Summit in sight Montblanc had a stellar reputation for making expensive, high-quality writing instruments since 1908. Now, 15 years after launching its first timepiece, CEO Lutz Beghte says that the watch business is not only booming, but also could overtake pens. What is Montblanc’s secret?

Summit in sight

Montblanc had a stellar reputation for making expensive, high-quality writing instruments since 1908. Now, 15 years after launching its first timepiece, CEO Lutz Beghte says that the watch business is not only booming, but also could overtake pens. What is Montblanc’s secret?

 

Forget ambitious upstarts. The Swiss watch industry is brutal even to brands with centuries of heritage and history. Walk around some of the fairs and exhibitions held in Basel and Geneva and you’ll spot several brand names that once sold all over the world, pioneered innovation and set records, but have now been reduced to eking out a living making a few thousand niche pieces, all but forgotten by the mainstream and the titans that dominate it. It is a business that does not suffer fools, young and old, gladly. And, while history and heritage are crucial to acquire and maintain “legitimacy” in this business, they alone are insufficient. Success is crucial too. You can make all the in-house movements and tourbillons and minute repeaters you want. But if you don’t sell, you don’t matter.
It was into this tough, exacting, unforgiving arena that Montblanc stepped into in 1997 with a diversification into timepieces. At the time, sceptics outnumbered enthusiasts by far. The brand has had a stellar reputation for making expensive, high-quality writing instruments since 1908. The Meisterstück pen is an iconic piece and a staple among luxury consumers. And while the pens themselves are crafted with painstaking detail and craftsmanship, they pale in comparison with the complexity of modern haute horology timepieces. It was a difficult new act to pull off, but Montblanc came in with intent. The first line unveiled at SIHH in 1997 was called the Star Collection, and it drew inspiration from the brand’s writing instruments.

Rewriting strategy: The Montblanc Régulateur Nautique Chronographe.

The initiative changed several gears in 2006 when Montblanc’s parent company, the Richemont Group, acquired the Minerva watch manufacturer in Villeret, Switzerland. Suddenly Montblanc, which absorbed Minerva, had access to the heritage of a haute horology brand established in 1858, and the expertise of 22 Minerva employees, many of them high-quality watchmakers.By late 2009, Montblanc was preparing to flaunt some of its newly gained street creed. A story published in the Financial Times in November that year, titled Montblanc: Bid to break into high-end watch world”, profiled the brand’s product and retail strategy. In the story, the brand’s then managing director for watches, Hamdi Chatti, spoke about the rationale behind Montblanc entry and investments in watchmaking.
“Montblanc is the market leader for pens. At first, we introduced watches as a brand extension, they were great quality, but in the middle market. We noticed that the same clients who would spend €300 on one of our pens, were spending €150,000 upwards on their watches,” Chatti told the Financial Times. The challenge the brand set for itself, he then explained, was to do whatever it took to reach that price-point. And that meant becoming a serious player. At the subsequent SIHH in 2010, the brand unveiled the Montblanc Villeret Metamorphosis, a limited edition, high-complication piece that was part certificate of the brand’s new found confidence, and part statement that it had properly arrived on the scene.
When Mint spoke to CEO Lutz Beghte at SIHH 2011, he was tightlipped about the brand’s ongoing strategy for watches. By this time, Montblanc had already developed a number of signature timepieces in the form of the Nicholas Rieussec and the TimeWalker TwinFly. It had a broad collection that spanned price points, design imperatives and complexity. Beghte told Mint: “Yes, I do foresee watches becoming a significant portion of our revenues in the next few years. But will it overtake pens? I don’t know. May be. However, writing instruments is the most important part of our brand DNA. We will never give that up.”

The first Montblanc Factory in Hamburg.

That year, Montblanc presented a robust collection of watches. The strategy in 2010 seemed to be more about creating a harmonious collection than in impressing with big bang innovations. There was a palpable sense that the brand was gaining grudging acceptance from the industry and a rapturous welcome from watch buyers.If Beghte was tentative in 2011, by SIHH 2012, he sounded much more certain about the prospects of his watchmaking operations. “We are not forsaking the writing instruments. I still think there is a lot of creativity there. We are still doing a lot of things with writing instruments and that business will continue to grow,” he said, sounding somewhat wary of dismissing the pen business entirely. “But, at the same time, we see more potential in the watches. The market is so much bigger. In five years time, maybe watches will overtake pen. In fact, it will happen by 2017. The potential in watches is huge.”
However, there were many visitors at SIHH, speaking off the record, who felt that this may have already happened. Montblanc may already be making more money from watches than pens. If so, then the velocity of the company’s transformation is astonishing. “Yes it is. So much has happened in the 15 years since we launched watches,” said Beghte. “But the success eventually came from our roots in craftsmanship and precision engineering.”
Beghte’s point is pertinent. Many, many brands have made the entry into the watch market through clever, some might even say devious, shortcuts. It is not particularly hard to start a watch brand. Sourcing branded cases and straps from suppliers, and slapping them around an ETA or Valjoux movement requires hardly any watchmaking expertise. Except for the first five years of its entry into watches, however, Montblanc has relentlessly invested in movements and watchmaking strength.

CEO Lutz Beghte.

“We were always committed to make our own watches. That is the only way to get people to take you seriously,” said Beghte. Today, the brand has two manufacturing facilities: one in Le Locle, for the vast majority of timepieces, and, the other in Villeret, where the brand makes its most complicated artisan, limited edition and bespoke pieces. “So now we make watches that even other watch brands look at and say: wow!”Testimony to this commitment and focus on artisan pieces is this year’s Montblanc TimeWriter II Bi-Fréquence watch that measures time intervals accurate to 1/1000th of a second. With an inhouse MB TW 02 movement inside, what truly distinguishes the watch is not just the accuracy, but how easy it is to read, understand and use.

SIHH 2012 may well be remembered as the fair that established Montblanc as not just a contender but a competitor. People now take the brand seriously, and Beghte knows it: “Look at the number of awards we are winning everywhere. Ten years ago, it would have been impossible to think that Montblanc watches could win prizes.” Beghte says Montblanc’s plan is to stay serious about watches, and to keep contributing to the art of horology through movements and special editions.And, as long as Montblanc keep doing that, even the pickiest watch connoisseurs will be very happy indeed.