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Brand Analysis: Lamy

A long while back, I wrote about the Twsbi Eco and the threat which it represented to Lamy’s business. The Eco has now been on sale for quite some time and I thought it would be interesting to look at what’s happening with Lamy, how they are responding to the challenge, and the choices they are facing to secure their future. In this post, we’ll explore all of that and try to determine whether their business is on sound footing or not. 

The Past

As you’ve probably heard, 2016 is the 50th anniversary of ‘Lamy design’, the line of minimalist products that was capped with the Lamy 2000. Although most of the attention will go to the products themselves, it’s important to remember that this wasn’t simply about some new designs: it was also a new strategy for the business. 

By 1966, ballpoints had exploded into the stationery market. Fountain pen brands around the world were aware of the threat but, for the most part, struggling to come to terms with it. When any business is disrupted by a cheaper, lower quality competitor, it’s quite typical for the incumbent firms to ignore the threat and maintain their faith that their customers are primarily interested in quality. More often than not, this attitude is completely wrong and it allows new entrants to capture the market before the incumbents even realise that they need to react — and by that point, it’s often too late. 

So credit goes to Lamy for picking up on the threat to their business early enough to figure out a strategy that would see them through. Not surprisingly, an economist was the brains behind this. Dr Manfred Lamy, son of the founder and an economics PhD, became marketing manager in 1962 and drove the new strategy. They hired external designers, came up with new products, and within four years were selling them to the public. Dr Lamy eventually took the reins of the business and held on until 2006. 

By that time, the strategy was obvious enough: selling decently made pens at a price which offered buyers a decent surplus relative to others available in the market. In this period, there was no Pilot Metropolitan, no Faber-Castell Loom, no Twsbis: nothing at all that could hold a candle to the Safari, let alone the Studio or the 2000. That gave Lamy scale: they were able to produce and sell their pens in massive quantities, which helped to keep unit costs low and a healthy profit margin. It’s rather astonishing how long the strategy proved to be effective.

The Present

After Dr Lamy’s retirement came the launches of some products aimed at reinvigorating the business: the Pur, the Dialog 3, the Scala, and the steel 2000. While I’m sure these have respectable sales, none of them have really caught on in the same way as the Safari or the standard 2000. And if you compare them with some alternatives, it’s not that difficult to understand why: the Dialog 3 is more than double the price of the Vanishing Point for effectively the same functionality. The Scala is incredibly similar to another Lamy product, the Studio, but 50% more expensive. These products simply don’t offer consumers the same, competitive value proposition that their predecessors did. 

While the new products have struggled to catch on, the older products have faced increasing competition. The Safari had to contend with the Pilot Metropolitan in 2012 and now the Eco as well. Taken on their merits alone, the Safari is a good pen and not a bad choice for a beginner. But when price is an additional consideration, it’s hard to justify the Safari over the Metro: both are cartridge/converter pens and the Metro is roughly half the price. The Eco attacks from the other direction, offering a more functional product for the same price.

Since the Eco’s release, I’ve been waiting to see how Lamy would respond: would they cut prices? Redesign the product? My deepest hope was that they would come up with a beautifully designed piston-filler pen that was priced well under $100, something that would really bring the fight to Twsbi by offering customers a product that was more expensive but better designed and better quality. But Lamy haven’t done that. In fact, they don’t seem to have done much of anything. 

That’s not just a problem because of lost sales. It’s also a problem because their business strategy depended on scale: the more pens they sold, the more profitable each individual sale became. Every sale Twsbi captures from Lamy drives up their costs a little bit and correspondingly drives down their profits. Once Twsbi start releasing the Eco in new colours and expanding into more retail stores, the harder it will get for Lamy to defend their FP business. 

Of course, the lack of action at the low end of the market doesn’t mean Lamy have been doing nothing at all. They released the Imporium last year, a cartridge/converter pen with a gold nib and an interesting, fluted design — for €375 (US$520). In my opinion, this pen repeated the mistake of previous models and totally ignored everything else that is available on the market: for the same money, you could have had an Omas Ogiva, a Graf von Faber Castell Classic, a Pelikan M600 or a couple of Pilot 823s. Shockingly, it hasn’t really caught on. 

They’ve also spent a lot of time navel-gazing for their 50th anniversary. There’s nothing wrong with a bit of celebration but when your business is being seriously challenged, it’s hard to imagine anything worse than clocking out for a year. Of course, there are special edition pens being released for the occasion and this might help to prop up the business for a bit — but if the rumours are true, the upcoming release of the new Lamy 2000 model will be a bit of a letdown. I can’t share any product details yet but I’m not sure the design will be sufficiently exciting to make up for the premium price. 

The Future

So the big question is how Lamy are going to survive all of this. They’re not in strife yet and they still have capabilities and resources which can lead to profitability if they are used effectively. They have a dedicated fan base (albeit one which has stopped growing), a top-notch distribution network, a solid production operation, and plenty of financial capital available from the rest of the business. How do you use those resources to make a successful, profitable FP business?

Well, Lamy’s answer over the last 5-10 years has been to try and rework the original magic of Lamy Design while shifting upmarket. But those premium pens have struggled to gain traction and, frankly, it’s not that hard to see why: each of them have ignored the advantages which Lamy currently possesses and have tried to become successful in areas where other brands have an edge. 

Nothing about Lamy’s business says to me that they have a crack marketing team who are good at figuring out profitable niches in the market. Instead, they’re pretty good at selling relatively standardised products en masse — that’s not something every brand can do, it’s a genuine advantage for Lamy. So it’s a bit of a mystery why they would try to sell a niche, designer product instead of a standardised one. 

It’s also a mystery because it has ignored Lamy’s key strength. Their whole business is structured for mass scale, that’s what they’ve achieved with their production and distribution strengths. But the niche products ignore these advantages. They’re items made in small batches, with high costs, and sold through a very narrow part of the distribution network. Lots of big-box stationery retailers and bookstores carry the Lamy Safari but very few would bother with something like the Imporium. The premium products even have limited appeal to Lamy’s existing customer base who, for the most part, are drawn to the cheap and colourful Safaris or the hyper-practical 2000. I can’t see either group feeling that the Imporium is their kind of thing. 

So, I really don’t feel like Lamy can make the upmarket approach work. It ignores their existing strengths and really depends on strengths which their business doesn’t currently possess. Of course, you can cultivate new strengths but that’s not an easy thing to do. And it’s really not necessary if there are profitable opportunities using your existing business — which I believe there are. 

Lamy really need to think about playing to their strengths: producing a pen which uses those advantages, something which appeals to the folks who already own, use, and love their Lamy 2000, something which can be produced at low cost in Lamy’s existing facilities, and something which can be sold through the existing distribution network. All of that will dramatically lower the costs of the product and that will help the value proposition to no end, which I see as the key faults of products like the Imporium, Dialog 3, etc. 

The challenge for the marketing team is figuring out exactly what segment of the market is most interested in a product like this and what they want to see in it. There are two possibilities which occur to me as ripe for Lamy’s attention. First is a makeover for the Lamy Studio ($80) into a premium Twsbi 580/580AL equivalent: a low-cost, dependable piston-filler with cheap interchangeable nibs and none of the quality concerns. Offering a premium equivalent would allow Lamy to charge a higher price than the competing product and capture those buyers who are attracted by Twsbi’s value proposition but hesitant about it’s quality. Priced close enough to the 580AL and pumping it through Lamy’s existing distribution network would make for a real competitive effort. It would also mark the first time that any brand actually took the fight up to Twsbi.

Another possibility is a big brother to the Lamy 2000. It seems that a lot of 2000s are sold to university students and that raises the question of what they are buying and using when they become professionals with full-time jobs. They have the means to buy a more premium product and arguably the desire to use something nicer but, other than the steel 2000, Lamy don’t really offer anything to that market. Certainly nothing that would be a good fit for the workplace. I suspect many of these buyers move on to a Pelikan M800 but would have happily stuck with Lamy if they had a decent product in that range. So a sleek, gold-nibbed piston-filler made out of something nicer than Makrolon and lighter than steel, with a solid capacity and an ink window, and priced somewhere in the $200-300 range. An external designer might be ideal for this, but someone less artistic than Bellini and more like Newson. In fact, imagine the Montblanc M as a piston filler with a $250 price tag. Ignoring the design, that’s almost exactly what I have in mind. You can probably see what a winner this would be for Lamy. 

A good value pen at that price would be extremely appealing for the L2k lovers as they move upmarket and could potentially even be an M800 killer. Such a product might well be tempting to the premium and even the mid-range retailers in Lamy’s distribution network and could be produced in tandem with the 2000s, keeping costs nice and low while contributing to the scale benefits enjoyed by the rest of Lamy’s business. 

Of course, these aren’t the only possibilities which are available to Lamy — they are just examples of what the business could be doing if they seriously looked at the advantages available to them and the opportunities in the market. Right now, ignoring these advantages is Lamy’s biggest problem and their new products will keep failing while they keep ignoring them. In business, as in life, it’s all about how quickly you can learn from your mistakes. 


Lamy isn’t in the best position at the moment but they are far from down and out. They still have a good reputation, capital, and a host of other advantages which they could use to revive their business and become competitive once more. The sad and frustrating thing is that they currently seem to be pushing, repeatedly and unsuccessfully, in the wrong direction. 

I’m really hopeful that we’re going to see some big changes to their business over the next few years, something similar to what revived the business in 1966 and set them up for four very successful decades. If they fail to figure out a new direction, it’s hard to imagine them avoiding the same fate which has met Cross, Parker, Sheaffer, and Waterman: empty shells of their former selves, being milked for whatever money can be made before they close down completely. But if they can pull off a transformation, they will live up to the reputation which they’ve inherited from the company’s founder and his son, and remain an integral part of the industry and community.


Quite a bit of feedback on last week’s post and I must apologize to those who have gotten in touch but haven’t received a response (yet). We’re in the middle of final exams and students are claiming most of my free time but I’ll try to get back to everyone. Today’s short post will follow up on a few pieces of feedback which I thought were interesting.

Before we get into it, two other things I wanted to mention. Unfortunately, I missed yesterday’s Sydney pen meet but I’ve been told repeatedly that it was a great day. Fountain Pens Australia now has semi-regular meets happening in Sydney, Brisbane, Perth, and Melbourne, and I’m really pleased with what it has become. The Facebook group is a lively source of discussion, debate, and enabling, and it’s really wonderful to see the friendships which have been sparked. If you know of any Australian FP addicts, young or old, be sure to let them know about us! 

Also, I recently asked on twitter whether readers would be interested in a post about poverty and development, which has become an interest of mine after my adventures in the Philippines. The response was largely positive so that will be another project for the winter break. I’m really looking forward to writing this and it’ll provide a good opportunity to think through my ideas before I formally present some of them next semester. Hopefully be published late this month or early next (no promises though). And now, on to the main course of today’s offering. 

Ian Hedley and Marek Kubica

Ian and Marek (The Hyperpessimist) both had similar feedback on the post: Twsbi may have a real advantage when it comes to the US market, where both the Eco and Safari are roughly the same price, but Lamy hugely outperform in Europe where the price difference is more like 2:1 (even 3:1 in the UK). This is absolutely true and I’m afraid it reflects a bit of sloppiness on my part, and not specifying the market that I was discussing.

Of course, it raises the question about why Twsbi is so much more expensive in Europe. The easy answer is to say it’s because of transportation costs, import duties, and the transactions cost of currency movements. The more complicated answer is that it’s because Twsbi — who are pretty relentless in cutting costs — haven’t really invested in European distribution yet. Once they do, their costs should fall, and we should see them become more competitive. 

That will strike some of you as counterintuitive: after all, a distributor has to pay out money for rent, wages, taxes, and a whole range of expenses, all of which increase the costs of doing business. This is all true but there are savings which should more than offset those expenses. Setting up a distribution centre would allow Twsbi to ship product from the factory to the Continent in greater bulk. That can then be broken down for delivery to individual retailers. A distributor would also grow the size of the distribution network, the number of retailers who carry the product, and enable some economies of scale to be realised. And a distributor would also work to improve brand awareness, further increasing sales. When a brand is of a certain size, setting up a distributor can end up costing more money than its worth. But beyond that size, it can start to become more worthwhile — and often it becomes more and more worthwhile as the business grows. I suspect Twsbi is already at a size where they are thinking about ways to economise on distribution and further reduce the retail prices they need to charge. 

That they haven’t already leads me back to a mistaken assumption which I made in the original Eco analysis. My thinking was that Twsbi at the time had three main avenues by which they could increase sales: new products, US expansion (particularly outside of specialty retailers), and European expansion. My mistake was in assuming that the first avenue was close to exhaustion, that they couldn’t possibly have many more products in the pipeline. Since then, they have come out with the Vac Mini and the only product rumours are of a new school/learners pen which largely fits with my thinking. But I didn’t foresee the limited colour runs as becoming a big part of their business. These are surprisingly popular and seem to offer Twsbi a way to grow their revenue with less risk and less capital investment than the other avenues. I’m not sure if this is a sustainable approach but it seems to be working for them for now. Once the market is saturated and buyers show less interest in new colours, we should see Twsbi start looking at those other avenues and hopefully European buyers will start to see some more competitive pricing. 

That said, Marek’s post is exactly the kind of response I love to see: someone who has read a post, thought about it, has a differing view and explains it clearly and reasonably. Ian and I have had a similar exchange in the past and I think it’s marvellous that some people in the community are willing to jump in for a constructive debate. 

Ed Jelley

Ed raises a point on Twitter that comes up now and then, when he points out there’s no data or sources in the Lamy post. As regular readers have probably noticed, that’s standard for this blog even though I understand it can be frustrating for those who want to delve deeper. It’s something which I considered and rejected early on in the blog history. possibly before I even went public with the site. Nowadays, academic economics is largely about data, statistics, diagrams, etc and it becomes impenetrable to anyone without a master’s degree. While there are good reasons for this, it also means that economics is often inaccessible to the general public. As this blog is all about making economics more accessible, I decided that I wouldn’t use any equations, any statistics, any diagrams, nothing that would prevent someone with time and interest from understanding any posts. 

Now you might disagree with that position and I think it’s entirely reasonable for anyone to do so. But that disagreement brings up some other issues which need to be considered: is using more data possible and is it desirable? It’s very rare for any business to reveal much data about their operations: even publicly-listed companies only give out the bare minimum about their aggregate operations. If you were to ask a retailer or a brand for sales figures, revenue numbers, production costs, I’d be surprised if they were willing to share any of that with you. I have good relationships with some people in the industry, there’s some trust there, and even I struggle to get much in the way of hard numbers. Absolute numbers (we sold x Twsbi Ecos this month) are quite rare; people are more comfortable sharing relative numbers (we sold x% more VPs this year than last year) but these obviously tell you much less. 

The problem is that, even if one retailer or one brand decided to give you access to all of their numbers, it still wouldn’t necessarily be enough to make the kinds of certain judgements that Ed seems to be seeking. Lamy could open the kimono but without Twsbi’s data, it’s really hard to say much at all. Sometimes you might need to know about what’s happening in the rest of the market: maybe Safari sales are actually up, but there’s still Safari-to-Eco substitution and that’s disguised by the fact the market as a whole is growing, and growing much faster then Safari sales. Their market share would be in decline, but you wouldn’t know without a few different entities offering up data which they wouldn’t normally make available. So even accessing data from one firm isn’t necessarily desirable as it tells you nothing in isolation. 

My approach then is what’s known in economics as methodological individualism: you think about individual behaviour, either buyers or firms, and try to figure out what’s driving them or why they might do certain things. Thanks to the blogs and forums there’s often plenty of insights available with which to form hypotheses about general phenomena. I try to find information which supports or rejects the hypotheses and, if they check out, I’ll think about what that means more broadly. Would this approach be sufficient for publication in an economics journal? Heck no. But our goal isn’t to reach a state of absolute truth, it’s for me to describe what I believe is happening, apply an an appropriate theory, and investigate the implications.

One of the things which every serious academic has to grapple with is the nature of truth: whether it exists and whether it’s something we can figure out and learn. Personally, I believe that it’s possible but I doubt many academic disciplines are anywhere close to it (including economics). Realistically, the best we can do is to try to incrementally get closer to the truth, even though our new theories and conclusions might be almost as flawed as the previous ones. Anything which helps us progress an accurate understanding of things is therefore desirable and that’s rather the role I see this blog as providing. Not bringing absolute truth to the community but bringing ideas and insights which help us move towards a place of improved knowledge and understanding.

General Feedback

A few readers have sent in social media comments that they’ve seen where Lamy fans have had their feelings hurt and have grown critical. And that’s fair enough. There’s an idea called status politics, which claims that some people will closely identify with something — be it a brand, an idea, a lifestyle, a sports team, anything — and want to see it raised in social status. They react strongly against anything which they perceive to lower its status. So you might believe that the homeless lack status and therefore you’ll support any policy which raises their status, regardless of the actual costs and benefits. 

For me, status politics wasn’t all that credible an idea until the blog started. I remember seeing a thread online somewhere when I first published my taxonomy of pen brands, where some hardcore Cross enthusiasts were deeply upset that Cross wasn’t perceived as being as a highly competitive brand. My comments weren’t that the pens were bad, not that their users were idiots, or anything like that: simply that they didn’t offer as much bang for the buck as other brands. Nonetheless, it was taken very poorly and status politics seemed to explain that behaviour better than any other theories. 

The same kind of thing can be seen in our community with almost every brand. They (almost) all have dedicated fan bases, and a subset of those fans are people who want to see their preferred brand raised in status. I’m not sure that behaviour is harmful in any real way but it doesn’t really add anything which I find interesting. There’s no analysis, it doesn’t enable constructive debate. So I don’t see much point in engaging. Those people aren’t going to like the things I write about their favourite brands unless it is cheerleading. And some of their behaviour — like reducing posts to a single sentence which doesn’t reflect the content — can be a useful signal to readers about whether to expect analysis or affirmation. 

Finally, before I wrap up, a retailer emailed me this week saying that they’d been asked about their relationship with me. In case any readers aren’t aware, I’m friendly with industry folks (retailers, distributors, and brands) but there’s no sponsorship or any other formal arrangements. The firms that are spruiked are ones where I’ve had good experiences, not because of relationships, payments, or any quid-pro-quo. I’m just a guy writing what I think.