These are some disturbing news I've heard from Eddie Kallman, the owner of Airlines International in Texas. The shop has been in business since 1978 and offers very personalised customer service. I was speaking to Mr. Kallman several days ago to negotiate a purchase of a Delta Federico Fellini, and while I was at it, I asked whether they were also an authorised Montblanc retailer. He said that they were ... up to a month ago.

Of course I asked what happened, and he explained that Montblanc is in the process of pulling out of "thousands" of American authorised retailers, with the eventual goal of selling their merchandise exclusively out of their own boutiques. Retailers who are aware of this, are stocking up on merchandise now, so that they can at leas have stock for a little while afterwards. All stock that the retailers get before the pull-out, can of course still be sold to customers under the rules of official MB retail; they just will not be able to get any new pens.

I was truly shocked to hear this information, and wanted to pass it on to FPN. Was anybody else already aware of it? Is there possibly a twist to the story that makes it not quite so bleak? I for one, would not be able to afford boutique prices.


QM2

Didn't MB pull this same bull (Potty Mouth) about five years ago? Apparently they are at it again. No, I had not heard about this round of nonsense, but it is consistent with MB's past corporate behavior. The last time they did this, they were upset about the discounts the authorized dealers were giving. It is probably that same issue motivating this round of dealer eliminations. MB also no doubt wants people to go into their boutiques to throw money at their other prestige items. This is sad news.

I did not know that MB has tried the same thing before. Still quietly using my Parker Vectors at that time, I was not part of the "scene" 5 years ago. Given that they've allegedly already ended contracts with several thousand shops in the US, it seems that this time it just may be for real. If anybody has inside information and can tell us what the deal is, it would be appreciated. If the information I have is exaggerated, I would be only too glad to hear it. But Mr. Kallman sounded like it was for real.

Vertical integration by MB has been going on for awhile now, didn't realize that they were doing it again.


Kurt

That is indeed a shame if it should become reality. By pulling their authorized dealers they 1.) show that pens aren't their main focus anymore and 2.) they will minimize the expertise of the salespersons. Whereas you could get around MB's snobbiness by buying your MB at a knowledgeable pen dealer, you might be forced to confront an ignorant boutique salesperson who usually knows squat about pens.

I am somehow aggrieved at the expression "merchandise." My internal alarm bells are ringing vigorously when I hear that word. I then have to think of overpriced cuff links and perfumes with the MB logo on them.

Wolfgang, I think perhaps your tastes aren't refined enough for the Montblanc Lifestyle. I woke up this morning to the sound of my Montblanc alarm clock, having slept in Montblanc Egyptian cotton sheets, then enjoyed a fine espresso in my Montblanc cup, brewed by my Montblanc espresso machine. I then wrote deep thoughts in my Montblanc leather diary with my 149.
The Lifestyle isn't for everyone, but that's a good thing, in my (Montblanc, of course) book. The rabble can have their own lifestyle, of which I want no part and to which I will not be exposed in my local Montblanc boutique.
David

David, you are such a French snob. How can a Germanic barbarian like me measure up to that. I wake up to the sound of my $4 alarm clock in my $20 Target sheets. However, I have to say I make mighty good espresso with my espresso machine. Thankfully, it wasn't made by Montblanc. I then seek refuge with my Clairefontaine notebook which I besmirch with my mundane Omas and Pelikan pens with lowly English writing fluid.
A destitute and indigent Plebeian I am.

Having said this, I still think it's a pity that MB is moving away from traditional pen dealers. I could see myself buying a MB (preferably an older one) in a real pen store with knowledgeable staff. However, I will not stoop to enter a boutique. I just don't belong there.

If this is happening, it saddens me, but then my local luggage store will be able to recoup that space and sell other brands of pens. So that's a whee!

Honestly, I don't spend a lot of time in the stores that are MB dealers because MB has required them to devote so much floorspace to MB that they tend not to carry other lines that interest me.

What kind of coffee are you drinking there? The Vienna boutique here now sells Montblanc Free Trade Blend. I picked it up last week for a song -- a mere $200 per 1/4 kilo. But I don't think American collectors are privileged to have it in the US yet. Maybe next year, if you're lucky.

sip-sip-sip
scribble-scribble (Greta Garbo, what else baby!)

QM2

Oh my. I was settling for non-Montblanc coffee, thinking to myself that something was off in my morning routine. I now know what it is: the $100 per 1/4 kilo swill I drink every morning. Thank you for directing my attention to what I'm certain is the finest, most distinguished coffee in the world (I'll have to find a European source for this, but that's actually quite compatible with the rest of my Lifestyle).
David

But maybe that is a good thing if I may say so

Lots of stores sell MB pens around here and every time I am in one I feel like either (a) shedding a tear or ( killing someone from the way these retailers treat those pens..! Because the sales people do not have the experience or the knowledge (let alone caring) for the pens being sold they are often opened up and put on display (on pieces of plastic that scratch those pens) under heavy spotlights.. I am sure this ruins the pens one way or another no? My experience was that every time I thought of purchasing one (for a ridiculously higher price if I may add) to my dismay they would always be scuffed or scratched one way or another..

When I go buy from a MB boutique, at least, I pick up the item and just go knowing that the sealed box I have just purchased came right from the factory and hasn't been handled in any way..

At the end, it is all for better service- for example- if I were to buy a MAC laptop from a retailer any problems I would have with it they would tell me to contact Apple etc.. But when you purchase from the Apple store direct, you have 14 days to exchange/replace the item for any defect that the consumer sees no question asked.. in a way its a relief..

What you are describing are careless dealers. it is by no means the norm of how authorised retailers treat MBs. I've bought all my pens untouched in the box. In fact, they were ordered for me, by my favourite authorised retailer (Bromfield Pens in Boston) directly from the MB warehouse, and at a much lower price than MB boutiques.
Also, by no means in my experience do MB boutiques offer better service. Nor are they more knowledgeable. So no, in no way do I think that the restriction of MB sales to proprietory boutiques and fixed prices is "maybe a good thing"...

Isn't part of MB's problem right now primarily one of image? It seems that the public opinion of the brand had been watered down, and that the authorized dealers have been part of the problem. The dealers are making access to MB too easy. The result is that a bunch of riff-raff are owning the pens. People who do not deserve to have a MB are walking around with one thinking that they are special, when they are not.

By limiting the sale of MB to company-owned stores, the employees will be able to receive specialized training, such that the pens will only be sold to those who have earned a MB pen.

oops

It should also help MB stem the flow of counterfeit and grey market pens.

Sales-wise the consolidation may help the pens stand on their own merits. No longer will pen users buy whatever pen happens to be on sale this month from an online retailer. The more attractive or functional pens will more clearly show through sales.

Are you being entirely sarcastic, or do people actually do that (buy whatever pen happens to be on sale from an online retailer)?...

Of course, if you want a Writer's Series and sort of like the Christie but the Wilde is on sale from your favourite retailer would you pass up a discounted pen? Maybe you would if you really had your heart set on the Christie, but maybe you would buy the Wilde as a good second choice or as an investment.

Okay, I see what you mean. But you think MB would object to this? Why? You'll buy the Christie anyway, since you want it so much. This way you also got the Wilde, which otherwise you would not have bought. Translates into more money for MB, not less.

The only time I ever bought a MB without planning, was when I saw the Fitzgerald in a going-out-of-business jewelry boutique sale at an almost insanely low price. That still did not prevent me from going ahead and getting a Boheme the next week like I'd planned. The "it's on sale" Fitzgerald purchase was an additional buy, not a replacement buy. The pen I really wanted was the Boheme. That scenario would never, ever happen if MB boutiques had a monopoly.

I think what MB will achieve by getting rid of authorised retailers is fewer pen sales and decreased profits. They are misjudging the situation if they think that the consumers will simply adjust to the monopoly price-structure. What they are doing just seems to me like such a lose-lose situation : (

While I agree that it may help reduce counterfeits, all grey market pens come from authorized channels by definition. What it will simply mean is that pen stores will give less floorspace to MB, reinforcing the MB brand less, and all pen stores that sell MB will either carry used pens or greymarket pens.

They might have lower sales, but balancing that against the cost of prosecuting counterfeits, shipping, and commissions to third party vendors, MB is likely betting on increased overall profits.

Also, consider how inelastic their core market is to price:
-If you "must" have a MB149 to fit in with your boss/company/social group, then you are going to buy one whether you can get it discounted or not.
-Similarly, if you are buying Writer or Patron line pens as an investment, then it doesn't matter what you pay now. You can be reasonably certain that they will increase in value in a couple of years.
-If you enamoured with a pen enough that it is worth it to you for $2200, then you'll probably also buy it at full list of $2750 or whatever.

I think the only decrease will be those buyers who want a nice pen, but don't necessarily want a MB. The new marketing will probably make MB less competitive against Omas, Pelikan or other big manufacturers for these buyers. They will miss out on trying a MB145 at Fahrney's and will be more likely to buy a M800 that they can handle there.

No way can "42 boutiques in 23 states across the U.S." offset the financial impact of eliminating MB's current network (of hundreds?) of authorized dealers.

This anecdotal report appears incomplete...

--BAM

MB N.A. Profile:
http://hotjobs.yahoo.com/careers-559849-Mo...c_North_America

Oops, double post.

PPCs still have something to learn from...pens!

--BAM

I really don't think that it is so clear cut. Just because somebody is a collector, does not mean they are filthy rich and indifferent to price. There also is not quite such a categorical division as one between ( a ) people who "must" have a 149 to fit in at work, vs. ( b ) the people who happen to try a 145 while at Fahrneys.

I own 5 MBs at this point; 4 of them are LEs. I hunted each one down carefully, at seriously reduced prices, because the price does make a difference to me. Yes, $2750 vs $2200 makes a difference, and so does $1200 vs $900 (the current MSRP vs reseller ratio of a pen I am considering saving for). The authorised reseller structure is what allows me to be a MB customer. At the rate I am buying their pens, I would probably have had 20 MBs by the time I am 35, with the help of the discount-giving retailers. But not if they close those down; if that happens I will probably just stop buying, at least until I get much much older.

I know people who own over a dozen, over 50 MB pens even, and each was bought from a dealer after some research and "hunting", but not from a MB boutique. Everybody likes discounts, and "rich" collectors are not any more keen to pay retail than the person who needs to save several months salary for their MB: Even film stars get their clothing and trinkets from special dealers and they love "bargains". I could really go on and on pointing out counter-examples to your theory.

So, I do not think that MB is doing this in order to increase profit on the pens. Possibly they are doing this to minimise the "pain in the neck" of the pens, and concentrate even more on non-pen-related items, which makes me very upset. If you go to the MB North American website now, you see an enormous ladies' handbag with embroidered stars all over it and the words "Starisma! Seduction by Montblanc." God, this is in such bad taste, that I just can't believe this is the same company who makes some of the pens I love the most. The only pen-related image on their current website is an itty-bitty piece of nib in the lower right hand corner advertising the Toscanini. But the barely recognisable nib image takes third place to the huge handbag and to the picture of a watch. So these, I think, are the real clues to what MB has in mind.

I hope it is obvious that I am not "bashing" anything. Clearly, I like MB pens. I am just truly dismayed and frustrated by the path this company seems to be choosing.

QM2

I think it will minimize the "pain in the neck" pen buyers, the high cost low value end of their market. These are the buyers, mostly FP users, that buy the pen but fill it with other brands of ink and skip purchasing the MB lifestyle accessories like organizers and attache cases. These are also the ones who eat up resources with warranty work, complaints about nib scratchiness and enquiries about repair work on discontinued models.

Better for business are the executives who use their pen once a day as a signature pen and who buy up the pricey branded accessories. A little scratchiness or off weight is of little concern to this segment. As a business you can save on customer service and repair personnel as well as the cost of returns and quality assurance.

It's like the Gillette business model, make the core product expensive enough to keep people from switching but make your real money in selling refills and accessories.

So I looked at the locations in Texas -- there isn't a MB boutique for more than 500 miles. How do they expect to sell more pens if they eliminate the only reliable source (and one that has sold many high-end pens) for 500 miles?

I could see, maybe, eliminating Edwards Luggage as a reseller -- they're within 20 miles of Valley Fair. (Apparently, they were pulled because they've added the pens to their web site. Huh.)

OH NO!
I really hope this attempt fails! For now, I'm going to have to buy ASAP. KBAM also mentioned the hit to revenue this will cause, as there will be a massive drop in sales. No matter whats happening, I'm quite sure some smart guy/gal at MB made their paycheck...
PRAG

This is nothing new, few years back I heard about MB trying to terminate contracts with many AD since now MB actually have stores selling their products. Many speculation out there, some people told me it is because many AD gave discounted price and it hurting their profit. My thoughts are that is not the case first of all those dealers are moving inventory better than the boutique itself because of the discounted price. Now the MB store they sell the pens at MSRP but they have to bear the cost of running the store. Most of MB store locate in huge shopping mall or expansive shopping strip so the cost of rent differently off set the extra money they would make from selling MSRP.
The true reason I think MB is terminating contracts with many AD is trying to sell their other lines of goods such as watches, leather goods and jewelry. MB pen has already establish as one of the most collectible among writing instruments. They already know that and they are trying to make their other line of goods to have the same status. Most of the pen store would not even carry their watches or jewelry, so next time when you are force to goto MB to buy your writer series do be surprise MB sales are going to push their watch for you to look at.

What a bunch of buttlickinpigs... Nothing those idiots do surprises me. They love to consider themselves exclusive so what the heck, I'll give them their wish and exclude them from future purchases (unless of course I find them used). What can I say? I really like the pens but truly hate the company... I'm sure I'm one of the low life pen totin' rednecks they're trying to eliminate anyway... heh

I do not think its a make it or break it deal.. perhaps MB will stop business with some retailers in specific areas they plan to open a store in and leave those operating in other areas/markets MB does not plan to intervene in..

It is an all-out corporate strategy I guess.. When they decide to open a store in, lets say Amman, Jordan, they would want this store to sell well and limit competition to it as much as possible in order to pay for like someone said rent, salaries etc so they might opt to curtailing supplies to other local retailers.. but for other places where they do not wish to open a boutique, I think they would still want their pens to be sold there and so they will leave them in peace..

MB is planning to open a store at King of Prussia here for the Philly region.
There are already some stores there that are authorized retailers- including Paradise Pens!

The rest of them are jewelry stores, which should not impact those places badly.
But Paradise has a "boutique" (about two wall display cases) that takes up a third of the store!
If that is pulled, I'm sure they won't be happy!




YEAH! My 100th Post!

Well, what I am wondering, and the original purpose of my post, is this: Does anybody have any additional, concrete and factual information on this issue? Either insider information, or a statement from a retailer other than Airlines International? The way I understand it, what makes this different from 5 years ago, is that it is more than just vague plans at this point. Many well-known shops have now already been given their "divorce papers". So, for instance: Does anybody know when the final stages of this marvelous plan are to be carried out? Is this going to be gradual, or all at once? Any reliable information you have is appreciated.

The last sentence is exactly the cause why Montblanc quit the liaison with those dealers who offered "better" prices for their customers.

It is part of Montblanc's policy (and one may think about it in many different and controversial ways) that Montblanc products will not be discounted - nowhere in the world - (unless the products go out of production) and that all prices will be on the same level - worldwide.

Montblanc does not take any respect on short or long term business relationship, if it's only since 1978 like Airline International or if it would be since 1908 (like my former store Dörrbecker in Germany). Even if you are one of the biggest Montblanc retailer in the US (like FPH), if you don't go confirm with Montblanc's policy you're out.

Will this policy be succussfull? Well, I do have my serious doubts!!! And - to be very honest - I am not unhappy that I retired from pen business in 2006.
But I think that one has to be aware that in the future one has to accept Montblanc's retail prices or one has to abstain from genuine products with the white star.

Best,
Axel

Hmm... But MB prices in their own boutiques are not the same worldwide. I am keenly aware of this, as I visit both European and American boutiques during my frequent trips for work. Take the new Boheme Arabesque: in Austria the price is currently 940 euros, which translates to just over $1400. In the US, the MSRP is just over $1200. The same is with almost every pen I compared: the US prices are consistently around 15% lower than Austrian. German and Belgian boutiques that I visited recently had slightly lower prices than Austria, but still higher than the US.

If VAT's included in the EC price, that'd make sense. Remember that we add sales tax on top.

I was totally joking about everything that I said here. It was sarcasm.

One issue may be that the discount they offer resellers -- and then have the resellers undercut their own boutiques in price -- may have been determined to cut into their pen profits.

Just a thought.

So, on a more proletarian note...the pens aside, does this mean that they'll be pulling their ink from the shelves of our favorite distributors? If so, it might be time to stock up on your favorite colors.

Mental note: buy another bottle of British Racing Green, and write a note to Lamy asking when they're planning on introducing an "army green" shade of ink into the lineup.

Furthermore, does this mean that they'll be pulling Montegrappa and Cartier out, since they're all (still?) part of the Richemont group?

I don't. Montblanc, as a company, knows exactly what it is doing. It wants its luxury products to appear exclusive and appeal to those customers who value that type of exclusivity. Along with reduced availability, I think we will see a move further up-market. Will reduced availability affect their sales? No, I don't believe it will.

Remember, Montblanc is not a pen manufacturer, it is a global brand that will stand for high quality, high-end and high-priced (note: these are not the same thing) luxury goods. Yes, it still makes pens because a pen can be sold as a luxury personal accessory. Will it continue making pens? Probably, because that is where its heritage lies and heritage is important to build a brand. Will there be staple products like the 146 in the line-up? I have no idea!

Just a few thoughts.

Martin

What I think it (Richemont) will do is use these "lesser" brands to bolster other brands, eg Montblanc.

Martin

This seems to be exactly the policy which landed Nintendo in a morass of problems (and fines/reimbursements) in the late 80's and early 90's. Price controls are supposedly illegal in the USA. Nintendo wanted, and tried to coerce, every retailer to sell that older game machine for $99 and threatened to pull their products, break relations, etc., to control the price.

So, perhaps this is why they wish to break standing dealer relations in USA. To cease supplying distributors in favor of sales out of one's own store isn't illegal, but to attempt control final retail price a no-no here. Once product is sold to a vendor here, that vendor is free to sell the product at any desired profit margin (or to give them away for free) because the product is now owned and controlled solely by the vendor.

This is my understanding of our USA system anyway. One Mb sells the pens to the vendor, their ownership and control ceases and they could actually fall under the same 'price control' penalties as Nintendo if the dealers pursue a class action suit. But, by opening many boutiques and removing independent retailers from their distribution lines, it's becomes a different situation.

They still suck, whatever happens in the future.

Alternatively, they could just cut the retailer discount to something ridiculously small. With no room for discount to the customer, this would mean that the retailer would have to sell at full price otherwise it wouldn't be worth their while.

Martin

That's the point. Austria has 21% VAT (as far as I remember) and Germany has 19% VAT. It's like the local taxes in the states but the VAT has to be included within the labeled and published sales prices.
And why currently the prices in Europe are higher than in the US depends on the strong Euro and the weak US$. If the trend holds on the next increase in the RSP in the US will be tremendous.

Axel

Cartier a "lesser" brand as Montblanc?!?
Nice pipe dream!

Axel

Yes, of course. I am ashamed to say that I don't understand the nuances of international taxation very well despite living half my life in Europe. Neither do I understand American taxation for that matter. Financial matters give me a headache; I just want to earn enough to buy art supplies, nice fountain pens, and a house in Maine. That's all.

Edit: What, too "Marie Antoinette" of me? Relax, I was just kidding. I have a very stressful and socially useful dayjob, so in my imagination at least I have a right to be frivolous : )

You're quite right. I was referring mainly to Montegrappa.

Martin

Montblancs are for rich excutives that make 200-500k a year. Their are some people myself included that dont make that much money and buy them because they like pens. That is simply who they cator to. Especially for the watches and handbags that cost well over 5k! Their shops are located where they are because of the people living their. Their are like 4 in chicago alone! Their are none in some of the large western states.

IMO they make alot more money selling a leather bag for $5,000 than a 149 for $550.

I am a diehard Mont Blanc guy. I have never been to one of their stores but I buy from them. I simply call and order it. All of the people I have talked to seem very informed about the products as well.

As a business principle, if MB made the retailer discount so small that there was no room to cut price, then many retailers would not agree to carry the merchandise. There would be no margin in devoting 1/3 of a store to MB. Also, the other MB merchandise "required to be carried" by B&M stores flows like glue in winter, so that's more working capital tied up in inventory and higher financing/debt costs. I would also suspect that the wholesale costs of pens to the boutiques and retailers would be roughly the same. Otherwise the margin needed to cover the rent and overhead of either type of retail platform would be undercut causing the stores to close. The net margin per pen to MB on a wholesale basis should be roughly the same.

It would seem the pen image of MB has become less of the luxury brand that Richemont wants. So let MB allow the boutiques to proliferate. I will say, I agree with the point that Richemont seems to know what it is doing. Its timing, global economic doldrums, is good in that the competitors will have a harder time grabbing market share (luxury goods slow down).

On the other hand, if I were another pen manufacturer, I'd seize the opportunity to increase profile and brand awareness as the pen of choice, inflicting damage on MB's middle market share. Then, the other manufacturers, like the Japanese car manufacturers did from the 1960's through the 1990's, could move up market taking a greater share of MB's stake in the luxury market. It's a long term strategy, but one that could work. Financial strength of MB's biggest competitors will matter greatly in this game.

I agree with Axel that discounting by retailers may be the heart of the problem.

As for strategic decisions, if this reduction in retailers turns out to be true, chances are it will prove to be a good decision. As fountain pen history shows, no other brand has a record for good decisions like Montblanc. They have thrived for a century in this business, they have over 50% of the fountain pen market share and well over 50% of awareness. One of the sound decisions they have made in the past was to concentrate on the luxury end of the fountain pen business, while others tried to corner the mass market. It seems to me like this is merely the latest reinstallment along that tried and true philosophy.

If only Waterman, Sheaffer, Parker and Wahl had followed the same path...

I for one thinks it's a good move by Montblanc. It has certainly worked for Ping golf clubs. They decided years ago that no retailor could sell below MSRP. There are certainly a few that will give a store credit if you buy a new set, but very few if any will sell below MSRP. This keeps thier brand high end and profits at a good gross margin.

I was told by a retailor that if Ping caught him selling below MSRP they would pull his distributorship, He said they do it all the time.

This is my feeling everytime I come across the MB boutique at Frankfurt or Helsinki airport, too. But then, what could they offer?

They don't have any of the wonderfully writing Meisterstück 14s any more. Nor an equally good writing 252. Not even anything like my humble 342 with it's semiflex wet nib!

So why should I stop there, carrying my backpack, wearing jeans and hiking boots?
Just to explain to some ignorant salesperson that anything she/he might be able to show me will not equal my vintage MBs from the 60s? Though I must confess that sometimes I am tempted to do so