Faberge looks to reinvent itself online

Faberge believes today's rich will surf the web and buy their bling online

By Katie Hunt
Business reporter, BBC News

Tatiana Faberge, the great-grand daughter of the feted Russian jeweller Peter Carl, is thrilled to be wearing one of the first new pieces of fine jewellery to bear her family's name since 1917.

Priced at 300,000 euros (£271,000; $439,000), the gem-encrusted seahorse brooch is part of a new collection that hopes to re-establish Faberge as a luxury brand to rival the likes of Cartier, Tiffany and Co and Bulgari.

Tatiana is advising Faberge on the family's heritage

"I've been dreaming of this moment for decades," she says, as the guest of honour at the launch of the new collection.

Her hopes are high but establishing a luxury brand, even one with some existing pedigree, is no easy feat, especially during the throes of a recession.

What's more, Faberge is spurning the traditional sales route of exclusive boutiques and glamorous sales assistants, and is instead asking its customers to surf the web and buy online.

'Mystique'

The Faberge's jewellery business was nationalised in the wake of the Russian revolution and a US businessman began using the family's name to market perfume in the 1930s.

RUSSIAN SAGA 1847 - First Faberge shop opens in St Petersburg 1885 - Tzar commissions first egg 1918 - House of Faberge is nationalised and its stock confiscated 1937 - Faberge name used to launch a perfume business in US without family permission 1989- Unilever buys Faberge brand for $1.5bn

Until recently, the brand was owned by multinational conglomerate Unilever to sell aftershave and cosmetics.

Now the company is majority owned by South African mining and investment firm Pallinghurst Resources, which bought the brand from Unilever in 2007 for an undisclosed sum.

Mark Dunhill, the chief executive of Faberge, is confident that he can turn it into a "super brand" worth billions of dollars.

"We believe its reputation is intact despite being used and misused. Its mystique has survived," he says.

Pallinghurst's deep pockets mean the firm is on a firm financial footing, holding no debt.

Mr Dunhill's backers say they have "given him everything he asked for".

And there was no stinting on the launch, at Goodwood House in Sussex where the collection was displayed.

The opulent surroundings would not have been unfamiliar to Faberge's first customers in the Russian Imperial court.

Contemporary focus

Displayed in a shell-lined grotto in the grounds of Goodwood, the jewels were certainly beguiling.

This peony ring would set you back 400,000 euros

Designed by Frenchman Frederic Zaavy, the 100-strong collection of rings, brooches, earrings and bracelets are inspired by flowers and Russian folklore.

Each piece is one of a kind. Prices begin at $40,000 and go as high as $7m.

Faberge also expects to receive private commissions, but the company is coy about whether they will make new versions of the highly decorated eggs that made its name.

"Our focus for today is on the contemporary," Mr Dunhill says.

Economic climate

Despite predictions that the super-rich might prove immune to turbulence that has felled economies worldwide, the financial crisis has hit sales of luxury goods hard.

This definitely isn't a mass market proposition Mark Dunhill, Faberge chief executive

US consultants Bain & Co, have estimated that the market for luxury goods would decline by 10% in 2009.

However, Mr Dunhill believes the current economic climate will play to Faberge's strengths. He says luxury brands such as Louis Vuitton - beholden to the demands of shareholders and accountants - overstretched themselves during the boom years.

"It's the perfect time for Faberge to come back," he says.

"In the eyes of customers, other brands have become devalued and suffered a loss of identity.

"Customers want uniqueness and provenance."

Unusual model

Perhaps, Faberge's biggest risk is not the timing of the launch but its business model.

Faberge is hoping to restore the brand's former legacy

Instead of Faberge stores on Bond Street and Fifth Avenue and other swanky shopping districts, Faberge will sell its jewellery online. "It would take 10 years to start up a network of stores and stock them with expensive inventory," says Mr Dunhill.

"We could have done that but we thought there had to be another way."

Although it has opened a "salon" in Geneva, its website will be the main interface with potential customers.

A video demonstration of the site showed a woman using high-definition zoom function, in lieu of a jeweller's loupe, to examine a ring and chatting via video link with one of 12 sales advisors, who speak several languages including Chinese and Arabic.

When necessary, the advisors will travel to clients homes and offices to allow them to try the jewellery in person.

But can customers really fall in love with a piece of jewellery through cyberspace?

Mr Dunhill is confident that the time-pressed and privacy-seeking rich do make major purchases online.

"This definitely isn't a mass market proposition. We don't expect people to be typing nice jewellery or funky ring into Google and coming to our site."

Two weeks after the launch, no sales have been made, but Faberge says it has seen "good interest" from prospective clients worldwide.

Tatiana Faberge has no qualms about the unusual strategy.

She says that her great-grandfather would have not have hesitated to use today's technology.

"He was one of the first to electrify his workshop and to have telephones installed. He also published a mail-order catalogue in the 1890s," she says.

"He would have embraced the internet."