Friedrich Schwarze

I am the CEO and member of the eleventh generation in line.

Mr. Schwarze, you are one of the German members of the Hénokiens. Could you please introduce yourself to our readers?

> Friedrich SCHWARZE : Friedr. Schwarze GmbH is our company name and my name also is Friedrich Schwarze. I am the CEO and member of the eleventh generation in line.

Who better than you can present your company and its activities?

F.S. : In 1664, our family business was first mentioned in an official document as a "Kornbrennerei", which means grain distillery. Our home region, Westphalia, is well known for its fertile soil and for the fine quality of grain that our farmers harvest. Throughout the centuries, my ancestors developed the art of distilling grain and our "Kornbrennerei" became one of the most famous distilleries in Germany. My grandfather, Friedrich Schwarze, sold grain alcohol in vats all over Germany and also in bottles to the people in Westphalia. Our emblem, the black silhouette of a Westphalia farmer with a hat, was one of the first logos to be officially registered in Germany. Thus, Friedr. Schwarze created a brand in a world that knew only commodities. In the 20th century, my family has consequently implemented our main brand "Schwarze Weizen Frühstückskorn" as the leading "Korn" in what is now called North Rhine-Westphalia.

How is your family involved in the company?

> F.S. : My three sisters, my brother and I hold all the shares in our family company. As managing partner (CEO), I am the only family member to be working in our company.

What have been the outstanding events for the Friedr. Schwarze Company in recent years?

> F.S. : In 1990, we agreed with the Schlichte family to take over some important brands like Original Schlichte Steinhäger, Kosakenkaffee (coffee liqueur) and Bärenjäger (Honey liqueur). This was our first step from a single brand to a multi brand company. In the following years, we acquired several interesting niche brands like Schwarzer Kater (fruit liqueur), Spreewaldbitter, Sechsämtertropfen, Meyer's Bitter, Café Oriental which allow us to be present on a national scale. Thanks to our brands sold internationally, Bärenjäger (USA, Japan, SAF and Israel) and Leibwächter (Austria), export sales now exceed domestic sales.

In 1998 we decided to merge our local Westphalia Coca-Cola bottling activity with the Berlin firm Coca-Cola Erfrischungsgetränke AG which is present throughout Germany. We are now shareholders in this important company that accounts for 70 % of the German Coca-Cola business.

In 2002 we signed a long term contract with the famous Kloster Andechs monastery in Bavaria. Using the unique fame of the Kloster Andechs Beers, we will build together a premium brand of liqueurs, which will be produced on the "Holy Hill" of Andechs.

In June 2003 we bought a new bottling plant in Rinteln, Lower Saxony from the Racke Company and now concentrate our alcohol bottling activities there. By this acquisition, we added famous German brands like Dujardin (brandy), Uerdinger (gin) and Racke Rauchzart (whisky) to our portfolio.

How can you explain the longevity of your company?

> F.S. : To survive for more than 340 years you need, first of all, a good deal of luck. If you think of all the misfortunes in life that you can be confronted with like war, disease and economic crisis, we must be most grateful for not having been swept away. What helps us today and what helped our ancestors are the love to our profession and the absolute dedication to quality. And, of course, it is a huge challenge to every new generation to carry on the business inherited from parents and to try to adapt it to changing times.

Could you say that this extraordinary longevity is an asset in your relations with your customers?

> F.S. : Of course. Every single bottle of Schwarze products we sell bears the year 1664 on its label in a significant place. Our 340 years of distilling experience help us to convince our consumers and our clients of the outstanding quality of our products. Among German Korn brands, Schwarze has the premium price position.

Do the traditional values guiding the firm constitute an advantage as regards research and innovation?

> F.S. : We are not a high tech company. The research work we do concentrates on new recipes and on sales development. Certainly the skills that we have acquired during our past will help us to avoid serious mistakes in the future.

What are the most important traps that your company must avoid in order to preserve its independence?

> F.S. : In recent years our alcohol business has grown substantially. Fast-growing turnover is always a seduction and it would be dangerous for our company to forget that profit has to grow at the same rate as turnover. Only good financial results strengthen the independence of a family company. A second trap could be to reduce quality in order to optimise the financial results. I hope that this will never happen, because only high product quality can constitute the basis for success in the future.

Has the determination of your family to keep its independence required over the centuries that difficult choices be made?

> F.S. : In the world-wide economic crisis in the 1920's, my grandfather, Friedrich, took the decision to sell the family farm and other assets in order to assure the survival of our company. Later, my grandfather lost his son, Friedrich, who died as a soldier in the last days of World War II. My grandfather decided to hand over the company to his son in law, my father, Wilhelm. My father, who was a banker at that time, accepted this duty and even adopted the family name Schwarze.

Is the transmission of the firm to a family member governed by clearly defined rules?

> F.S. : Yes, we have strict rules about the education that a family member has to go through before integrating the family business. Together with our board of external advisers, we decide the succession.

Is the new generation already working in the firm?

> F.S. : No, my daughter is 19 years old and my son is 15 years old. The eldest children of two of my sisters are just starting their professional career.

Could you say a few words about your major projects in a middle or long term?

> F.S. : We want to strengthen our national position by launching and acquiring some more niche brands. That will allow us to continue growing as we have been in recent years. We are also considering starting to import foreign alcohol brands into Germany. Actually our export of Bärenjäger is the strongest growing item in our company. We will look for partners in new countries to work for this brand. Austria and the Czech Republic are our next targets for this brand.

Do you have a message to communicate to those who would like to start their own family business?

> F.S. : Watch the efforts and the results of your future competitors. Be prepared, to make mistakes and keep learning from those mistakes. Implement binding rules to keep some of the money you earn inside the company.
Establish rules of succession right at the beginning of your company.