Smoby International SA - Company Profile, Information, Business Description, History, Background Information on Smoby International SA

B.P. 7
39170 Lavans-les-Saint-Claude

Company Perspectives:

Play is more than having fun! It also means developing one's senses, physical ability, and language. And integrating the ideas of sociability, sharing, and exchanging. Finally, it's a training ground and preparation for tomorrow. At Smoby, we listen to children. By studying their behavior and identifying their desires, our experience grows each day. Smoby's strategy is based on values of complicity, creativity, and early-learning. Our mission is to create toys that will develop a child's independence and ability to adapt while stimulating the imagination. For this reason, we give importance to emotions and multiple sensory experience when conceiving our toys.

History of Smoby International SA

Smoby International SA is France's leading toy manufacturer and number three in Europe. Posting sales of more than EUR 208 million, Smoby primarily targets the infant through age ten market with its stable of toy companies, which include Smoby, Ecoiffier, Monneret, Pico, Unice, and Smoby Baby (formerly Lardy). Smoby's catalog includes some 2,000 products grouped among several major categories, including infant to three years (15 percent of sales); role-playing (50 percent); outdoor (15 percent); and family (8 percent). While Smoby itself encompasses a wide range of toys, the brand is especially recognized for its plastic role-playing toys. Ecoiffier features a collection of educational and stackable and construction toys. Monneret's major product are tabletop soccer games. Spain's Unice is one of Europe's leading manufacturers of playing balls and balloons, and Pico, also based in Spain, is a leading maker of toy strollers and related toys. In addition, Smoby's Mob subsidiary produces plastic bottles and packaging, accounting for 12 percent of the company's sales. Located in France's Jura region, the heart of the country's toy-making industry, Smoby operates factories in France, Spain, and Romania and distribution subsidiaries in the United Kingdom, Switzerland, Italy, Germany, Argentina, and Hong Kong. International sales have become a strong component of Smoby's success, as some 57 percent of the group's sales come from outside France. In the early years of the new century, Smoby has begun expanding beyond its core European market, which accounts for 93 percent of sales, with an entry into Brazil and Argentina and moves into the Asian region. Listed on the Euronext Paris Exchange, Smoby is led by Jean-Christophe Breuil, grandson of the company's founder.

From Pipes to Plastic: 1920s-1970s

For many French, the country's Jura region had long been synonymous for its two most important products: wood and toys. One of the most vibrant offshoots of the region's wood industry at the beginning of the 20th century was the production of tobacco pipes. The area surrounding Saint Claude was particularly active in this industry, with pipe-making workshops dating back to the 18th century. Early pipe production remained the province of artisans, but by the mid-1800s pipe-making had increasingly become industrialized. By the end of the century, more than a third of the total population was employed in the pipe-making industry, and by the outbreak of World War I the area contained some 50 factories.

Among these were companies operated by the Moquin and Breuil families. Both companies remained modest operations, however, until 1937, when Jean Breuil, born in 1908, whose family had founded its factory in 1924, married Georgette Moquin, whose brother led that family's pipe business. Breuil and Moquin went into business together, creating the new company SARL Moquin Breuil in 1939. In the meantime, cigarette smoking had already begun rising in popularity, steadily reducing demand for pipes. The company diversified its product lines, adding pens and mechanical pencils to its production, as well as wooden housekeeping products.

Moquin Breuil continued to grow during World War II and by the end of the war had three workshops in operation. The arrival of the Allied forces in France further stimulated the demand for cigarettes, and by the end of the 1940s the demand for pipes was shrinking dramatically. The company, by then led by Jean Breuil, decided to invest in a new material, plastic, and in 1947 the company acquired its first injection-molding machine.

The company now converted much of its production of household and housekeeping items to plastics. At the same time, it developed an important offshoot of this activity when it began producing a small line of plastic toys, another prominent industry in the Jura region. Through the 1960s, however, toys remained only a small part of the company's operations, accounting for just 25 percent of its sales. In 1967, however, the company joined with a number of other, dedicated toy makers, including Lardy, Clairbois, and Berchet, to form an export cooperative, Superjouet.

Focus on Toys in the 1980s

The major turning point for the Moquin Breuil company came at the end of the 1960s, when Breuil's son, Jean-Pierre, born in 1943, joined the company with his 20-year-old wife Dany. The pair took over the company's toy department in 1968 and became responsible for its development. The company's plastic production by then took place under the name Mob, a contraction of Moquin Breuil, and specialized in cheap plastic toys, which were picked up by the growing supermarket and hypermarket chains in the country. The company also produced toys as part of product bonuses, such as are found in cereal boxes or attached to laundry detergent containers. At the same time, Moquin Breuil, through Mob, launched into the production of plastic bottles, containers, and other packaging items.

Dany Breuil soon became the chief inspiration for the company's growth. With two young children at the beginning of the 1970s, and with the rise of child development theories favoring the necessity of play in a child's education, Breuil became interested in the educational aspects of toys. At the same time, Mob faced growing competition from the flood of cheap plastic toys from Japan, Taiwan, and elsewhere.

Under Dany and Jean-Pierre Breuil, the company began to invest in research and development in order to create a new line of higher-quality, educational toys. By 1978, the company had developed a new brand name, Smoby. The new line of toys--the company was to become synonymous with such role-playing toys as its grocery store and construction cranes--were a quick success, backed by strong investments in marketing. For its distribution, the company made use of supermarket and hypermarket channels, which had been quickly gaining on the traditionally small, city-center shops. The company also targeted the European market for sales.

By the early 1980s, the company's sales had topped FFr120 million. Over the next decade, toys became the company's primary focus, although it continued to build up its Mob packaging operations, extending it into the pharmaceutical, food, and chemical industries. By the end of the 1980s, Mob contributed some 20 percent of the company's total sales.

Now known as Smoby, the company went public in 1983, listing on the Lyon Stock Exchange. The founding families nonetheless retained control of 58 percent of the company's stock, including 72 percent of its voting rights. Two years later, founder Jean Breuil retired, turning over leadership of the company to Jean-Pierre Breuil.

A new phase in Smoby's growth began in 1987 when the company acquired new plastics technology in the form of rotational molding. The new procedure, invented in the United States and adapted to meet European standards and market demand by Smoby itself, enabled the company to begin producing toys on a larger scale, and Smoby quickly established itself as one of the leading makers of outdoor slides, playhouses, and related products.

The launch of the company's first rotational molded toy, the "Fée du Logis," became the company's first success in its newest market. Smoby continued adding to its rotational molding capacity over the next decade and expanded its range of large-scale designs to include some 25 models. Meanwhile, the company had successfully expanded internationally, opening distribution subsidiaries in Spain, Germany, England, and Switzerland. By 1991, Smoby's sales had risen to nearly FFr400 million.

The death of Jean-Pierre Breuil in 1992 placed Dany Breuil in the company's CEO spot. Joining Breuil was son Jean-Christophe, who, at age 20, abandoned his studies in international finance to help his mother keep the family business on track.

International Targets for the 1990s and Beyond

The 1990s were to mark a new period of expansion for Smoby. The company set itself an ambitious strategic target: that of becoming one of the top five toy makers in Europe by the end of the decade. As part of that strategy, Smoby decided to pursue growth through external expansion, starting with the acquisition of fellow Superjouet partner Lardy in 1993. That company, founded in 1952, had become a specialist in toys and other products (such as stuffed animals) for the early childhood years, and the addition of Lardy gave Smoby a strong boost in extending its own product range. It also encouraged Smoby to strike out on its own, and in 1994 the company, together with Lardy, left the Superjouet group, which later became Smoby's chief French rival, Berchet.

The year 1994 saw the next piece of the Smoby puzzle come into place when the company acquired Ecoiffier, a toy maker specializing in educational, creative, and construction toys while at the same time doing a strong business in the low-end toy segment. Like Lardy and Smoby, Ecoiffier had its roots in the Jura region and had risen to become one of France's toy leaders.

Smoby found new allies for its growth into the mid-1990s. Until the late 1980s, the retail toy market had been dominated by the supermarket and hypermarket circuit. Yet these stores tended to maintain limited toy departments outside of the crucial winter holiday period. In the early 1990s, however, a new breed of toy specialists appeared in the French retail market in the form of such large scale "category killers" such as Toys "R" Us, Jouetland, Jouéclub, and other firms that introduced year-round toy shopping--as well as the floor space to display Smoby's large-scale products.

Smoby's own product range enabled it to cover the younger children's market. In 1996, the company acquired majority control (raised to full control in 2002) of another Jura-region toy maker, Monneret, which had already been in business at the beginning of the 20th century. Monneret had launched into plastic toy production in 1950 with the purchase of its own blow-molding press. By the time of its acquisition by Smoby, Monneret had become a market leader in its specialty of tabletop soccer games yet had been struggling against losses in the mid-1990s. The addition of Monneret gave Smoby a link into the older children's segment while forcing the company to restructure its own operations as it worked to restore Monneret back to profitability.

Smoby returned to external expansion in 1998, turning to the international market for the first time in order to acquire Spain's Juguetes Pico. Based in Ibi, Pico specialized in manufacturing toy strollers, carriages, cribs, and related toys. The purchase not only helped reinforce Smoby's own toy range, it also gave it Pico's expertise in producing and working with tubes, which in turn enabled Smoby to enter the market for tricycles and scooters.

The purchase of Pico helped pushed Smoby's sales past the FFr1 billion mark ($150 million) in 1998, making Smoby the toy-making leader in France. The company was also on its way to achieving its long-term goal of becoming a leader in the European toy industry. By the end of the 1990s, more than 50 percent of the company's sales came from outside of France. By then, Smoby had made its first moves into the South American market, which was boosted in 1999 with a production and distribution agreement with Brazilian toy producer Gulliver to bring Smoby's toys into that country. Meanwhile, Smoby had continued to invest in its Mob packaging subsidiary, adding a new production site in 1994, and acquiring Novembal Flaconnages, in the north of France, in 1998.

Smoby's next acquisition came at the beginning of 2001, when it once again turned to Spain, acquiring Unice. Founded in 1968 in Estella, in the north of Spain, Unice had become a leading manufacturer of play balls--backed by its patented method for applying illustrations to the ball surface--as well as balloons. The addition of Unice also added that company's recently established subsidiaries in Brazil and Mexico, both of which began production in 2001. Back at home, Smoby took its first step into the electronics market with the launch of a CD-ROM based on its popular Lilou doll.

By the end of 2002, Smoby had reorganized its holdings, absorbing Monneret and converting its Lardy brand into a new Smoby Baby brand. The company also entered into a joint-venture with leading Italian toy maker and distributor Giochi Preziosi. While rising raw materials prices and difficult economic conditions combined to depress the company's profits, Smoby continued to post strong revenue gains that year, topping EUR 208 million in sales. By then, Dany Breuil had turned over leadership of the company to son Jean-Christophe Breuil. Founder Jean Breuil died in April 2003 at the age of 95, having seen his company grow from a small pipe making workshop into one of the top three European toy companies.

Principal Subsidiaries: Ecoiffier; Euroball (50%); Giochi Preziosi France (49%); J 39 Distribution (80%); Juguetes Picó (Spain); MOB; Monneret Industrie; Monneret Jouets; Sjp (Spain); Smoby; Smoby Argentina; Smoby España; Smoby Hong Kong; Smoby International; Smoby Italia; Smoby Suisse; Smoby UK; Unice (Spain).

Principal Competitors: Mattel Inc.; Hasbro Inc.; Lego A/S; Little Tikes; Tomy Company Ltd.; Giochi Preziosi SpA; Simba Toys GmbH und Co.; Top-Toy A/S; Milton Bradley Co.; Berchet SA.


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