You never know when an impromptu act of derring-do – such as performing an emergency tracheotomy or stopping a runaway hot air balloon – will be required, so it’s always best to be prepared.
That philosophy has kept Victorinox, the maker of Swiss army knives, in business for 125 years: the examples above are real occasions when its trusty red pocket knives have saved the day. “The knife for us is more than just a knife: it is a friend and a companion,” says chief executive Carl Elsener earnestly. The torch-bearer of the company behind one of Switzerland’s most famous exports is in London before a big advertising push to raise awareness of the brand, founded by his great-grandfather Karl Elsener in 1884.
Victorinox is still based in the same Swiss town of Ibach, its modern factory nestling in a scene so picturesque it looks like a chocolate bar wrapper: snow-capped Alps towering behind and cows grazing in the adjoining fields. But after worrying about corkscrews and toothpick attachments for more than a century, the company now harbours ambitions to become a global lifestyle brand and is applying the Swiss precision engineering behind its knives to luggage, watches, clothing and even perfumes. The “Swiss Army for Her” fragrance promises to “whisk away the senses to the lofty heights of the Swiss Alps”.
Like the original pocket knife, which has evolved from a chunky wooden-handled effort to a hi-tech tool boasting a memory stick and laser pointer, Victorinox has also developed creatively. In 2000 the Elsener family effectively handed ownership to their employees, giving 85% of the company to a foundation and the remainder to a charity that is endowed with 10% of the firm’s annual profits. The rest are ploughed back into the business. “The family no longer owns the company and if it was ever sold, the money would go into the foundation and we would have to come up with a new goal for it,” explains Elsener.
In common with many other family-run enterprises, the company, which had annual sales of €412m (£335m) last year, takes a long-term view. “In our history we have never looked at quarterly results,” says Elsener. “We always tried to think in generations.” The foundation, he says, was established so that the company could remain financially independent: “We wanted to make sure the company was not destabilised by the next generation. We are 11 children and there are already 23 grandchildren.”
Elsener says Victorinox products epitomise “typical” Swiss traits such as inventiveness and reliability; it is his wife Veronika, one of the company’s marketers, who acknowledges, in jest at least, that the fastidious Swiss can be “a little bit boring”.
“We are down to earth, definitely,” she explains. “Especially where our company is based. It is in the mountains where people tend to be a little bit conservative. But they are also pushed to the limits in order to survive, so you have to look outwards.”
When Elsener started the firm in the 19th century, Switzerland was one of the poorest countries in Europe, and a paternalistic approach to staff has been handed down through the generations. The philosophy extends to pay, with the highest earner receiving no more than five and a half times that of the lowest. “We have always felt that what you exaggerate is not healthy and today you see companies who exaggerate and it is never good,” says Elsener. “It does not build mutual trust and respect.”
It all sounds too good to be true and Elsener agrees it is an unusual set-up, shaped by “unobtrusive” Christian values: “It is a unique situation for 11 children to come to the same conclusion and give away a big part of their wealth. For us the long-term success of the company was always our main objective.”
Elsener joined his father at the office in 1978 and says the company – named after his great-great-grandmother Victoria – has been consistently profitable although it does not disclose its returns.
Half of the 1,800 employees are based in Ibach and such it is importance to the local economy the area has been nicknamed “Swiss army knife valley”. The family is proud of the fact that, to date, it has never had to make staff redundant because of a downturn in sales. “We will do whatever is possible to continue with this philosophy,” he adds.
Over the decades, Victorinox has targeted hobbyists such as fishermen and mountaineers – one frightening-looking model, the SwissChamp XLT, boasts 50 tools, including a wire-crimping blade and pharmaceutical spatula. Elsener’s favourite new feature is the LED light, although he admits his father, a purist who turns 90 this year, cannot understand the appeal of the memory stick.
“I am a big fan of the LED,” he says pulling out a long key chain that jangles with three Victorinox tools. “Many times it has offered me great service.” His fascination with LEDs has become a running joke with his three children, not least because he keeps incorporating them in new products, including the zipper slider of a jacket.
That urge to diversify intensified after 9/11, when the security crackdown at airports resulted in a 30% drop in knife sales. “September 11 showed us how dangerous it can be when you are just on one strong leg,” says Elsener, who reports new business areas now account for more than 60% of sales. Victorinox is also under attack from increasingly sophisticated counterfeit producers in Asia. “We had to ask ourselves how could we continue to manufacture in Switzerland and stay competitive? When the quality of a copy is getting close to the original, but at half the price, then the only solution is to invest in brand,” he says.
Conlumino analyst Neil Saunders says it makes sense for Victorinox to broaden its product range to gain wider appeal: “Most professionals don’t need to carry a pen knife around with them – it’s quite a niche market. People are willing to spend on products that are interesting and durable and that is what the Swiss army brand stands for.”
After 125 years, the penknife market is yet to be saturated, with Elsener reporting growth of more than 10% in the first three months of the year as its luggage and clothing provide walking adverts for the brand. “I think the knives, even the standard one, [are] still relevant. When you see a young boy who is seven or eight years old and his father offers him a Swiss army knife, you still see his eyes light up.”
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