July 25 (Bloomberg) -- A simple messenger bag for bikers made of recycled truck tarpaulins has become such a fashion hit for the Freitag brothers of Zurich that they liken themselves to a Swiss version of Apple Inc.’s founders.
“We didn’t start in a garage but in a shed behind our house,” co-founder Markus Freitag, 42, said of an upbringing where he and his brother Daniel, 41, made the toys their parents didn’t get them for Christmas as kids. Three decades later, the siblings operate namesake Freitag shops from New York to Tokyo.
From a flagship store cobbled together with 17 freight containers in Zurich’s hip Zueri West area, Freitag now has nine stores, including on Prince Street in Lower Manhattan, the Ginza district of Tokyo, Berlin, Vienna and Davos, home of Switzerland’s annual World Economic Forum. Their bags, while common on Zurich streets and among Swiss business workers, don’t have the pricy cachet of Prada, the Italian fashion house, or Louis Vuitton, the French maker of laminated canvas handbags.
Raised by composting parents, the brothers aren’t looking at the top end of the retail market. Instead, they were avid bikers who got the seed for the business after watching freight trucks draped in tarps pass the apartment. Seeking something functional and rainproof, the first bags for students and bikers were carved from truckers’ tarp handouts.
Freitag acquaintance Roland Bruemmer, owner of the Dings shop by Zurich’s main train station, was the first to sell the distinctive bike bags two decades ago. He just didn’t think colorful water-repelling handbags made of tarpaulin, old seatbelts and bicycle tubes would endure.
“We thought it was exciting but never imagined that it would last 20 years,” Bruemmer said. The brothers, a display artist and graphic designer, sold 300,000 bags and accessories last year, 15 percent more than in 2010 and more than twice the 140,000 of five years earlier.
“We’ve seen so many new brands and products in the past 20 years, but Freitag was one of the only brands that really pulled it through,” Bruemmer said. “People don’t wonder if it’s in or out, they just know it’s a good product. It’s an evergreen now.”
The company, with more than 130 employees, designs, manufactures and markets products from iPad covers, purses and wallets to the best-selling, distinctive unisex biking bag. The Museum of Modern Art in New York added a Freitag bag to its designer collection in 2003.
Freitag isn’t listed on the Swiss stock exchange while an initial public offering is a possibility for a company whose bags clung to the shoulders of fans at Bruce Springsteen’s concert this month in Zurich.
“Who knows, maybe one day,” Daniel Freitag said at the “Out of the Bag” exhibition at Zurich’s design museum that ends July 29. “It’s never been our plan to go public. We’re a family enterprise and we like that we can be true to ourselves and not have shareholders telling us what to do.”
While the company has been able to grow, the biggest challenge isn’t finances. It’s finding enough usable tarpaulin, especially with exotic colors and designs, the brothers said.
That task belongs to four Zurich-based employees responsible for finding tarps all over Europe. Demand is such for a product with no real competition that the company uses about 390 tons of tarpaulin a year.
Once a tarp arrives at the Zurich factory in suburban Oerlikon, it’s washed in rainwater collected in an underground basin that’s pumped to a washing machine, air dried and photographed. It’s then taken to a work table where a cutter decides the design of the bag. Remnants are recycled.
The messenger bags cost 190 francs ($192) to 398 francs while the iPhone sleeve costs 60 francs. Freitag’s recent Reference collection of more elegant, uni-colored handbags and tote bags range from 440 francs to 690 francs.
“We do have ideas for further expansion but we like the surprise effect Apple uses, where they announce it a few days before the launch,” Daniel Freitag said. “We only like to communicate once we know it’s ready.”
The Freitags’ biggest initial investment was 2,300 francs for an industrial sewing machine. They later borrowed 20,000 francs from their parents to fund an expansion. The brothers also obtained bank loans twice to finance their store in Zurich and to equip the new Oerlikon factory.
Profits are always reinvested as the brothers try to avoid outside financing when possible.
“Our company is our Rolls-Royce,” Markus Freitag said. “We reinvest everything because we want to grow by our own means. Perhaps it’s also the designer’s ambition -- the product is the most important thing and if there’s something left, it’s nice to be able to use that to continue to develop.”
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