Watchmaking and its Challenges
Vontobel, in partnership with Bilan magazine, brought together CEOs and watchmaking experts for the second annual evening to discuss this subject “the challenge of luxury: is the watchmaking industry visionary?”.
On October 11, the second of the Vontobel evening meetings dedicated to watchmaking, in partnership with the magazine Bilan, was held at the Royal Savoy in Lausanne with over 220 guests. The purpose of the evening meeting was to question industry players about the potential of the Swiss watch industry to reinvent itself and prepare for the future and was presented under the theme, “The challenge of luxury: is the watchmaking industry visionary?”.
On this occasion, Vontobel and Bilan invited Geoffroy Ader, expert in modern & vintage watches, Patrik Hoffmann, Executive Vice President of WatchBox Switzerland, Georges Kern, CEO of Breitling, Patrick Pruniaux, CEO of Ulysse Nardin and CEO of Girard-Perregeaux, and René Weber, Vontobel Investment Banking analyst. Alexandre Jost, head of Vontobel Wealth Management Lausanne, welcomed the guests and highlighted the three values that are common to banking and traditional watchmaking: sustainability, passion, and performance. “Just like luxury craftsmen, we only do what we excel at,” he said.
“Online sales remain low”
René Weber, Vontobel Investment Banking analyst for the watchmaking sector, presented the outlook for the sector: “The double-digit growth experienced in recent years is behind us,” he said. However, sales are expected to grow at a robust single-digit rate. He pointed out that major watch retailers are expanding through acquisitions, with Bucherer leading the way. However, he noted that online sales still remain low. He also showed that the auction market was largely dominated in the first half of 2018 by Rolex and Patek Philippe, which accounted for 71% of sales.
Podium guests (from left to right): René Weber (Vontobel), Geoffroy Ader (Expert modern and vintage watches), Patrik Hoffmann (WatchBox), Patrick Pruniaux (Ulysse Nardin, Girard-Perregaux), Georges Kern (Breitling), Cristina d’Agostino (Bilan). © Darrin Vanselow
“Taking Breitling to the next level”
Georges Kern, CEO of Breitling, reviewed his first year at the helm of Breitling. He left his position as head of Watchmaking, Marketing, and Digital at the Richemont group after 6 months and after 15 years at the head of IWC. He saw his move to the independent brand Breitling as a unique opportunity to invest and become an entrepreneur. His challenge today is to take Breitling to the next level. He highlighted the brand’s potential, which is well established in major Western markets, but is little known in Asia (except Japan, the traditional Breitling market), especially in China, where millennials are willing to explore less conventional products than their parents. His first step is to integrate distributors to work more directly with retailers.
“Is there still a need for fairs?”
Speaking about Baselworld and SIHH, which the brands are abandoning one after the other, Georges Kern confirmed that Breitling will be at the Basel fair in 2019. However, they are considering their future approach. Previously, people used to come to Basel to pick up prototypes and place orders; today, digital marketing has taken off, and brands are doing more retailing. It is, therefore, important to consider whether these fairs intend to serve as sales or communication platforms, which would benefit from being redesigned as fashion shows or platforms for Apple launches – the brand that, in his opinion, is the best at product launches: “It’s a one-hour ritual, watched live by millions of people.”
The Apple experience
Patrick Pruniaux, CEO of Ulysse Nardin and Girard-Perregaux, previously worked at Apple where he participated in the launch of the Apple Watch. What experience can be transferred to the luxury sector? “Apple is extremely agile, and the company also has a long-term vision. We learn from continuous feedback on products, and reliability, with products being tested and retested. And they make the use of the product an art in itself.” Patrik Hoffmann, executive vice president of the reseller Watchbox, explained that the market for certified second-hand watches is still in its infancy. Until now, customers had no organized market on which to buy, sell, or exchange their watches with reliable and competent professionals. Watchbox guarantees a used watch purchased via its website for 15 months. In his opinion, “Resellers and brands must work together.”
“The Chinese cannot match our luxury watchmaking expertise”
Geoffroy Ader, expert in collector’s watches, is absolute: The Chinese will never be able to replicate Swiss watchmaking know-how. And we cannot compare Apple watches to Swiss luxury watches: “As an analogy, if Apple makes Coca Cola, watchmakers make Château Lafitte. Apple watches are consumed and then discarded to buy another one. But we keep Swiss watches and pass them on from one generation to another.”
Vontobel’s reports on watchmaking
Vontobel’s reports on Swiss watchmaking provide clarification for followers of the Swiss watch industry. They analyze the luxury and watchmaking market in detail and are designed to help investors make the right choices regarding their return on investment.
Our analyst, René Weber, has been observing the Swiss watch industry for more than twenty years and maintains excellent contacts in the field. In addition to providing forecasts, he gathers feedback from many industry players. As a result, he is in a position to assert that his assumptions about the sales of the various brands are completely reliable. Even if he knows that sometimes his figures are not 100% accurate, they are nevertheless a very good estimate for individual brands and provide valuable information to guide investors.