The photo service provider and online printer, Cewe, is continuing to expand. Cewe Stiftung & Co. KGaA announced on Tuesday, 30 April 2019 that a purchase agreement had been concluded for WhiteWall Media GmbH, which is based in Berlin and Frechen near Cologne. The seller is Avenso GmbH. The transaction, which is to be completed on June 1, 2019, is still subject to the approval of the antitrust authorities.
WhiteWall’s core business is large-format photos, especially framed wall pictures of gallery quality, which, according to the company, enjoys an excellent reputation among professional and amateur photographers due to “the outstanding product quality”. Therefore, according to Cewe CEO Dr. Christian Friege, “the acquisition fits perfectly with our brand portfolio and premium claim”.
WhiteWall has been active in Germany, several European countries and the USA for approximately ten years. They own stores in the metropolises Hamburg, Düsseldorf, Berlin and Munich as well as in Vienna, Zurich, Paris and New York. Cewe intends to take over these stores as well as the business operations in Berlin and the production site in Frechen near Cologne and the approximately 170 WhiteWall employees.
The takeover package does not include Avenso’s Lumas division, founded in 2003, with its galleries and curated art wall paintings (not unique pieces, but small series), with which Cewe intends to cooperate and whose pictures are to continue to be produced in Frechen. WhiteWall’s shop-in-shop presence in the Lumas galleries in New York, Vienna, Zurich, Cologne, Frankfurt and Paris are also to remain unchanged.
WhiteWalls remains unchanged
For WhiteWall, belonging to Cewe is obviously an opportunity to maintain its brand and its independent position on the market. According to WhiteWall, the company brings over 237,000 customers, including 21,500 professional photographers, artists, gallery owners and collectors. There is also an app with which photos can be viewed virtually on the wall with the help of Augmented Reality and can be matched to the interior design. The pictures can be simulated with colored mounts, frames and various size options.
“It was important to us that WhiteWall remain an independent brand with its own production. The financial strength and experience of the Cewe Group will ensure WhiteWall’s future development,” explains Avenso CEO Marc Ullrich.
Cewe is thus pursuing a multi-brand strategy. Cewe has already done similar things with previous acquisitions such as the mobile phone sleeve manufacturer DeinDesign, or last year with the French photo app Cheerz and in 2017/2018 with the online printer Laserline.
Cewe can afford the deal
The purchase price of the WhiteWall acquisition is based on the enterprise value of approximately €30 million. Cewe has valued the company at 0.9 times its 2018 revenue. For the current fiscal year, the Cewe Management Board expects the acquisition, including purchase price allocation and transaction costs, to initially have a negative EBIT effect of around € 1 million, but expects the acquisition and the expected synergy effects in processes such as purchasing to have a positive effect on the value of the company as a whole. According to Cewe, WhiteWall is currently growing dynamically and will continue to drive Cewe’s growth by further developing the brand.
Financially, the acquisition should not be a major feat for Cewe. With its photo and online print divisions, the company achieved sales of €653 million in the 2018 financial year – an increase of 9% over the previous year’s €599 million. Operating earnings before interest and taxes (EBIT) rose from €49 million to almost € 54 million. For the current year, Cewe has committed itself to further growth: Sales are expected to increase (not least due to the acquisition) from €655 million to € 690 million.
Even if WhiteWall is to remain independent, Cewe will integrate the new acquisition into its management structures. The group has sent Thomas Alscheid, who has been active in the Cewe Group for more than ten years, to WhiteWall’s two-man management team. Alexander Nieswandt, founder and managing director of WhiteWall Media GmbH, will remain managing director in the future.
Digital transformation at its best
Today, Cewe is primarily known for its photo books and has completely repositioned and transformed itself since the turn of the millennium. Founded in 1961, the company was then one of the largest of many photo service providers focusing on the development of analog films and prints. However, during the triumphant advance of digital photography, this sector collapsed by around 30% a year, and very few survived. Cewe also struggled but adjusted to the digital market earlier than other competitors – from their point of sales to production. Between 2002 and 2014, well over €350 million was invested in to digitization. This change was accompanied by the introduction of digital printing in production.
Today, the proportion of film photofinishing still in use is only marginal (even if, like vinyl, it will continue to survive in the music industry). But the majority is the printing of photo products – and here Cewe was able to establish itself quickly thanks to its large presence in the trade (currently more than 20,000 trade partners in 26 European countries, which in turn operate tens of thousands of POS) with its brand Cewe Fotobuch and by bringing its ordering and design software as well as apps in large quantities to the consumers’ home computers, tablets and smartphones.
Position as online printer
By the time photo books were produced in 2005 Cewe had entered the print market on a massive scale. Since the start of production, well over 50 million copies of the photo books produced in digital printing have been sold, 6.2 million of which alone were sold in 2018. Other photo products have also been added. “We print everything that can’t defend itself,” said Hollander, former CEO of Cewe, in an interview in December 2014, referring to mugs, watches, shirts or smartphone covers, pillowcases and greeting cards.
“Financially, the acquisition of WhiteWall should not be a major feat for Cewe. With its photo and online print divisions, the company generated sales of € 653 million in the 2018 financial year – an increase of 9% over the € 599 million of the previous year.” – Bernd Zipper
But that’s small stuff. In 2017, the market for murals and posters in Germany alone was estimated at €90 million. In addition, there are €56 million for individual photo calendars, €46 million for postcards and €28 million for photo fun objects. Together with the turnover for photo books (a total of €303 million in Germany), this represents a market of €523 million.
The former photo developer, Cewe, with its 3,900 employees, has now become a pure printer. Therefore, the entry into Onlineprint from 2010 was only logical. A good part of Cewe’s sales is now generated in e-business print, where Cewe is successful with its Saxoprint, viaprinto and Laserline brands and offers enormous print potential. It was crucial for Cewe to also enter the online print market. Digital printing of only photo articles no longer seems sufficient today – and is not profitable enough. In the meantime, this market has begun to stagnate in some segments.
My take: Picture and print are inseparable and belong together. And it is becoming more and more obvious that formerly independent markets are growing ever closer together. This is especially true for photo applications and print. This is because the printing of wall pictures or photo books differs from convenient advertising material, posters and packaging printing only in the printing technology used. But both are successfully distributed via e-commerce. It is important not to underestimate the synergies that can arise between classic photo applications and online printing. The links between the photo business, business stationery, brochures, illustrated books and other print objects are obvious.
