April 5 (Bloomberg) -- For Merkel, happiness is a warm gun.
The rifle maker, with no relation to Angela Merkel, hails from the same former communist east as the German chancellor. It sells arms that can carry the price tag of a house, yet are resilient to recession. A hand-made rifle by Merkel Jagd- und Sportwaffen GmbH, as the company is known by its full name, can cost anything between 2,500 euros and 200,000 euros ($264,000).
“We sell lots of our most expensive guns in the U.S., where the demand for German firearms is for quality, not quantity,” Marketing Director Oliver Schmider said at Merkel headquarters in Suhl, Thuringia, about 3 hours south of Berlin. Sales may rise 15 percent this year from 18 million euros in 2011, he predicted.
The marriage of utility and luxury has provided Merkel and German competitors including Blaser Jagdwaffen GmbH and J.P. Sauer & Sohn GmbH with a steady stream of rifle aficionados who are largely unfettered by fiscal constraints. Merkel was purchased by Abu Dhabi investment company Tawazun Holding in 2007 and has since pushed its global ambitions, with the U.S. and Russia making up a fifth of total revenue today.
Seized by Communists
Founded in 1898, Merkel was seized by the communists after World War II in what became East Germany. The reunified country remains the biggest market for closely held Merkel and accounts for 20 percent of sales, said Schmider. The company has 180 employees, a fraction of the 2,000 workers under communist rule until 1990.
“With the fall of the Iron Curtain, Merkel was suddenly exposed to competition,” Schmider said.
The company’s response was to develop a lower-cost line of firearms starting at about 2,500 euros. These are about 70 percent machine-made and 30 percent handmade. Merkel’s high-end weapons are about 70 percent hand-made and start at 6,000 euros.
Among the company’s latest innovation is the Helix straight-pull bolt-action rifle for speedy reloading that allows the rifle to be taken apart without tools for traveling. The gun sells for about 2,700 euros in a simple configuration.
Still, extravagance is a common theme running through the high-end clientele of German gun manufacturers. Some aristocrats want their castle engraved on their rifle, Schmider said, adding that gold inlay is increasingly in demand. One U.S. customer had an Indian chief on one side, a cowboy on the other and a bald eagle on the bottom, he said.
Tawazun, Merkel’s owner, has added other fire-arm assets to its portfolio, including Caracal, a maker of pistols, as well as the Caracal Shooting Club, that was the first commercial shooting range in Abu Dhabi.
Blaser, whose sales have boomed in Germany in recent years, has followed through on a customer request to engrave a pair of bull testicles on a rifle. Other off-piste initiatives to boost the brand have included a cooperation with Jaguar Land Rover Plc, for which Blaser designed a special edition of the rugged Defender vehicle that’s limited to 60 units.
“Crisis? What crisis?” said Matthias Klotz, chief executive officer of J.P. Sauer. “It’s not just wealthy people who buy our guns. Hunters, even if they don’t have much money, still demand 100 percent quality. So they might compromise on a stereo but will never do so with a rifle.”
Sauer, based in Isny in southern Germany, exports almost 70 percent of its production, and sale rose 8 percent last year. Founded in 1751, the company has provided rifles to monarchs including Germany’s Kaiser Wilhelm II. Nazi Reichsmarschall and Reich Master Hunter Hermann Goering also favored Sauer guns, which featured inlaid swastikas during the Third Reich.
Merkel has also attracted a varied following. The company has provided rifles or components to King Juan Carlos of Spain, former Soviet leader Nikita Khrushchev and Dwight Eisenhower when he was military governor of the U.S. Occupation Zone of Germany in 1945. Goering also went deer-stalking with a Merkel.
And the Chancellor, Angela Merkel? Schmider laughed when asked whether sharing the name sometimes prompts confusion.
“Only with Google searches,” he said. “We’re not related and she’s never visited us. People sometimes think we’re advertising for Frau Merkel’s re-election when we put our name on caps.”
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