Montblanc International GmbH

Hellgrundweg 100 22525
Hamburg, Germany
Telephone: (49) 40 84 001 0
Fax: (49) 40 84 001 320
Web site: http://www.montblanc.com

Division of Compagnie Financiere Richemont
Incorporated: 1908 as Simplo Filler Pen Company
Sales: $226 million (2005)
NAIC: 339941 Pen and Mechanical Pencil Manufacturing; 316993 Leather Goods, Small Personal, Manufacturing; 334518 Watches and Parts (Except Crystals) Manufacturing; 339910 Jewelry and Silverware Manufacturing

Montblanc International GmbH manufactures one of the world's leading brands of luxury writing instruments. Its Montblanc pens have been sold around the world since the early 20th century. Montblanc specializes in very expensive pens and controls an estimated half the global market for pens that cost more than $100. The company also makes other luxury goods such as men's and women's jewelry, desk accessories, leather goods, watches, and perfume. Montblanc products are widely distributed through retail establishments around the world, and also sold through Montblanc boutiques. Sales from its boutiques account for about a third of the company's total volume. Montblanc has been owned since 1977 by the British tobacco and luxury goods company Alfred Dunhill Ltd. In 1998, its parent became part of the wide stable of luxury brands owned by the Swiss firm Compagnie Financiere Richemont.

AN AUSPICIOUS LAUNCH

Montblanc International began as the joint business venture of three German entrepreneurs. Claus-Johannes Voss ran a stationery shop in Hamburg, Alfred Nehemias was a Hamburg banker, and the third partner, August Eberstein, was an engineer operating out of Berlin. These three began making pens in 1906, and in 1908 incorporated a company in Hamburg, called the Simplo Filler Pen Company. Simplo Filler took a name implying that its pens could be filled simply. In the era of fountain pens, advances in pen filling methods represented a technological cutting edge. A hundred years later, it is difficult for us to grasp what a huge advance the modern fountain pen was over its predecessor. For centuries, writing by hand was accomplished with a pen cut from a reed or a quill (feather), which had to be constantly dipped in ink. In the late 18th century, pens were manufactured from wood, with a metal nib. Although these were an improvement over the quill, as the metal nib held ink for a longer time, writers were still hampered by needing to have an open bottle of ink at hand. In the late 19th century, various inventors came up with systems that combined the ink and pen in one instrument. An American insurance agent, Lewis Edson Waterman, is credited with the first modern ink-feeding system, which he patented in 1884. By 1906, when Montblanc began, pen manufacturers used many different filling mechanisms, all vying with each other for ease of use. Hamburg's Simplo Filler was one of a new breed of pen manufacturers who grew quickly because of the great utility of their products. German competitors included Pelikan and Fendograph, while Parker, Sheaffer, Waterman, and Wahl Eversharp dominated the U.S. market. France, Italy and England also had thriving fountain pen industries at this time.

Simplo Filler's first pens were called "Simplizissimus," and in 1909 the brand name became "Rouge et Noir" (Red and Black). Rouge et Noir were black pens with a red six-pointed star on the cap. By 1910, the company had offices in Paris, Barcelona, and London, and the business depended heavily on export. That was also the year the company adopted the brand name "Montblanc." The company did business under this name, although it did not officially change its name to Montblanc until some years later. Mont Blanc is a famed snow-covered peak in the Alps, the highest point in Europe, and the name was said to represent the height of quality promised by Simplo's pens. In 1913, the company began making its pens with a white, six-pointed star logo on the cap. This adaptation from the Rouge et Noir model was meant to graphically depict the top of Mont Blanc. In 1919, the company opened its first Montblanc Boutique to sell its pens in Hamburg.

After World War I ended, the company took the name Simplo Füllfeder GmbH. It made a range of pens, not all luxury, yet its advertising continued to feature the peak of Mont Blanc, with its implied promise of lofty quality. The company introduced its most enduring model in 1924. This was the Montblanc Meister-stück (Masterpiece), a top-of-the-line pen with a large engraved nib and other fine details. The Meisterstück was a status pen, though the company also made more everyday models. By the mid-1920s, Simplo Füllfeder was selling its pens in more than 60 countries, and supporting its sales with international advertising.

RECOVERING AFTER WORLD WAR II

The worldwide recession set off by the stock market crash in the United States in 1929 hit Simplo Füllfeder hard. In 1932, the company began selling a line of economy pens, which revived its fortunes somewhat. That year the firm changed its name, becoming Montblanc-Simplo GmbH. Along with its economy pens, Montblanc also continued to produce fine writing instruments in the 1930s, including Meisterstück pens with a new advanced piston filling system. Montblanc made a significant acquisition in 1935, buying a leather-ware company. For the first time, Montblanc branched out from producing writing instruments and began making leather desk accessories.

During World War II, the German company was severely damaged. Its manufacturing facilities were bombed, and many records were lost. Montblanc was forced to rebuild. By the mid-1940s, Montblanc was back in production, with a new factory in Denmark as well as in Germany. The postwar years were difficult for fountain pen manufacturers in general, as ball point pens became popular worldwide. Ball points had been in production before World War II, but first became widely used during the war. After the war, dozens of ball point companies sprang up, and the price of pens dropped dramatically. Montblanc's more expensive pens were in a different world altogether from cheap plastic ball points, so competition from makers such as Bic was not direct. However, the writing instruments market was definitely different in the 1950s and 1960s than it had been in the heyday of the fountain pen in the 1920s.

Despite changed conditions, Montblanc maintained its brand profile, and came out with some of its best-selling pens in the postwar years. It debuted the "140" series of Meisterstück pens in 1948, a line which proved an enduring favorite. Other pens in the 1950s also did well in the export market. While continuing to make pens for the luxury market, Montblanc produced a wide range of pens in the 1960s and 1970s, with some meant to be introductory or "junior" models to its higher-priced pens.

COMPANY PERSPECTIVES

Montblanc has been known for generations as a maker of sophisticated, high quality writing instruments. In the past few years, the product range has been expanded to include exquisite writing accessories, luxury leather goods and belts, jewellery, eyewear and watches. Montblanc has thus become a purveyor of exclusive products which reflect the exacting demands made today for quality design, tradition and master craftsmanship.

In 1977, Montblanc was bought by the British firm Alfred Dunhill Ltd. Dunhill had been a long-time minority shareholder in Montblanc. Dunhill was known for luxury leather goods and tobacco. Under Dunhill's management, Montblanc dropped its lower-priced pen lines and began to concentrate solely on the upper echelons of the market.

REVITALIZING THE LUXURY MARKET

Montblanc was a fortunate survivor of the postwar decades, when many European fountain pen makers went out of business. Its German competitor Soennecken expired in 1967, and another German maker, Kaweko, closed in 1970. Faber-Castell, another German writing instrument manufacturer, changed its focus to pencils and art supplies, closing its fountain pen division in 1975. Many French, Italian, and U.S. fountain pen manufacturers also went out of business in the 1960s and 1970s. Montblanc adopted a wise strategy in the mid-1970s when it was bought by Dunhill. Its specialization in the luxury market allowed the company to not only hang on but finally to prosper quite nicely.

In the 1980s, when computers became ubiquitous, fountain pens did not fade away but went through something of a rebirth. Montblanc hung steady in the luxury market, continuing to make its distinctive big, black Meisterstück pens and other models. Montblanc exported its pens to the United States through a distributor, Koh-I-Noor, in the 1980s, and then set up a North American distributor on the East Coast in 1992. The company marked 1986 as a year of revitalization, when fountain pen sales began to surge. Expensive pens were particularly valued by business executives. In the 1920s, a Montblanc pen had been a dignified business tool. In the 1980s and after, a Montblanc was more of a business status marker. A contract could be signed with an ordinary ball point just as well, but certain users found it more elegant and impressive to ink their deals with a pricey fountain pen.

The growth of the luxury pen segment intensified in the early 1990s. In 1990, Montblanc opened a standalone boutique, its first since the 1920s, in Hong Kong. Over the next decade, the company opened almost 300 more independent Montblanc boutiques. The fountain pen industry as a whole grew in double digits, so that by 1992, the niche in total was worth twice what it had been in 1986. Montblanc did extensive advertising as it mopped up the high end of the market. By 1992, Montblanc accounted for half of all sales of pens in the $100-and-up range with some pens selling for well over $100. A popular Meisterstück model retailed in the U.S. for $345 in the early 1990s, while some special edition Montblanc pens sold for $3,000 or more. Montblanc was by then part of a consortium of luxury goods companies that was formed when its parent, Dunhill, merged with Cartier in 1993 to form a new firm called Vendome. Vendome was itself owned by Compagnie Financiere Richemont. Vendome's brands included Montegrappa pens and some writing instruments made by Dunhill and Cartier. Montblanc's sales figures were not broken out, but Vendome's writing instruments division had sales of $290 million by 1994, an increase of more than 10 percent over the previous year.

Montblanc capitalized on the new popularity of luxury fountain pens with worldwide advertising and special edition pens. Montblanc raised its prices over the late 1980s into the early 1990s, so that by 1995 it was charging roughly twice what it had in 1985. Yet Montblanc's production costs had not risen at the same rate, meaning its pens were increasingly profitable. While Montblanc charged a lot for its pens, some of the limited editions rose sharply in value within a few years, so that collectors were paying even more for them. The company sometimes made special custom orders for pen collectors. A gold and diamond-studded Meisterstück, for example, sold for about $120,000, giving Montblanc the crown for world's most expensive pen.

KEY DATES

1906:

Three founders begin manufacturing pens.

1908:

The company is incorporated in Hamburg.

1910:

The Montblanc brand name is introduced.

1932:

The company's name is changed to Montblanc-Simplo.

1977:

Montblanc is bought by Alfred Dunhill Ltd.

1992:

Montblanc North America is founded; the company buys a leather goods firm.

1993:

Montblanc, under Dunhill, becomes part of Vendome.

1997:

Montblanc begins selling watches.

1998:

Vendome is folded into Compagnie Finan-ciere Richemont, its parent company.

2004:

Montblanc's CEO becomes chief of the parent firm, Richemont.

With such success with its pens in the 1990s, Montblanc repeated a plan it had first tried in the 1930s, and branched out into leather accessories. Montblanc acquired the German leather goods company Seeger in 1992, and soon began selling pen holders, organizers, business card holders and other desk accessories, as well as fine writing paper. Montblanc also opened more boutiques. It opened six in the U.S. alone in 1996. Other stores opened across Europe and Asia.

EXPANDING THE BRAND

With the great success of its pens in the 1980s and 1990s, Montblanc began a serious campaign to expand its brand into other luxury goods beginning in the late 1990s. Montblanc had sold leather desk accessories early in its history and then again when it acquired Seeger in the early 1990s. In 1995, Montblanc began selling its own brand of luggage. The next year, the company added jewelry, and in 1997, Montblanc watches hit the market. Its jewelry line was aimed at men, and consisted of cuff links, as well as key rings and money clips. Montblanc was developing into what was termed a lifestyle brand, encompassing a range of products associated with a well-to-do manner of living. In 2001, Montblanc introduced its first perfume, a men's fragrance called Presence. The scent was made through a licensing agreement with Cosmopolitan Cosmetics/Intercosmetics Inc., a division of the Wella Group. A year after the men's scent debuted, Montblanc brought out a women's counterpart, called Presence d'une Femme. Montblanc was able to sell a wide range of goods in part because of the success of its stand-alone boutiques. Though Montblanc was best known for its pens, shoppers in its stores could be easily exposed to the other product lines. Though its pens, especially the thick, heavy Meisterstück, had long been a primarily masculine item, by the early 2000s, some 40 percent of purchasers in Montblanc's boutiques were women. They might enter the store to buy a pen as a gift for a man, but could be enticed to buy something else more feminine for themselves.

While Montblanc was venturing into new product lines, its parent company was also going through some changes. Vendome, which had been a partly-owned division of Compagnie Financiere Richemont, ceased to exist as a separate company in 1998. That year, Richemont acquired the remaining 30 percent of the company it did not already own, and Vendome ceased trading on the London and Luxembourg stock exchanges where it had previously been listed. This led to some changes in management structure, but Montblanc remained an important cog in the larger Richemont machine. Rich-emont's pen sales, which included Montegrappa as well as Montblanc, rose almost 20 percent over 1999, and this steep rise was attributed mostly to the expanding product line at Montblanc. In the early 2000s, Rich-emont piled up debt and was plagued by losses attributed to shifts in currency, especially the falling value of the dollar. In 2004, Montblanc's chief executive, Norbert Platt, moved up to become CEO of Richemont. By that time, Richemont had righted itself from its earlier slump, and sales were rising sharply.

Montblanc continued to bring out new offerings in the mid-2000s. After introducing a men's jewelry line in 1996, in 2005 the company came out with its first line of women's jewelry. By that time, the company was spending about $4 million annually on advertising. As the company drew more female customers, its advertisements changed from simply showing the product—be it pen or watch—to showing a female model. "I'm successful; I'm cultured," is the message the new ads sent, according to the president of Montblanc's North American division, quoted in Brandweek (October 3, 2005). In 2006, Montblanc's advertising went even farther in this direction, showing not only female models but featuring women's high fashion. The company partnered with young fashion designers and ran ads in women's magazines, showing models wearing Montblanc jewelry, a Montblanc watch, and a dress by the designer. The white star logo and the tag line "Signature Style" was all that tied these ads to Montblanc's history as a maker of writing instruments. The strategy to differentiate into a host of luxury goods under the Montblanc brand seemed to be paying off handsomely. Riche-mont's chief executive referred to Montblanc as one of the conglomerate's "star brands" in an interview with WWD (June 9, 2006). Sales had grown again by close to 20 percent over 2005, with about a third of sales coming through the roughly 300 Montblanc boutiques. As the company entered its second century, it had made a key transition, from pen manufacturer to purveyor of a range of luxury goods.

PRINCIPAL COMPETITORS

A.T. Cross Company; Lamy GmbH; Sanford L.P.

FURTHER READING

Julie Bosman, "Venerable Maker of Pens Turns to Young Designers," New York Times, August 7, 2006, p. C6.

Canedy, Dana, "In Retailing, Biggest Gains Come from Big Spenders," New York Times, December 12, 1996, p. A1.

Collins, Glenn, "Montblanc Expands on Gertrude Stein to Suggest that Sometimes a Pen Is More than a Pen," New York Times, July 27, 1995, p. D9.

Conti, Samantha, "Richemont Sets Sales Record," WWD, June 9, 2006, p. 17.

Costello, Brid, "Montblanc's Femme Fragrance," WWD, June 21, 2002, p. 7.

Cowell, Alan, "Still Pricier Fountain Pens Gain Cachet and Profit," New York Times, May 10, 1995, p. D3.

Dragoni, Giorgio and Fichera, Giuseppe, eds., Fountain Pens: History and Design, Milan: Arnoldo Mondadori Editore S.p.A., 1997.

Elliot, Stuart, "Creative Agencies that Feel at Home in the Global Village Are Writing their Own Tickets," New York Times, September 30, 1994, p. D17.

Erano, Paul, Fountain Pens Past & Present, Paducah, KY: Collector Books, 1999.

Fallon, James, "Dunhill, Cartier Merger Okayed," Daily News Record, September 8, 1993, p. 14.

――――――, "Richemont Realigns Staff for Luxe Focus," WWD, November 23, 1999, p. 2.

Garbarine, Rachelle, "Remember Fountain Pens?," New York Times, April 23, 2000, p. NJ9.

"Happy Days Return," WWD, June 11, 2004, p. 1.

Langley, Alison, "'Mr. Cartier' Retiring from Swiss Parent Group," New York Times, May 7, 2003, p. W1.

――――――, "Swiss Maker of Luxury Goods Suffers from Currency Shifts," New York Times, June 6, 2003, p. W1.

Levine, Joshua, "Pen Wars," Forbes, January 6, 1992, p. 88.

O'Loughlin, Sandra, "Montblanc Pens Story for Jewelry," Brandweek, October 3, 2005, p. 10.

"Richemont Appoints CEO, Post 15% Increase in Sales," WWD, September 17, 2004, p. 17.

Rothstein, Edward, "Pens May Not Be Mightier than PC's, But Reports of their Death Are Greatly Exaggerated," New York Times, January 22, 1996, p. D5.

"Sales, Operating Profits Are Strong at Richemont," WWD, November 18, 2005, p. 9.

Underwood, Elaine, "Prestige Pens for a Paperless Era," Brandweek, July 1, 1996, p. 28.

"Vendome Luxury Group Becomes Part of Richemont," WWD, March 30, 1998, p. 2.