Carl Elsener, the fourth-generation CEO of Victorinox, speaks about the Swiss brand’s values, the iconic pocket knife and their plans for India.
Having worked with Victorinox for several years, how would you describe your journey with the brand?
When we started in 1884, it was only a small workshop. My great grandfather had learnt how to make knives, and then trained apprentices when he started making Swiss army knives for soldiers in huge quantities. Even when he started to industrialise, he was still a manufacturer and the biggest challenge was the making of the knives. So when my father came in, he focussed on making our manufacturing more efficient. Around 1978 is when I came into the business, and we started to diversify after that. We started with watches, then travel gear and also started to own our own subsidiaries. Before that, we had only had long-term partners. I saw my father doing a lot himself, and I started to realise that I can no longer do everything myself. I need to delegate responsibility, and to find people who have the same passion for watches and travel gear that has been in my family for 100 years. I also needed to find people in key markets, who help me to live this passion and commitment. So for a long time, we were manufacturers, [up] till 25-30 years ago, when we realised how important it is to be a strong brand. We are in a world where there are many competitors in the market for watches and travel gear. You need to differentiate, and you can do this with a strong brand and loyal customers.
From being a manufacturer of Swiss knives to having six different product lines, what was the thought process behind the bifurcations?
For us, there are three reasons that pushed us to diversify into other product categories. The success of the Swiss army knife in the 1980s led our customers to come and tell us that since they were so happy with this product, maybe we should look at offering the same values in other products. Coincidentally, in exactly the same period, my father and I saw a growing number of copies from Asia. We were afraid that someday, we would lose all our customers because these copies were very cheap. My father was convinced that their quality will improve over time, and they will still sell at half the price of a true Swiss pocket knife. We discussed how we can ensure that in 20-30 years, we can still be manufacturing this knife in Switzerland and remain competitive in the global environment. We concluded that we need to invest in making the brand more visible. So we did our research in key markets, asked the consumers what products they wanted us to make under the Victorinox brand. Watches were a logical diversification and were mentioned at the top. People also mentioned travel gear. We started manufacturing that with a reliable partner in the USA, who specialised in high quality travel gear. He approached us and asked if we could have a licence agreement. Four years ago, we got the licence back because we want to control the brand, quality and distribution more closely. Our third reason was 9/11, post which the sales of our Swiss army knife dropped by over 30 per cent. My father calls it the most challenging time in our history. This shock pushed and motivated us to invest in more product categories.
The market for high-end watches is very hard to crack. How did you manage that?
I think the main reason that we have been successful is our little red knives. When we started to manufacture watches, our strategy was really to talk to the same people who trust the Swiss army knife. When people visit our factory, they always tell me they are surprised at how reasonably this product is priced, given the amount of work that goes into making it and maintaining its high quality. So we started selling our watches to the same customers who buy our knives. We were surprised by how their trust transferred to this new product category. Later, we also started to understand how important it is to convince watch traders that our know-how extends beyond making the best pocket knives and that we can produce high quality Swiss watches, too.
We want our customers to perceive our products as a true companion. When you travel, you may have the knife in your pocket, and the watch on your wrist. We receive letters from all over the world, where people share their stories and adventures. They often say that it’s not just a knife; it’s a companion.
In the digital age, when there’s an app for everything, people are increasingly using their hands less for doing things daily. Keeping that in mind, who is buying the Swiss army knife now?
We discuss this within Victorinox, since today’s children use the internet and social media a lot. But there’s still a demand for such knives and it’s growing globally, because when you’re outdoors in the mountains or a forest, you need a Victorinox Swiss army knife. In India, there are not so many people who go on outdoor adventures as compared to Europe or the United States. For our interest, we’ve recently hired someone to teach children how to carve with a knife. And we were surprised that this course is always heavily booked, because parents want their children to spend more time outdoors and do things with their hands in a creative way.
Also, we try to develop our knives in a way that is relevant to today’s needs. So we have integrated features like LED lights, ballpoint pens or a USB memory stick. We have also created a winemaster, because in Europe and United States, people like to drink quality wine.
The company’s literature speaks of values like modesty, credibility, responsibility and courage. This seems unusual, given that today’s marketing pitches are about getting noticed if you shout the loudest. How has this worked for Victorinox?
These values have always been important to my family, and are one of our pillars for success. We employ 950 people, who have been with us for an average of 22 years. Every year, we have 40- 50 celebrations of 25-, 40- and 50-year work anniversaries. This shows that people appreciate our values. I had the great privilege to work with my father for 34 years, and he was a great role model for the entire company. He often told me that if a company has to stay successful in the long run, it has to cater to the passion, commitment and motivation of the employees, the satisfaction of the customers, the quality and reliability of the product and the brand development. When you do these four things right, not much can go wrong.
How would you describe India as a market? What are your popular product lines here?
In Europe and North America, we have a mature market. But for us, India is the market for the future. We have a lot of hope and expectation from it. The big difference here is that there is no strong outdoor or do-it-yourself culture. For instance, in Germany or Switzerland, everyone has a Swiss army knife. If there is a loose screw in your bathroom, you repair it yourself. So in India, watches are our top sellers, followed by travel gear.
A KNIFE’S EDGE
Victorinox began operations in 1884, as a very small workshop manufacturing high quality knives, mainly for the Swiss army. Since then, the company has diversified into watches, travel gear, apparel and fragrances, and it is the world’s largest manufacturer of pocket knives.
