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Hand Candy

Published by Forbes on 2007-01-09

Let's say you have $172,425 to invest, and would like a 10-fold return within 24 hours. Where would you put your money? Answer: You'd buy Montblanc's "Solitaire Mountain Massif Skeleton" pen, made in 18-carat white gold and studded with 1,277 white and 123 blue diamonds.

Of course, you would not be able to buy that pen, let alone sell it for a profit to buyers who'd be only too willing to pay a huge premium. Only three were made this year, the 100th anniversary of the German company's founding in Hamburg by a stationery trader, a banker and an engineer. So great was the demand for the centennial pen - particularly from collectors in Japan, Hong Kong, South Korea, Taiwan, and Singapore - that Montblanc had to organize a lottery for potential buyers, according to CEO Jan-Patrick Schmitz.

"We could have set almost any price we'd wanted, and we would have found buyers," Schmitz, who's widely credited with his brand's dramatic expansion in Asia and the United States, told Forbes.

In the event, the three lucky buyers were a collector from Asia, and another from Europe - neither of whom wanted his identity or nationality disclosed - and a professor of business and economics at Charleston Southern University, Albert E. Parish Jr. Professor Parish, who's also director of the university's Center for Economic Forecasting, has one of the world's largest collections of Montblanc "limited edition" pens, including the Meisterstueck Black Diamond Royal - the only pen of its kind that Montblanc sold to him for $150,000 in 2003. Collectors in Japan, Singapore, Taiwan and Hong Kong are reputed to have even larger Montblanc treasures.

One of most expensive pens that Montblanc manufactured, the Solitaire Royal, was encrusted with 4,810 diamonds, the number representing the height in meters of Mont Blanc, which is claimed by both France and Italy, and is Western Europe's highest mountain. Collectors - particularly in Asia - are reportedly offering 10 times its original price of $175,000 for it.

Schmitz, a cheerful German who holds an MBA from Southern Illinois University, says he isn't surprised by the rising value of Montblanc's limited edition pens - even though the first such pen, "Creation Lalique," was launched a mere 15 years ago.

"There's a magic to the idea of owning these pens," he said. "They are not only exquisite works of art - their limited production means that buyers automatically become members of a very exclusive club globally. Ownership of a Montblanc says to the beholder, 'I am cultured, I am educated, and I am successful.'"

Indeed, says Anwer Sher of Dubai, possessing an iconic brand such as a Montblanc pen makes "a sophisticated, understated, yet powerful statement" that cuts right through Asia's myriad societies and their complex cultures. The Pakistani-born Sher is chief executive officer of Dubai's "City of Arabia," billed as the world's largest residential and commercial development.

"In certain Asian societies, it's very fashionable to show off an expensive item such as a Montblanc, or an antique Rolex watch," Sher said. "In other societies, particularly in the Far East, it's more acceptable to be discreet about one's taste in luxury goods. I suppose Montblanc pens meet both sets of criteria. As for collectors - pens now have nearly the same status as very expensive art."

Dubai, needless to say, is dotted with Montblanc boutiques. Virtually every major Asian city has one, including New Delhi. That's where Dilip Cherian, a co-founder of one of India's best known communications-strategy companies, does his shopping. His friend, Dilip Doshi, who once played for India in international competitive cricket, runs the Montblanc franchise there.

Cherian is in good company. Virtually every top Indian businessman uses a Montblanc, as do leading politicians. Jawaharlal Nehru, India's first prime minister, owned a Montblanc. So did his daughter Indira Gandhi, who also served as prime minister. And so did her son, Rajiv Gandhi, another prime minister. Other Asian leaders such as Emperor Hirohito of Japan, Presidents Sukarno of Indonesia, and Junius Richard Jayewardene of Sri Lanka, used Montblanc pens.

In 1992 - two years before Schmitz joined the company - Montblanc launched two limited edition pens, one named after Lorenzo de Medici, the 15th century Florentine patron of the arts; and another named after Ernest Hemingway. (Hemingway loved Montblanc pens, although it's debatable if he would have purchased one for $50,000, the reported price of the pen named after him. His friend and literary rival, F. Scott Fitzgerald, also had a limited edition pen named after him in 2002; like the Hemingway pen, it's so rare that it's almost impossible for collectors to acquire one, even at its reported price of $20,000.)

Each year since 1992, two limited edition pens are issued honoring a writer and a patron of the arts, with 4,810 copies of each. Among the writers honored are Agatha Christie, Franz Kafka, Marcel Proust, Edgar Allan Poe, Charles Dickens, and, this year, Virginia Woolf. Not the least on account of its booming sales and collections in Asia, Montblanc is reportedly planning to issue limited edition pens honoring writers such as Sir Rabindranath Tagore, India's Nobel laureate.

Beginning in 1993, when Montblanc decided to ratchet up its brand to super luxury level, it began producing limited edition pens aimed specifically at the Asian market. The first Asian-themed pen was called "Imperial Dragon."

Another special edition, "Year of the Golden Dragon" - in which European writing culture is combined with Far Eastern tradition - acknowledges Asia's cultural and artistic contribution, according to Schmitz. With both limited editions, the golden dragon is a central element of the pens: on "Limited Edition 2000," it comes in the form of a 750 solid gold clip and the cap, which, like the barrel, is made of black precious resin. Montblanc's literature notes that the dragon's eyes are two glowing rubies, and between its teeth it holds a precious cultivated freshwater pearl. The second pen was limited to 888 pieces: the triple-eight figure is considered especially lucky by the Chinese.

Still another limited edition pen was dedicated to China's Qing Dynasty, an era of especially high accomplishment in culture. The pen's cap is made of pure jade and surrounded by a hand-engraved dragon with five claws - the Chinese symbol of happiness, strength and long life. The 18-karat gold nib, which is decorated with a dragon, is engraved with the figure "4810," as are all limited edition pens.

One limited edition pen paid homage to Japanese culture and its fascination with the cherry blossom. Called "Sakura," the pen's barrel and the cap are made of exquisite Meissen porcelain and decorated with delicate paintings of cherry blossoms and the Meissen crossed swords symbol. Schmitz says that the 18-karat gold nib is a tribute to the symbol of Japanese aesthetics - with the word "Sakura" engraved in Kanji characters.

The "Sakura" pen was dedicated to Japan's Crown Princess Masako upon the arrival of her first-born, Princess Aiko. The pen was enclosed in a special engraved box, with a poem carved on it. The poem was composed by an ancient emperor when Kyoto was Japan's capital.

Curiously enough, Japanese collectors are less enamored with limited edition pens bearing Asian motifs than they are with Western themes. That is why, says Schmitz, these special pens sell out quickly in Japan, and then command stratospheric prices in collectors' circles.

"There are some truly enormous collections in Japan, and elsewhere in Asia," he said. "But these collectors choose to remain anonymous - although they are known to other very wealthy collectors."

Schmitz has helped widen Montblanc's annual recognition of patrons of the arts. This has gone across particularly well in Asia, with awards having been bestowed on luminaries such as actor Jackie Chan and Sir Run Run Shaw of Hong Kong - who is said to have a formidable Montblanc collection - So Kuramoto, Tamasaburo Bando and Sadao Watanabe of Japan; Xiao Xiangyun of China; Tan Siah Kwee of Singapore; and Tan Syed Mohamad Albukhary of Malaysia.

While the brand was always popular in Asia, Schmitz says that the six years he spent in Japan as Montblanc's chief executive alerted him that buyers were ready to move up in the luxury category. Montblanc, which has more than 300 company-owned boutiques around the world, enjoys 70% of the market share in high-end pens; its closest competitor, at 11%, is Cartier, another company owned by the Swiss-based Compagnie Financiere Richemont, which acquired Montblanc in the late 1980's.

His insights turned out to be accurate. Now some 60% of Montblanc's sales are outside its home territory of Europe. And although the U.S. is its largest market - with some company-owned 43 boutiques, and more than 1,000 displays at top-level stores - growth in Asia has been rapid. Richemont reported that its overall sales for the first half of 2006, ending September 30, were up 15.7% to $2.91 billion, compared to the same period last year. Net profits rose by 22% to $815.9 million. And while Richemont doesn't break down figures of its 16 companies, Montblanc is reported to bring in the most revenues and profits.

The income has increased significantly because, in addition to its pens - which Montblanc prefers to call "writing instruments" - the company now manufactures leather goods, watches, fragrances, eye-wear, and men's accessories such as cufflinks - some 4,000 products in all. Starting February 2007, it will offer diamond jewelry for women. Schmitz expects Montblanc's line to be especially popular in the Middle East, Far East, and Southeast Asia, where high-end jewelry has traditionally sold well.

But even as it extends its product line in some 70 countries, Montblanc's 20-year business strategy - known within the company as "Strategy of Concentric Circles" - calls for the brand to project even more exclusivity. For example, pens are only sold at its own boutiques or at high-end retailers such as fine jewelers and leading department stores. Long gone are the days when Montblanc products were available at neighborhood stationery stores.

"The very idea of exclusivity creates its own demand," Schmitz says.

At any rate, it's doubtful if the average customer at neighborhood stationery stores would be able to afford a regular Montblanc pen, let alone a limited edition. Ballpoint pens - known among aficionados as "convenience mode" - start at about $300. Fountain pens typically start at $600.

But it's the limited edition pens that have burnished Montblanc's image of exclusivity. These pens have been shrewdly marketed: for example, in 2005, which was the centennial of New York's Julliard School of Music, Montblanc produced 100 fountain pens, each of which sold for $17,000. The previous year, it brought out a special U.S. edition, titled "Fourth of July." It carried an engraved signature of one of the original signers of the Declaration of Independence, John Hancock. Only 43 pieces were produced - one in honor of each of America's 43 presidents - and quickly sold out at $20,000 apiece.

Naturally, Schmitz has a small personal collection of Montblanc pens. But which one does he treasure most?

"The Meisterstueck traditional fountain that my father Michael gave me," Schmitz said. He received that gift when he obtained his MBA.

"I'll treasure it forever," Schmitz said. "It's not just a family heirloom handed down to another generation. A piece of my personal history is in that pen."

His father, who'd used his Montblanc for 50 years, died two years ago, shortly after Schmitz came to America for Montblanc.

SUGGESTED BOX:

The record for the most expensive fountain pen ever sold by its original manufacturer is held by Caran d'Ache, a Swiss who designed "La Modernista." Created in honor of Antoni Gaude, a famous modernist architect who died in 1926, the fountain pen has an 18-carat gold nib, 5,072 full-cut Wesselton diamonds, and 96 half cut-rubies arranged on the top of cap, which forms the monogram. "La Modernista" was sold at Harrods in London in 1999 for $265,000.


Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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