INTERVIEW • Montblanc International
May/June 2006
Hungry like a Wolff
Montblanc began as a fine writing
instruments company 100 years ago.
Today the Hamburg-based firm is a
diversified and hugely successful luxury
house, part of the powerhouse
Richemont empire which includes Cartier,
Van Cleef & Arpels, Piaget, Vacheron
Constantin, Jaeger-LeCoultre, IWC and
Dunhill. So long considered a masculine
brand, in 2005 it took a major plunge
into the women’s market with the launch
of the Montblanc jewellery range. To
coincide with the brand’s grandly
ambitious centennial celebrations in
Geneva in March, Montblanc
International Managing Director Wolff
Heinrichsdorff spoke to Martin Moodie
about the past, present and future of the
self-styled ‘Soulmakers for 100 years’.
M
artin Moodie: Let’s examine the transition
from a one-sector company to a diversified
group. The luxury sector is littered with
failures, where a brand that is strong in one sector
has tried to stretch into others. Some have done well
for a while then fallen away. Others haven’t done it
at all. You seem to have got it right. What’s the key?
or circle you look for the next one. What is the next logical step? Because a big proportion of your customers are
always the same – your aficionados have to believe in what
you are doing, otherwise this stretching can actually
result in tearing the connection.
Wolff Heinrichsdorff: It’s very simple. Before you diversify you must have as a prerequisite a very strong presence in
one sector, a core competence – you have to be superior.
Yes. They are the core. You are looking to those customers who believe in your brand and you are trying to
convince them that the products you are producing outside your core competence are as good as your core products. If they start to believe that then you can think about
the next step.
Then you have to decide whether you want to diversify
vertically or horizontally. Vertically means like Armani
with Emporio Armani, Xchange Armani and so on. You
broaden your base but the danger is that you lose exclusivity. The luxury business means ‘not for everybody’.
That’s the definition the way I see it.
Third, you have to find out what is the next closest area
of competence to your core competence, and extend
your competence into that area. Take your time and do
a proper job. It’s like concentric circles, as if you throw a
stone into water and create ripples.
After you have a credible competence in that second ring
156
So is that key – holding on to the aficionados?
That is what we have done. I call it the concentric circle
strategy. I painted that kind of picture for my people in
1992 when I told them, “First we have writing instruments; the next step has to be about everything to do with
writing – desk accessories, blotters, agendas, things like
that.” And of course many of those items are made with
leather so people got used to us doing leather articles.
So I said let’s now extend into leather. Take two or three
years. Buy a leather factory, because you have to control the
quality and ensure you don’t disappoint your customers.
The Moodie Report
May/June 2006
INTERVIEW • Montblanc International
So we went step by step. At the end of the day it took 16
years! You have to take your time and that’s something
that most people don’t understand. They go into different areas that they find sexy, whether it has something to
do with their brand or not. That doesn’t work.
Let’s talk about the duty free channel, where Montblanc has made a lot of inroads in
recent times. What role does it
play for Montblanc?
Duty free is about creating image
for a brand. In the past duty free was
in the margin and discount business
and that is not necessarily what you
want to have when you are running
a brand. That’s why I forbid a duty
free presence if we are not strong in
that market. It gives the wrong
impression, and it’s also too selective
in terms of assortment.
They will simply buy them in the domestic market. So the
brand must have a strong presence to give that feeling of
confidence.
How important was the travel retail channel to you
in the evolution from a writing instruments company to a broad-based luxury group?
“Before you
diversify you
must have a very
strong presence
in one sector, a
core competence
– you have to be
superior.”
Duty free wants the fast-moving
products – particularly ones that
don’t need too much explanation,
because people are in a hurry. But
that can result in an assortment we don’t want to see out
there, because it does not represent the brand properly.
Once you get stronger as a brand you can of course force your
trade partners to look after the brand better. But you know
very well that every square foot in duty free is a valuable
part of the business. So duty free is a double-edged sword.
Clearly owning or strictly controlling your distribution is integral to the Montblanc approach.
It wasn’t very helpful, because travel
retail normally follows the success
of a country [domestic market]. For
a very long time travel retail tried to
concentrate only on our pens business. Travel retail was the last channel to start believing that Montblanc
was a diversified luxury brand rather
than a pen peddler!
They pushed us for a long time to
give them gwps featuring a pen and
things like that. Our breakthrough
started with the biggest group, DFS,
when they were having their biggest
crisis. We started a very trustful cooperation – I told them “Let’s test
out a Montblanc shop in duty free
and you will see that it works very well.” We had benchmarks at that time, particularly in Incheon, where today
we actually have two different and excellent partners.
DFS and Lotte?
Right. There you can see different techniques for offering the product. But [with DFS] we tested it with trained
personnel. That’s another very important issue – duty free
retailing is too often about saving money and not coming up with good, dedicated personnel.
Yes. About 230 out of our 313 outlets are owned retail.
That’s a very significant percentage. And duty free is
largely uncontrolled – you’re in the hands of airports and retailers with space constraints and many
brands fighting over limited space.
It’s a little like department stores and brands. It’s all about
space versus brands. Many duty free partners out there try
to avoid allowing the brand to have too strong a presence,
because they want to be seen as a brand themselves.
But I believe the customers out there, in luxury in particular, want the brands. And in duty free, where they buy
quickly, they want the feeling of competence – and if they
don’t have that feeling they won’t buy valuable products.
The Moodie Report
Star quality all round: Wolff Heinrichsdorff with
Montblanc pen aficionado Johnny Depp and partner
Vanessa Paradis
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INTERVIEW • Montblanc International
May/June 2006
Now we are going strongly towards women. Montblanc
is often perceived to be a male brand, which is not true.
It’s a masculine brand; there’s a big difference. And masculinity is sexy for women.
Naomi Campbell
wears Montblanc,
on the the wrist
that is, at the
Geneva 100th
birthday
celebrations
In the luxury industry you need dedicated, well-trained
personnel who are knowledgeable about the products,
because the customer is a socially upclass customer. He is
not buying a bottle of whisky or a box of cigarettes. He
is used to a luxury environment in his home town.
That’s an area where there is a lot of room for improvement in duty free, particularly in Asia. You see these girls
doing their hair, filing their nails, rather than looking after
the customer – I’m close to screaming when I see that!
And that is an opportunity. DFS is starting to do this very
nicely. They are investing and they have very good people. We are working very closely with people like Kirk
Martin and Luis Samaniego who for many years have
been our partners. They understand the kind of mechanism I am talking about. The results from the co-operation have become very good.
How far can you stretch the Montblanc brand? And
are you there yet?
We have a clear definition of what we believe Montblanc is, and should be. We always will be a hard goods
company. Second we will not be fashion. The core, the
heart, the DNA of Montblanc is continuity, timeless luxury, and we will not do silk ties for example. This is not
our area.
Some big companies have tried to get licences from us.
But we don’t like to give licences. We tend to do our business ourselves. We control the quality. We even invest in
production facilities if we don’t have the expertise. And of
course we never would have been able to do watches
without being part of Richemont. One has to understand a brand’s limitations.
You ask how far can one stretch a brand. Well we don’t
stretch the brand if there’s no elasticity.
158
My wife drives a Porsche that I gave her. She was very
happy to receive a Porsche and is very proud to drive
around in it. She looks sexy in it but it is a masculine car!
It’s the same with Montblanc. Many women use the same
model of Montblanc you are using for this interview for
years in their careers – I’m talking about the executive
lady who makes her own money, who is self determined.
She is not the woman of 50 or 60 years ago who waited
in the kitchen for the husband to come home so she
could make the dinner.
These ladies make good money these days. They are not
just waiting for the white knight on the white horse to buy
that famous diamond ring. So Montblanc already has a
very strong relationship with females – with intellectual,
well-educated females who have their own income.
In our boutiques we have seen down the years (we created the first Montblanc boutique in 1990 in Hong Kong)
– that in gift giving peak seasons such as Christmas and
Fathers’ Day there is a bias of up to 60% women in our
boutiques. They buy for themselves and for their loved
ones – for their father, husband, lover, brother.
And that kind of relationship – self usership and gift giving – gives us a hook to talk to them more closely [through
the company’s jewellery range launched in 2005 – Ed].
You have to watch the development of these [executive]
ladies. Twenty years ago they wore no make-up and they
tried to be as masculine in their jobs as possible so they
were not mistaken for sex objects. Nowadays they are
confident and they are coming in sexily-dressed, fashionable and wearing make-up. It’s about femininity with
self confidence.
So Montblanc changed its attitude to them. Suddenly we
had products that were more feminine for them.
And yet the extent of that male-female transition is
a very daunting one. For example, if you look at
another highly-successful company with a masculine image – Hugo Boss – which entered the women’s
fashion area, it had real problems making the transition at first. What got you off to such a strong start?
I think that the female customer was not with Hugo Boss.
The Moodie Report
May/June 2006
INTERVIEW • Montblanc International
It was a man’s brand. And suddenly they took that man’s
brand and tried to talk fashion to the ladies. They had not
been in the fashion business before, they had been in the
men’s apparel business – which as we all know is not that
fashionable. That is a huge jump. And they tried to do it
much faster than us. I believe they have a long way to go.
ebullient about life. Is that how you do business?
And they are in the fashion business, not the hardware
business. They are trying to get into hard goods with
accessories and things like that. So I say good luck,
though there’s a long way to go. But it’s a very high
potential brand, there’s no doubt about that.
So we communicate very openly with them – about the
good and the bad. If you come to our factory in Hamburg
or to Le Locle [the home of Switzerland’s watchmaking
industry since 1705 – Ed] and you talk to the workers you
feel that pride; it’s a very important point.
You went into fragrances of course, which seems by
your earlier definition to be off beam.
The second thing is that we have a style of challenging
partnership. That means you are allowed to talk up – you are
allowed to be angry with your management if you have a different opinion
about something. We are very blunt
and straightforward with each other.
Totally! Completely off the track of
our core strategy. But we made that
decision for one simple reason –
Montblanc was always, through its
writing instruments and heritage, a
very serious brand. It was not a
brand where you heard nice laughter! So we wanted to have something
that was a little bit hedonistic, a little bit lighter without being fashion.
And we also wanted to begin a good
legitimacy with females.
“Politicians get
fired very quickly
in our company.
Intrigues are not
allowed because
the enemy is
outside, not
inside.”
For us it was not a commercial issue.
The licence fee that we take is nice
but that wasn’t the basis of our decision. It was a strategic decision. We
wanted to show the Montblanc
woman in advertising as well. And that is what we have
done. It worked out very well, and it did and still does a job.
As you realise we now have the old and new licensees in
Cosmopolitan and now Procter & Gamble [which were
combined in 2005 after P&G bought Wella in 2003 – Ed].
It’s nice to work with them together as they are very
professional and they understand brands, which is the
prerequisite to doing good things.
So that acquisition of a licensee didn’t trouble you in
any way?
No. Not at all. And the fragrance business offers an easy
access for young people, which is important. You have to
renew the brand from time to time.
Tell me about your own philosophy on running
the business. You seem to laugh a lot and be very
The Moodie Report
(Laughs in response) First of all I believe that a company has to be run with passion. Not just the passion of the
management, but also of the people on the machines.
They have to be proud of what they are doing.
We understand each other to be
friends among the management at
the different layers. That allows us to
fight with each other with respect.
This type of German Streik-Kultur –
fighting culture – doesn’t allow any
kind of politics. Politicians get fired
very quickly in our company.
Intrigues are not allowed, because
the enemy is outside, not inside. People who don’t understand that are
not with us for long. That makes the
company rather efficient.
So is your management retention rate high?
Yes. Most of our people have been with us for a long time.
I have been here 16 years; my Category Manager Writing Instruments has done 16 years; my President in Asia
is close to ten years; my Area Manager Western Hemisphere has been with the company 20 years.
We believe in cumulative knowledge in our company –
you need to know the brand and you have to connect your
own destiny with the long-term success of the company.
Yes, you throw that away at your peril, don’t you? Yet
I think many companies today don’t understand that.
I agree. High fluctuation within a company is the most
dangerous thing you can have.
I see that in the development of our daughter companies.
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INTERVIEW • Montblanc International
We have 20 daughter companies worldwide, so we control
about 90% of our business through our own companies.
Every time you get continuity into a company the development is fabulous. But the moment you have job hoppers
it doesn’t work – somehow the brand loses its authenticity.
Yet there seems to be a modern day madness that
says experience can actually be a bad thing. One sees
it time and again in our industry and many related
sectors – a sort of corporate ageism.
It’s only the case with people who are unable to learn any
more. For myself I learn new things every day. I learn
something from every discussion. When you stop learning you should retire.
Let’s close by talking about Montblanc’s 100-year anniversary,
which you’re celebrating here in
Geneva in spectacular style. How
do you view the significance of
this moment?
The 100th anniversary is just a milestone which is a round number.
Every anniversary is a small milestone. We are celebrating 100 years
with this special cut diamond idea
[see Brand Showcase, page 162].
[Long pause]. Phew. What a question… you know… if
you get up in the morning thinking about everything that
might happen and heaven falls on your head… whereas
for 16 years I have been getting up early in the morning,
being curious and looking forward and having fun. It
takes a certain attitude to make lemonade out of lemons.
I think we have that kind of attitude. I’m proud of my
people. I’m proud of the fact that my people in the factory are proud of what they are doing – that is the greatest thing the management has done and a guarantee as
well for a bright future, for they are our ambassadors.
The brand exists because of two groups – the people
who run it and the people who use it.
“We stopped
selling writing
instruments
many years ago.
We are selling a
luxury product
which happens to
write.”
But basically the anniversary is more
the first day of the next 100 years
than the last day of the 100 that went
before. Nowadays we talk about
things that will happen in 2007, 2008
and 2009. What you see around you now [on the Montblanc exhibition area at the Salon International de la
Haute Horologerie] is, for us, ‘old stuff’.
The company is reinventing itself again and again – that
is one of its secrets. We keep tradition as an innovation
of the past that is worthwhile, but we innovate constantly to get the tradition of tomorrow. That is the philosophy of the company – innovation and tradition are not
in conflict with one another. Tradition is not outdated
and ‘yesterday’ – the tradition of tomorrow may be the
innovation of today.
It’s yin and yang. Hi-tech and high touch. The luxury
market is prosperous because of hi-tech development, not
in spite of it. Again it’s a question of balance.
What single thing makes you proudest in your career?
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May/June 2006
And the future does indeed seem
bright. It’s not just about numbers, of course, but your numbers
are good. And your brand has
been almost tenderly nurtured
down the years and stretched into
several sectors without apparently going wrong.
Yes, the numbers are OK. And you
know what’s nice to see? Many luxury brands go and spend millions on
celebrities, but we have a very natural relationship with them. They are
sophisticated people, real artists.
We also have a philosophy of giving
a lot back to society. That is a basic
philosophy of the Rupert family
[which controls Richemont] – that if you are successful in
society you must give back to society. That gives me a
good feeling about working in this company, because the
shareholder has ethics and social responsibility.
We have celebrity connections, but with that kind of
social responsibility. We believe we are part of culture,
and that culture is the backbone of civilisation. We like to
support culture. We made it part of our marketing programme. Doing good and talking about it is fun. We have
very natural relationships with these celebrities because
many of them feel the same urge to give back during the
peak of their success in life.
So someone like Charlize Theron might do a show with
us. We do it with her in connection with the Entertainment Industry Foundation for the benefit of children’s art
education. We don’t make it our choice of cause – that’s
The Moodie Report
May/June 2006
the difference in the way we work. And what’s wrong with
doing good and talking about it? It’s a nicer way to do
advertising.
This evening you will see Johnny Depp. Why is he coming? He doesn’t even go to the Oscars if he is not nominated. The reason is that last year we did the
Entertainment Industry Foundation campaign with him
[focusing on the neglected resources of children’s art
education curricula – Ed] and he is someone who likes the
brand very much.
He collects Montblanc pens. He told me “I want the
Hemingway pen, and I can’t get one.” That was the first
author pen I did, in 1992. I have one in my personal possession, and with tears in my eyes I will give it to him as a
kind of thank-you. But I will be tearing it from my heart.
My next question is one which I am sure you have
been asked a thousand times; but I think it remains
important. Many pundits forecast the death of the
writing instrument in the computer age. Yet Montblanc has flourished. How has that happened?
We’re not a writing instrument. Let’s face the facts. With
regard to handwriting as a communication tool, the revolution happened 550 years ago when Gutenberg invented the printing machine or in 1871 when Remington
produced the first typewriters. They were revolutionary
steps in terms of writing as a communication tool.
We overestimate the influence of the computer these
days. What you are doing [taking notes during the interview] is a very close brain eye connection to the hand.
Every neurologist can tell you that this results in better
thinking. The second thing is that the world is still ruled
by the signature – signed and sealed. That hasn’t changed
since medieval days when writing was the privilege of the
church and the king. When you sign a document you put
your name to it.
INTERVIEW • Montblanc International
ers never understood that – they just missed it, and that
is the difference.
Are they still missing it? After all, you are seeing a lot
more competition at the top end.
The time is gone. I have taken over responsibility in the
group for Montegrappa, which is a fine Italian brand.
With our corporate muscle we are trying to help them,
because I believe the market needs stimulation. Montblanc is doing new lines of course, but it needs something
new from another side, and that is the Italian craftsmanship factor. I think it is an interesting position.
What about the Chopards and the Bvlgaris of the
world, which are targeting the top end writing instruments market?
They’re not on the radar screen. Tiny, nice trials, nice
designs. Production quality? Room for improvement let
me say.
Writing instruments is a little bit more complicated than
one thinks. You need a little more technical respect. It’s
not just about being good looking, it’s about function, and
when you remove the cap how does it look beneath. I
would very much appreciate more competition and more
class. It’s good for the market, because the luxury writing
instrument as a segment is rather small.
Happily we believe we are in the love business. You don’t
say “I love her, should I buy her a Waterman or a Parker?” You say “What makes her happy?” That can be a
Louis Vuitton bag or a Porsche or any kind of luxury
item. We are not in the pen market any more; we are in
that kind of luxury market. So we may be in competition
with, say, a Hermès silk scarf. And that determines our
marketing.” I
When you see, say, people in Asia with their pen in their
shirt it is not saying “I can read and write,” it is saying
“My signature is powerful. I am… I have achieved… I am
somebody of social standing.”
That is what luxury writing instruments are all about, and
that is what Montblanc is all about. We stopped selling
writing instruments many years ago. We are selling a luxury product which happens to write. Nobody needs that
pen you are using because he doesn’t have anything to
write with. It warms your heart, it’s wonderful to have it.
That’s the business we are in, and the other pen producThe Moodie Report
Century duty: Wolff Heinrichsdorff’s ‘concentric
circles’ strategy has made ripples across categories,
particularly watches – and now jewellery
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BRAND SHOWCASE • Montblanc International
May/June 2006
Diversification
pays dividends
Diversification is the name of the game for Montblanc in travel retail, and in its wake
the brand is commanding significantly increased space. No wonder General Manager
Travel Retail – Western Hemisphere Frank Passmann is in upbeat mood. He spoke
to Martin Moodie during the recent 100th birthday celebrations in Geneva.
“E
ight or nine years ago people were laughing. They
were asking things like where would we put the ink
in the watches.” Montblanc General Manager
Travel Retail – Western Hemisphere Frank Passmann’s
anecdote underlines how much retailers’ perceptions of
the German luxury company have changed. Nobody is
laughing any more, and certainly no-one thinks of Montblanc as being just a writing instruments company.
Passmann is charged with developing Montblanc’s
travel retail business in the western hemisphere. It’s a
sector that is flourishing for the luxury house, buoyed
by some high-profile openings and activities around
the globe.
None is more high profile than an outstanding campaign
being conducted with UAE carrier Emirates and Montblanc’s representative in the Middle East, Visions. Passengers onboard Emirates flights between March and the end
of May are being invited to take part in a sealed bid auction featuring the ‘ultimate watch’ – a Montblanc centennial automatic chronograph in 18ct gold, showcasing the
Montblanc logo and set with black and white diamonds.
“We are going for shop-in-shops or free-standing boutiques, which is in line with our new positioning,” notes
New Business Development Manager – Western Hemisphere Jan Luijendijk. “For example at Munich Airport
we have had a much larger space since last year, and it
works very well.”
The same thing has happened at Dubai International
Airport, Passmann says. “In Dubai we were one of the
first brands to open a free-standing boutique in the aisle,
and the development since has been outstanding.
“The increase in turnover we get after opening a freestanding boutique in a big hub airport can be 15–20
times, because we can show the full assortment,” Passmann adds. “With that kind of exposure no-one can
miss you.
“And when it comes to new terminals such as Heathrow
T5 and the new concourse in Dubai we have to be in
there with a free-standing boutique.”
As befits the stature of the timepiece, the minimum bid
is US$65,000. And bidding is known to be strong.
All the proceeds from the auction, including the cost of
manufacturing the watch, will be donated to a charity
dedicated to providing a safe, nurturing and loving environment and a better quality of life for children in need
across the world. The initiative reflects Montblanc’s
strongly held view (see page 160) that a successful company should give something back to society.
Today the company’s travel retail activities reflect its
diversified portfolio, one enhanced by the late-2005
launch of the women’s jewellery line. To showcase the full
range Montblanc has been seeking enhanced positioning
in the airport retail channel.
162
Martin Moodie and Frank Passmann at the peak
of the celebrations
The Moodie Report
May/June 2006
BRAND SHOWCASE • Montblanc International
As recognition of the group’s successful diversification
grows, so does the real estate it is able to command.
“Our customers understand that Montblanc is no longer
just a pen manufacturer and are increasingly prepared to
give us more space,” notes Luijendijk.
Montblanc is preparing to open a shop-in-shop with
DFASS at Dallas Airport T4, where DFASS-led partnership Buckaroo Duty Free opened for business in the
summer of 2005.
“We have big potential with DFASS to enter airports in
the US where we haven’t been before,” says Passmann.
“Through DFASS we’re also looking at a special inflight
brochure featuring just Montblanc products – in first
and business class only – on Continental and United Airlines. We will have around 12 pages, with around 12
products.”
New York JFK is another key location and Montblanc
recently opened a boutique in T1 with International
Shoppes, to be followed by an outlet in the DFS-run area
of the privatised T4. That 30sq m store, which should
open by August or September, will feature the full range
and have its own entrance as well as access from the
main store.
Elsewhere the company has just achieved what Luijendijk
describes as a “major breakthrough” in the key European
hub of Amsterdam Airport Schiphol. The new free-standing unit, run by Gassan, was set to open in the lounge
central area from the beginning of May.
Another recent success is Madrid Barajas Airport’s
impressive new T4 where Montblanc is one of the most
conspicuous shop-in-shops among the Aldeasa-run Les
Boutiques stores. “Aldeasa have high strategic importance for us,” Passmann says. “Besides the new terminal
at Madrid we have Barcelona, plus one planned in Kuwait
and a free-standing boutique in Vancouver [in 2007].”
Another success story is Rome, where Montblanc opened
seven months ago in new space run by airport company
Aeroporti di Roma. That outlet replaced one formerly
operated by The Nuance Group, which exited its contract
last year. “One month after opening we were really astonished at the results,” says Luijendijk enthusiastically.
“The shop is in a much better position – previously you
had to walk back from the escalator to the Nuance store.”
In product terms 2006 is understandably focused around
consolidating the position of the jewellery range as well
as emphasising the centenary celebrations. “A lot of what
we are doing this year will be limited editions,” says Passmann, citing a limited-edition version of the famous
Starwalker pen. “In Cannes writing instruments will be
the main topic, plus some female jewellery lines. It has
been tremendously successful.
“In travel retail our main focus is to bring out a fine jewellery collection in spring and some big extensions in
Cannes. The objective is to have fine jewellery at the same
level as watches in travel retail, i.e. 20–25% of the business in around two years.”
Given the success of the company’s watches in the channel, few would bet against it. The sound in Passmann’s
ears today is the ring of success, not laughter. I
The 100th
birthday party
took place in
Shanghai (left)
and Geneva (right)
where Zainub
Sareea (on left of
picture), General
Manager Travel
Retail of Visions,
Montblanc’s
travel retail
representative in
the Middle East,
chatted with Fiona
Nagi and Sharon
Beecham of Dubai
Duty Free
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163