoges, the cutlerly manufacturer Seed, and reinforces institutional silverware and tableware sales.
The company launches store-in-store boutiques.
The company returns to the Paris stock exchange.
The first company-owned retail store opens.
The company acquires Berndorf Austria and Berndorf Switzerland.

Principal Subsidiaries

Guy Degrenne Industries SA.

Principal Competitors

ARC International; Brown-Forman Corporation; Christofle Orfevrerie; Mikasa, Inc.; Lifetime Hoan Corporation; Noritake Co. Limited; Oneida Ltd.; Royal Doulton plc; Waterford Wedgwood plc.

Further Reading

Bertouille, Marjorie, Guy Degrenne nenvisage pas daugmentation de capital, La Tribune, January 10, 1997.

Epinay, Bénédicte, Guy Degrenne lance son propre réseau de distribution, Les Echos, December 9, 1997 p. 10.

Lecoeur, Xavier, Guy Degrenne intégre ses derniéres acquisitions, Les Echos, May 22, 2000 p. 18.

, Guy Degrenne prend le contrôle des filiales arts de la table de lautrichien Berndorf, Les Echos, February 2, 2000 p. 15.

Le Masson, Thomas, Guy Degrenne revient sur le second marché, Les Echos, December 6, 1996, p. 11.

M.L. Cohen