IT HAS BECOME ALMOST ROUTINE in the booming luxury business for curious minds to draw back the industry's proverbial Oz-like curtains to learn the tricks of the trade—how a $10,000 French handbag is stitched or where Brazilian gemstones are mined. But at Swarovski crystals in Wattens, Austria, a town of 8,000 about 20 minutes northeast of Innsbruck by car, the factory—and all the technical knowhow stashed inside—is strictly off limits.
In the 111 years since its founding, Swarovski has established itself as the largest supplier of high-end crystals to the fashion and design industries, adding sparkle to jewelry and evening bags as well as a growing number of interior-design products, from expected items such as chandeliers and vases to more original pieces like curtain tassels. Crystals are essentially sand and water and chemical coloring agents fired and then cut and polished by machine, so a factory visit would seem harmless.
But for years the founder's rule has stood: Only members of the Swarovski family, two independent board directors and a few dozen top managers have unrestricted access to the production facility. Even the 6,200 employees who work in the factory (and they make up the better part of the population of Wattens) see only bits and pieces of the production cycle.
"We feel that what we have learned over time is a big asset for the company," says Markus Langes-Swarovski, 32, an executive-board member who oversees branding and communication and is a great-great-grandson of the company's founder, Daniel Swarovski. "Protecting your know-how is one element of showing appreciation for what you've achieved so far."
That is unusual. Even defense companies let school groups in to ogle the missiles. And most companies in the luxury-goods industry go to great expense to persuade journalists and style tastemakers to drop by their ateliers to witness artisans at work. There's pressure to differentiate themselves from the increasingly sophisticated fast-fashion chains and copyists—and to justify their prices.
"Establishing authenticity is very important for all luxury companies," says Robert Buchbauer, 40, a great-great-grandson of the founder who directs the company's consumer-goods business. "The more interchangeable products become, the more important it is, but so far we're in the lucky position that our product is unique."
On this sunny, clear day in the Austrian Tyrol, Langes-Swarovski and Buchbauer, two of the 20 family members who manage and work in the privately held company, are seated at a table in a conference room at the corporate headquarters. Floor-to-ceiling windows provide a view onto the 60 other buildings of the corporate and factory complex, which include a water-purification center. There are five cranes on the property, a sign that business is good.
Competing for our attention, on the table is a giant, 33-lb. version of the company's new star product, the Xilion, which in its oversize form suggests a fortune teller's ball. The commercial version is pea size, perfect for necklaces and dangling earrings. True, it's brilliant, throwing off hundreds of sparkles—but unique? Exactly how unique can a rhinestone be?