Running in the Family

How the Mouawad brothers took a 126-year-old company to Hollywood and beyond

Liza Tan | Executive Producer
A piece form the Andrea Lieberman Jewelry Collection for Mouawad, on display in Beverly Hills in December 2006.
Mark Mainz | Getty Images
Mouawad brothers on family business success
Mouawad brothers on family business success

With Mouawad's history as the jeweler to Middle Eastern royalty, a tie-up with cheeky U.S. underwear retailer Victoria's Secret may not have seemed a match made in heaven.

But combining Mouawad jewels and the Victoria's Secret "angels" - high-profile models such as Alessandra Ambrosio and Candice Swanepoel - proved a surprise piece of marketing genius.

Since 2001, the luxury jewelry house has designed, manufactured and built the jewel-encrusted "fantasy bras" worn at the end of Victoria's Secret's annual fashion show.

The showpieces are worth between $2 million and $12 million each, which Pascal Mouawad considers a price worth paying for global exposure the angels and their bras receive.

"The Victoria's Secret fantasy bras are really fantasy items," Pascal, the chief executive of Mouawad's retail group and the architect of the VS deal, told CNBC's Hadley Gamble in an interview in Dubai. "We've never sold one of them, even though they've always been for sale."

As co-guardians of the Mouawad legacy, thinking outside the parameters of the 126-year-old company's heritage has been key for Pascal and his older brothers, Fred and Alain.

Mouawad was established by their great grandfather David in Beirut. Their grandfather Fayez took the business to Saudi Arabia, where he won a reputation as the aristocracy's favorite. Then their father Robert expanded brand beyond the Middle East to Europe.

So when Robert stepped down in 2010, was a decision that the family did not expect.

Fred, the oldest, said, "We still could not believe our father would step away so quickly because he has very much been in control of the organization for many years, so I think at first we were surprised."

Fred and his brothers discussed what their roles would be, as their father did not leave them with a game plan. After deliberating, they agreed that co-guardianship was the right model under which to run the day-to-day operations of the business.

Each took on the role that reflected their passions; Fred became co-guardian of the diamond division, Alain the watch division and Pascal the retail group.

But finding that perfect fit between executive and responsibility wasn't easy, the brothers admit. "I think it was a big challenge at first to get to work with one another," Pascal said. "There's definitely learning curve that we had to go down. It's quite steep at first but today we found really the right role for one another."

One of the significant shifts Mouawad has made during the brothers' six years in charge was to move from being a multiple- to a mono-brand retailer. Instead of representing, for example, different luxury watch brands, they decided to build their own brand.

Fred said, "What we envisioned is a Mouawad store with Mouawad diamonds, Mouawad jewelry in all ranges and also Mouawad watches."

To achieve that, they decided vertical integration was crucial.

"We've been going all the way from rough [stones] to jewelry and that has given us a lot of advantages," Fred added. "We were able to position Mouawad as a diamond house, we were able to offer broader variety to our clients and also offer better value. So we control the whole process."

And control is something the Mouawad brothers would like to keep. They have no plans to take the company public and want to keep the business within the family.

Pascal Mouawad with Victoria's Secret models Adriana Lima, left, and Alessandra Ambrosio, right, at the November 2014 launch of the Dream Angels Fantasy Bra in Las Vegas.
Bryan Steffy | Getty Images

One of the biggest challenges to working together was, well, getting together. The brothers live on three different continents, with Fred in Bangkok, Alain in Geneva and Pascal in Los Angeles. They have managed to find a rhythm in weekly calls as well as quarterly meetings with their management teams.

But when they're in the same city, as they were in Dubai in March for a management meeting, it's not all about work; they're often up for a challenge, with Fred usually taking the lead.

"He's the one who leads the challenges - when we went bungee jumping the first time, he made it and we had to follow him," Alain said.

Naming jet skiing, snow skiing and motorcycling as his favorite sports, Fred, who guesses he has bungee-jumped at least 20 times, said there were parallels between sports and business skills.

"Taking calculated risks, I think that's what I love about sports. We do the same thing in business," he said. "When you make key decisions, you have to assess all the risks involved [now] and moving forward, I think that sports is exactly the same from that perspective."

Pascal said he was the most risk-averse of the three. But having watched him successfully pair his family's storied jewelry brand with the unapologetically sexy Victoria's Secret, others may beg to differ.