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HODINKEE Podcasts
The Business of Watches [017] Oliver Müller, The Man Behind The Numbers For The Morgan Stanley Swiss Watcher Report
01:08:23
How the key Morgan Stanley report gets made, plus Ben Clymer drops in to talk watch industry news and trends.
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- [00:01]
A
Welcome to the business of Watches, the Hodinkee podcast, where horology meets high finance. And we go behind the scenes to find the financial drivers of the watch industry. I'm your host, Andy Hoffman, this week the man behind an annual report that often sets the tone for the watch industry for the entire year. Oliver Mueller is the founder and principal at Luxe Consult, a Swiss based consultancy that provides the revenue and production estimates for the yearly Morgan Stanley Swiss Watcher report that the whole industry pays attention to and gives detailed insights into what's working in the watch business and what isn't. But first, I'm joined by a very special guest to talk about some of the business news driving the headlines. Ben Clymer needs no introduction, of course. He is the founder of Hodinkee and certainly one of the key drivers and reasons that the United States is now the biggest single country market for Swiss watch exports. Ben, thank you for joining us.
- [01:17]
B
It's a great pleasure. Andy, this is my first time doing this with you.
- [01:21]
A
I'm excited indeed. Welcome to the business of watches. And how are things with you today? What's happening?
- [01:26]
B
Yeah, so I'm at my home office right now working on live lots of stuff in the Hodinkee realm, including magazine, including Watches of Wonders, including some more strategic kind of larger conversations with the powers that be. A very busy day. But I would say the highlight of it is this conversation right here.
- [01:43]
A
Excellent. Good to hear. So, you know, I just saw you just about a week ago in Geneva. We got to hang out a bit, tell the audience what you can about what you were doing in Switzerland and anything that sort of caught your eye or your interest when there.
- [01:58]
B
Sure. So I was in Switzerland, as you mentioned last week, with not only yourself, but a man named Brian Duffsey and a man named David Hurley, who are the CEO and deputy CEO of Watches of Switzerland, respectively, and two of the guys. Why, frankly, I kind of came back to Hodinkee and now work with Watches of Switzerland. These are great guys, established leaders within the space and just kind of wonderful people. So we were there, frankly, to kind of reintroduce Hodinkee to the brands with which we work most closely. So, you know, it's been several years since I was at the helm of Hodinki. It's been, frankly, even longer since I was running such things as limited editions. And having real touch on the editorial team now, of course, with James Stacy. You know, he and I work together every single day on the tone, the texture, and frankly, the fiber of all that we do on the edit team. So this was really just a way to say, hey, you know, here we are, I'm back, let's see what we can do together. Did get a lot of interesting insight into how the larger brands are kind of thinking about the market, as Alexa consult report says. I mean, we see a lot of the big brands getting bigger, small brands getting smaller, and you know, a lot of talk about ASP being average selling price for those who don't know the acronym acronym rather, you know, people want to go high end. And I'm not surprised by that. I've said here, not necessarily on the business of Watches podcast, but on Hipping Q Radio that, you know, when I first got into Watches, it was a very common thing to see somebody start off with a Seiko or whatever and then a Tissot and then a Longines, then a Tag Heuer, then an Omega, then a Rolex, then a whatever, Jaeger, Patek, et cetera. Now you really see people, there really was a path and it was very clear. And with the exception of, you know, runaway hit with the PRX that Tissot has, there's really not a lot of hype around Watches. Below, we'll say 4,000 Swiss francs or $5,000. And that has changed markedly. And I think if you look at the ASP of Rolex, Patek, ap, you know, the brands that kind of are, you know, on the tips of everyone's tongue every day, you'll see that the pricing of these things have gone up significantly. So a lot of talk about asp, a lot of talk about the price of gold, which is, you know, becoming a real issue. We'll say absolutely. A lot of talk about the weakness of, of the US dollar on our
- [04:12]
A
side or the strength of the Swiss franc.
- [04:14]
B
You can look at it either way. I tend to think of it and perhaps this might reveal my political leaning, but I view this as the weakness of the US dollar, which has become a real issue for, for many of us. And I was able to see one or two great independent brands while I was over there, you know, doing real work. And, and you know, I would get a price of X in Swiss franc and I'd say, okay, like that, that's not so bad. And then I would run the math on what that is in USD. Then you have the, the, the 15%, you know, landed tariff from, from, from all imports from, from Switzerland.
- [04:42]
A
Yep.
- [04:43]
B
And you're, you're talking about just an enormous delta between, you know, what you think of it as, as kind of a One to one, you know, kind of a parity price with Switzerland, which is kind of what I was used to, I guess, when I was, when I was, you know, in Switzerland all the time. So, yeah, again, in summary, a lot of ASP talk, a lot of gold talking. You know, gold is now more costly than platinum. So platinum offers a lot of value and I expect to see a lot of platinum watches that watch some wonders this year because of it. But, you know, overall, the strong get stronger and the weak get weaker.
- [05:12]
A
Indeed. I mean, yeah, we saw the Swiss watch exports data come out today for January 1st months of the year, and indeed we saw a big drop in precious metal and that means basically gold watches. So, yeah, I mean, the industry is certainly feeling it and it's reacting now. You know, we're going to be talking before we throw it to that interview with Oliver Mueller, I mean, you've had at least a bit of a quick look at the Morgan Stanley luxe consult report. I mean, we're certainly seeing Rolex and a few of the other big brands continue to dominate the top of those rankings. I mean, basically, Rolex, Cartier, Audemars, Piguet and Patek, they're responsible for about 55% of total industry sales. You've had a look at the report. Anything that jumped out to you? What do you think we should make of this and what does it tell us about sort of where we are?
- [06:05]
B
Yeah, on a very personal level, I saw a stat that is quite remarkable just because I've never seen it before and that's maybe on, says more about me than anyone else, which is that 88% of AP sales comes from the Royal Oak, which again, is just a number I've never heard before. And that is remarkable. I mean, we, we always knew that, that the Royal Oak was, was, you know, the, the key driver of AP's Ascent, so to speak. But to see it so plainly like that is really quite remarkable. And, and for sure, it has to be the most valuable model in all watches. There's just no way there's anything that comes close. I would think so. That's quite remarkable. That is to say, I mean, AP has reported growth over the last year. So, you know, I think they reported
- [06:42]
A
growth when most others did not. They did pretty well last year.
- [06:47]
B
They did. And I think it's so funny because, look, I mean, this report is not perfect. And I would say that to anybody's face involved with it, like, nothing is perfect in life. It's the best thing we have. But, you know, I Think the consensus, at least in the US is that AP is down over the past year or two. And according to this, and according to, you know, Hilaria's own results that she mentioned with somebody recently, they're actually up double digits year over year by sales. So I think, you know, it's always interesting to kind of gut check these reports with what you hear directly from the brands and then also what you see in the market, because I think most of us would have said AP is down double digits just based on collector sentiment alone, but that is clearly not the case. So I think, you know, it's those moments, elements, that really make you kind of ponder the entire idea of what we do, I suppose. But the report is not too surprising. Obviously, the Rolex dominance is clear. Their ascent over the past 10 years or so is just. It's remarkable. I mean, it can't be kind of expressed in just one sentence on a podcast, I think how dominant Rolex has become vis a vis Omega, which is obviously still a huge brand and a great brand. And as far as I know, that they're still up significantly in the US market, I think probably down elsewhere. But I think the Rolex Omega dynamic that we grew up with, if that makes any sense, or at least I
- [08:07]
C
grew up with, has changed quite a bit.
- [08:11]
B
Where Rolex is really now, leaps and bounds ahead.
- [08:14]
A
Indeed. And they're continuing to take a bit of market share as that ASP for them goes up to. I think the estimate from Morgan Stanley is 14,000 Swiss francs. And certainly one of the brands that that's coming out of is Omega and a lot of other Swatch brands. But indeed, not a lot of positive growth for the entire industry. But some interesting sort of surprises. You know, we see some names moving up the list. Some of the independents, H. Moser, for example, Christopher Ward, I think, made its debut, you know, on the list, but as you say, certainly underscores that polarization and that those shifts in ASP that we've seen.
- [09:04]
B
Yeah. And I think with great respect to our looming guest here, as kind of an independent observer or pundit of this space, I don't put a ton of stock in reports such as this when it comes to private brands, because you don't actually know anything. And there's many different ways to kind of. And I think even the Swiss would admit this. There's a lot of kind of jockeying that happens behind the scenes to present things a lot stronger than they may be. I mean, have you ever heard a brand executive actually tell you that Things are tough, you know, even in the worst of times with the worst brands, it never happens. Right.
- [09:38]
A
It's pretty rare.
- [09:38]
B
It's pretty rare. So I would say with this report and with any report for private companies, you know, take things with a grain of salt. It is absolutely the best thing that exists within the space, no question about it. But it's not a perfect thing. And I think with the Rolex numbers and you know, Nick Hayek himself, you know, kind of brought some, some criticism against these numbers about Swatch in the past. Certain take everything with a grain of salt. But again, I think it's still fascinating and it's amazing to have some directional insight into a lot of how these brands are doing. The other thing I have to say before you kind of kick me off this thing is the big story, I think at scale, and we see this with watches in Switzerland, and I feel it every single day, is the strength of Cartier just an unbelievable growth story in the watch category. Always strong with jewelry, always strong with women's watches. Now we see incredible strength with men's watches. And I'm not just talking about like the Hodinkee set prevey, you know, monopusher, high end stuff. I'm talking about four to $5,000 stainless steel Santos and tanks and you know, kind of run of the mill stuff that is, not to be frank, incredibly exciting to somebody such as myself. But is, is just seemingly immensely exciting at like gross commercial, you know, scale. Right. I mean like large commercial scale. And what Cartier has been able to do under, under Cyril and now under Louis is extraordinary and I think, you know, a model for what I think many brands to aspire to. And I will say, you know, the chatter with all these brand executives and most of these were CEOs or at least C level execs, was, you know, who do you see really doing stuff? Right. And you know, beyond Rolex, which we can all agree is kind of perpetually the answer, it has to be Cartier. And I think, you know, some of the sports, the other brands that we met that, that kind of specialize in sports watches were shocked to hear that Cartier steel men's watches were selling as well as they are. And you know, I can say that they're, they're, they're just on fire in a way that, that most people would not believe.
- [11:37]
A
Yeah, I mean, you know, if there, the report certainly lays bare that that Cartier has solidified that number two position, if it was, has ever been in doubt for the past three, you know, two or three years and indeed, you know, now responsible for something like, you know, 7 or 8% of the market. They are really strong. And indeed the executive change there hasn't seemed to have been an issue. The momentum continues.
- [12:05]
B
I would say quite the opposite. And you know, I know Cyril and I know Louis, of course, just, just as you do. I would say quite the opposite. I mean, you know, Louis did such a masterful job with Vacheron and if you think about where Vacheron was when he joined and then where they are today, right. I mean, they're the largest brand within the swm, which is the watchmaking division of Richemont. It is an enormous brand now, an enormous commercial success. And that was just simply not the case 2017 or whatever. It was maybe 16 when he took over. So I think quite the opposite of having any challenges with Louis. I think we've already seen a really thoughtful and commercially oriented but also very mindful tact on Cardi, which is like, so they want to do more stuff with commercial partners, they want to open more stores, they want to do that. They killed the NSO program, which I think we can all agree is probably, probably the right thing for brand protection. And those, those two things kind of, in many ways kind of run counter. But I think to me that is exactly what one should be doing. Like Cartier is a large scale brand. You have these really special things. You want to keep them special. So like stop, you know, maybe stop doing all the custom dial work, et cetera, and begin to focus on product that resonates at scale at the high end as well. So I'm extremely bullish on Cartier. Again, we see within Watch Switzerland, I hear about it every day from my friends and, you know, kind of family in the area, so to speak. And to see it in a report such as this and also within the Richmond earnings reports, I mean, Cartier is just a force to be reckoned with right now and it's quite a story. It really is.
- [13:35]
A
Absolutely. Well, okay then, Ben, it's always a treat to get your take on things. Thank you so much for being here. So here's our conversation with Oliver Mueller, the principal and founder of luxconsult. Great, let's get into it, Oliver, because first of all, let's talk about the Swiss Watcher report. What it is, how long it's been around and you know, what you do, you're someone who's been around the industry, the watch industry here in Switzerland for more than a couple of decades now, I guess. What is the Morgan Stanley Swiss Watcher report. And what do you think aiming to do with it every year?
- [14:26]
C
Okay, so first of all, we started in 2018 on, based on the 2017 figure. So it's, it has been the 9th annual Swiss Watcher this year.
- [14:38]
A
Amazing.
- [14:39]
C
Yeah, yeah. And it takes time. Of course, at the beginning people were looking at it and, you know, questioning a little bit where the figures are coming from, how we make all those things up, how with what we cook, if it's only water or if we have a magic trick. So yes, I shall jump right into it. So the base idea at the people of Morgan Stanley who then reached out to me for one reason, in fact. Yeah, that's another maybe that's a fun fact. They tried in 2017 to start this and they soon came to the conclusion that it's a very dark black box, the whole Swiss watch industry and that they needed maybe someone from inside to help them to open up doors and gather intel to build up that report. And the first decision was that we would publish numbers which are comparable, Apple with Apple and peers with peers, rather than then comparing numbers which are arguably not necessarily comparable. And I'll explain why. Another thing is that report is made for the clients of the bank. Every year I get requests by people from the industry telling me, yes, you know, it's an industry report. I always tell them, yes, it's an industry report, but it's made by a financial institution, Morgan Stanley. And it's made because the clients of Morgan Stanley are investing in listed companies which are lvmh, Richemont, Swatch Group mainly. And in the Swiss watch industry, the privately held companies, the privately held brands are overperforming the market and are very dominant in terms of market shares. That's why we include them and that's why all the industry thinks that that report is being made for them. But it's not, it's made for the financial community. And that's why that angle, you know, I'm reading sometimes on social media people saying, you know, they do this, they do that, it's not useful, et cetera. Guys out there, it is, it's not my report, it's Morgan Stanley's report for their clients.
- [17:13]
A
I mean, it's a financial analysis report. This is what a typical analyst report looks like. This is obviously extremely in depth and it's rare to do in the Swiss watch industry, which is a lot of privately held brands. And obviously even within those publicly traded groups, generally the brand volumes and performance aren't broken out. So there's a lot of information gathering, estimations being done. Yeah, like I think, you know, people would like to know, how do you come up with the production and revenue estimates that we see? What is the process? How much can you show us?
- [17:54]
C
I will go a little bit into the kitchen and tell you what we do there. And the thing is, basically we decided to compare what's comparable. And what is comparable are market shares on retail value. So everyone is at the same level. Why? Because you have a company like Richard Mille selling 100% direct to consumer through their own boutiques, 42 in the world. And then you have a brand like let's say Rolex, which before they bought bouchereur it was 100% wholesale. So their sales were made primarily through subsidiaries and then from the subsidiaries, let's say Rolex USA to the retailers of Rolex. So it's not necessarily comparable. If at Rolex you do 11 billion at Consolidated level, meaning at brand level, that translates in about 16 billion sales at retail level. Whereas if you take Richard Mille For 2025, it's 1.75 billion Swiss sales. But those sales are all at retail value because as I just said, it's all made and estimated at retail level, as you say.
- [19:20]
A
Yeah, they capture all that margin.
- [19:21]
C
They capture the whole sales and the margin. Exactly. Yes, precisely. And some people think that it's an Excel sheet made of four columns. It's not. It's a lot of work. We try to be as precise as possible. How do we gather the information? So basically, as you rightfully said, even if you're listed, you are Swatch Group, LVMH or Richemont. You don't break down the numbers at brand level because you don't have to do that. You publish consolidated numbers and at best those listed groups, they share information which are at business units level. So you say we make that much on leather goods, we do that much on jewelry and watches, but you don't break it down at the level of Cartier or at the level of Louis Vuitton, Adele vmh. So that's our work is that we talk to those groups, that those information are rather gathered by my colleagues at Morgan, at Stanley, who do an excellent work. And on the privately side, I have, as you said in the introduction, I have three decades of experience in that lovely watch industry. A lot of input coming in upstream, downstream. I have a lot of information coming from suppliers where I can recheck the volumes if they made sense. I have a lot of information from the markets et Cetera, et cetera. And then all this is being aggregated, rechecked, like you do when you are a journalist. You have one source, two sources, three sources, and you check if those numbers that you're being given make sense. Year after year we have more and more people becoming proactive, meaning they turn towards us even before it's being published and they give us some insights on how the business is going, etc, etc. The intelligent people out there have understood that it's better to do it before the publishing than to come back and then try, you know, to argue that the numbers were wrong or whatever. Or whatever.
- [21:56]
A
And so you're basically working sources and sources of information across the Swiss industry, whether it be from the watchmakers themselves, suppliers, buyers, retailers. I mean, it's, you're getting the information from a bunch of different places in order to create the estimates and you're sort of aggregating that all together. And that's how you come up with the numbers. And as you say, some participants are more proactive and, and cooperative than others. Is that the way to think about it?
- [22:31]
C
That's perfectly, that's perfectly told. Yes. You are perfect. You, you, you broke it down with all what I said before. Yes, that, that's the point. And then there are, you know, company cultures which are more inclined to share information. You know, basically in this industry, everyone would like to have the numbers of the competitor but not give his own numbers. That's the point. And then year after year they realize that it's quite a useful tool to just pick up that. Of course you have the people saying all the numbers don't make sense anyways, that is what they are telling the media. And then off the record they tell you that the numbers are very near the truth. And sometimes I get even some compliments. Of course not in public for obvious reasons, but there are people telling us that the numbers are very accurate.
- [23:38]
A
Let's address that, you know, before we jump into the specifics of the findings of the report this year. I mean, obviously Swatch Group has at times raised criticisms and questioned the numbers and said they are inaccurate. What's your, you know, how should we think about those comments that we hear from Nick Hayek Jr. And others?
- [24:01]
C
So first of all, Swatch Group as a listed company, has to publish consolidated numbers. So what I'm always trying to tell people is let's take the assumption that Mr. Oliver Mueller is 100% wrong on SWAT Group, which we are definitely not. And I'm not going to explain why I am so confident with the numbers that I'm giving to Morgan Stanley. But let's take that assumption that at the end of the day the consolidated figure of Swartz Group are being published and those figures are not good. And I have a hard time understanding that people, you know, looking at the same numbers as I do do, can buy into the stories of Mr. Hayek telling you, yes, last year we did 25 millions, but you saw the last quarter was extraordinary. So this year we are going to make 5 to 600 millions. By the way, every year comes up with the same stories saying that they are losing XY percentage due to headwinds which are for instance FX rates. Because when you produce in Switzerland and you sell somewhere else, then of course if the Swiss franc gets strong, then you are disadvantaged. But so are Audemars, Piguet, Patek, Rolex and all the competitors of the Swatch Group. So it's not a good argument to say why you're performing badly. And unfortunately for the Swatch Group, the problem is the structural problem. Out of the 16 brands they own and manage, at least they try hard to manage them. Many of them are positioned in mid price segment. And as we all know, and that's the main key takeaway since 2018, since the first Morgan Stanley report, is that the whole market is getting polarized in the high end and premiumized. Meaning that when you are in the high end, in the upper side of the brand pyramid of the market pyramid, then you are on the safe side, at least for some of the players. And if you are in the mid price tier, then it's very complicated. And some of their brands are doing a very good work at trying to survive there. I'm not here to criticize everything the Swatch Group does, but obviously as a consolidated group they have an issue. And the other main issue they have is that they have a oversized manufacturing production capacities which in Mr. Hayek's opinion, and he is the manager, he's not the main owner, but he is one of the shareholders and he has decided that the main focus of their group strategy is to push watches towards the brand. And it's not the market pulling. And I have learned once in my life that it's better to listen to the market and what the market wants rather than telling the market what it should want. And that's a real issue at Swatch Group. And hence they are losing year after year market share. And I mean if you take the most important brand within the Swatch Group, which is Omega, making about one third of the sales and 70% of the gross margin, that's our estimate, then you have a real issue that you're over dependent on one brand. And if that brand is competing against someone called Rolex and you see that Rolex is more than four times your main brand and that it has grown to an over dominant market player, I'm talking about Rolex, then at Omega of course you have a hard time competing against your main competitors.
- [28:16]
A
That certainly makes sense. And indeed Swash Group has taken a different tack and a different approach to the current challenges in the market. And they've kept that production capacity operating and indeed it is a differentiator from their competitors. And so, you know, let's talk about the findings in general from the report. Obviously you know, as we know from Swiss watch exports, the market contracted a bit in 2025 for the second year in a row. But I guess, you know, the, the overarching theme here is, is as you mentioned, that you know, the, the big four brands, namely Rolex, Audemars, Piguet, Patek and Cartier, they are really dominating and consolidating that leading performance. Talk about, you know, how that bifurcation, that polarization that, that, that we find,
- [29:14]
C
I forgot to mention before in my sources and you do rightfully you mention the export statistics because those are very useful and kudos to the Swiss Federation of the Swiss Watch Industry who do an excellent work at publishing those numbers and preparing those numbers month after month. So yes, basically we have a very strong polarization and we estimate there are about 450 really active Swiss made watch brands. And out of those 450, there are only four which are making up 55% of the market shares. And those are, and don't be surprised because those are in the ranking of the market shares. And those are Rolex, number one, Cartier, Patek Philippe and Omega, which is number four in terms of market share and number five in terms of sales. So only four brands are making more than 50% of the whole sales of the Swiss watch industry. And then you have a group that we like to call the Big four, which are made up of Rolex, Audemars, Piguet, Patek Philippe and Richard Mille. They capture together an aggregated 49%. And that's even more impressive because when we started the report with the 2017 figures, those four brands were capturing barely 37, 36.7, but let's say 37. And now they are almost at half the whole market value. So that's a very, very impressive polarization of the market. And as you already understood this is in the high end. You have as the four biggest captures of market shares. You have Cartier and Omega, which are rather in the premium level. And those are quite exceptional. And what we already also have understood is that some brands are largely overperforming the market. And the one exception to the rule or the findings that we are making since 2018, saying that privately held brands are overperforming because they are long term thinking because it's family business and when it's family business you're very careful not to push too hard when things go well, et cetera. So the one exception being Cartier owned by Richemont listed company and Cartier does an extraordinary work at keeping everything in a balance, still an accessible price, etc.
- [32:12]
B
Etc.
- [32:12]
C
But maybe we deep dive later on that. So polarization. A few brands are capturing major part of the market. Very few brands manage to scale their business. That's another thing which is very important. And there are two exceptions to this which are in our top 50 which are two privately held brands, Francois Paul Journe and H. Moser, they managed to grow to above the 100 million Swiss sales threshold. They are at 36 and 37th position of our ranking. And kudos to them because they kept their values. Especially not that I'm less full of praise for my friends at Moser, but Francois Paul Journe, it's really incredible because it's a very niche positioning of a brand and still that brand managed to go over 100 million.
- [33:15]
A
Yeah, it's an extraordinary achievement. And we see that sort of shift in the perception of Francois Parjorn, a watchmaker who's been around for a while and makes only about 900 mechanical watches a year according to estimates. And then there's the elegant quartz section of that. But indeed, I mean, you know, what has been the differentiator for those, you know, privately held brands like Moser and FP Journe who have managed to sort of buck that trend and continue to gain sort of market share. What's made the difference for them, do you think?
- [33:57]
C
I'll answer your question, but first I should have talked about Richard Mille because it's also privately held and even it the success story of the last 20 something years. This year they will be having their 25th anniversary. It was launched in 2001 and before Richard Mille I should have talked about Frank Muller. But let's go back to Francois Paul and H. Moser. I think Francois Paul Journin, unlike what some people think they still look at him like an artisan watchmaker, which he is, of course, obviously, very strong personality, very rare in the media, et cetera, et cetera. But the whole brand was built up like a real brand, coherent with the narrative, which fits the purpose, with the color codes. All what I'm saying might sound, you know, like a little bit. Yeah, so what? No, it's a real brand built up with the same values over time, still keeping a very strong community. One of the very strong points at Moser and Francois Paul Jorn is that those two brands have a very, very strong community. It's all almost like, you know, a religion. If you like Francois Paul Jones, you love him, and so his customers are very loyal. They are buying anything which comes up, etc. The prices on the secondary market are very high, so the value retention on a FP Journe is very good. So it's a good investment. Besides being an extraordinary watch, very attractive brand, etc. Etc. The value retention on the long term is there. Moser, same thing on the community side. The two brothers, the two Mellon brothers. Edouard in the first place, as the CEO, does a tremendous job at entertaining people, et cetera. That means a lot of travels, a lot of time spent with the people. And that creates the magic bond creating that relationship. Yeah, yeah. It's a special relationship, and that's how it works. Why would you buy a Moser rather than a Patek Philippines, where you get the status, the recognition, etc. Etc. Because there is maybe something more special. It's rare. It's below 4,000 watches a year. Patek Philippe is now at 72,000 watches. And if we jump back to Richard mille, same thing. Mr. Mille himself was. Now he's retired, happy, retired and wealthy. But before that, he was traveling around. And he's such a good storyteller. I remember hearing what he was saying in 2007 when he was opening up a boutique in Malaysia. My wife told me, go and listen to Mr. Mille because he's one of the best storytellers in your industry. And I went there, I sat down and I listened to Mr. Mille. I said, this guy is good. Another one who is very good and also in our top 50 and also a niche brand, but managing to grow year after year is MB and F with Max Busser, another extraordinary storyteller. Great product, great brand concept. He always told me at the beginning that it was not a brand, MB&F, it was a lab. But, you know, after three, four years, once I called him and I said, max now you became a brand, isn't it? And he said yes, that now we are here for the long term. And also that I'm very full of praise for them.
- [37:57]
A
Indeed. No, it's quite interesting. I mean, as you say, H. Moser, F.P. journe Around 105 million Swiss francs per year. And then we have also a relatively young brand like Richard Mille at 1.7 billion. They are part of that, that billionaires club that you talked about and that you've often highlighted in the report. And then obviously we saw Longines drop out of that billionaires club this year. And indeed there are. You know, while the overarching theme is that polarization, that bifurcation, that move upscale, there are some brands in the approachably priced segment or the smaller production segment that, that seem to be doing okay. I mean we see Vraymond Weil on the list at about 79 million Swiss francs in revenue, making about 80,000 watches per year. You estimate that they were up this year in terms of, in terms of revenue. And so, you know, does this show that there are some brands in that lower price segment that can still do well in this challenging environment where everything seems to be moving upscale?
- [39:13]
C
Absolutely, it's a good point. You're bringing up Remonville, Frederic Constant, Christopher Ward, they joined the ranking this year. It's the proof that there is still a market out there. Everybody wants to move up. Everyone tells you, you know, there is only a living up there in the skies where you sell watches at more than 50 or 100,000. No, there is still there are buyers. And even for institutional brands in those market segments, there are some performing quite well. Raymondville had a great time until 15, 20 years ago and then the brand disappeared a little bit from the radar. And a few years ago they came back with a good concept of products based on Neo vintage where you have inspiration of watches from the 1940s to the 1960s.
- [40:15]
A
With the Millesim.
- [40:16]
C
Yeah, the Millesim, exactly. Yeah. That's a very, very attractive product at an accessible price. And the extraordinary thing, and I was proven wrong once more 10 years ago, a little bit more, the smartwatches came up, et cetera. And I had strong doubts that conventional watches would ever survive against this competition. And of course it inflicted quite some damages on the entry level and lower mid price segment when Apple came in and launched their watch. But guess what, we are back to conventional watches. Gen Z is finding this extremely cool to have mechanical watches, even more so if you have to wind up your movement every day. I have two sons, 17 and 21. They are wearing mechanical watches. Of course, we are not quite objective with the dad they have. They can't wear any Apple watch.
- [41:24]
A
Sure.
- [41:24]
C
But overall there is an interest coming up for watches which are taking the codes of serious watchmaking and putting them at the accessible level. And that opens up the door for brands like crememill, for Frederic Constant, for Christopher Ward and others not appearing on that top 50, which are rather micro brands. And they do an extraordinary work at recruiting the clients of tomorrow, the Gen Z and others.
- [42:00]
A
Yes. And it's a competitive space and it's a space that's certainly under pressure. But I think the list shows, and in terms of those increases, it shows that some can thrive and do well as long as they have the right products and make those connections with customers. There's another interesting sort of standout or anomaly on the list which was Jacob and Company, which is a, you know, kind of a polarizing brand, but it was among those that grew the fastest in terms of revenue and sales for this year. What talk about Jacob and Company and what happened there with, with that brand.
- [42:45]
C
It's. It's funny that you're using the term polarizing. I think it's the most appropriate term not only for the brand, but for the person making the brand. Mr. Jacob, he's a larger than life figure, but I love what he does. Why? Because it's a brand which really invented a brand territory. Jacob, at one point he was at La Fabrique du Temps. He was a client of La Fabrique du Temps, those guys R and D Atelier, making movements for third parties. And now they are owned by Louis Vuitton. But back in those days when they were independent, Mr. Jacob was standing there and he was telling my two friends, Michel Navas and Enrico Barbizzzini, basically, I want to make choo choo trains for the hand rest. And they looked at him and they thought, oh, this is quite a special guy. But he was right. Mr. Jacob, he created his very own, very recognizable design language and concept of movements with extraordinary complications. And that's why he's so successful. The prices are tremendously high, just like at Richard Mille. But he manages to recruit new customers every day. Today, the watch part, the watch business unit is making more sales than the jewelry because in the first place, Mr. Jacob was coming from the jewelry business.
- [44:26]
A
Jacob the jeweler.
- [44:27]
C
Jacob the jeweler, exactly. And Jacob managed to create an own brand territory. As you may know apart when I'm writing the Morgan Stanley report, I do a little bit of, of consulting, creating brands and creating products, et cetera, et cetera. And I always tell my clients, you have somewhere, you have to stand out, you have to create your own world, not only copy paste the narrative of an institutional brand and trying to be compared with whomever here. It's very strong what Jacob does because he's in his own league. He does things with the Bugatti watch, which is just incredible. Then he does a watch for $20 million, etc. Etc. And yes, his person in the brand's narrative is very important, but as you rightfully said, it's also polarizing. But when you are in that market segment, you don't need to sell 100,000 watches a year, so you don't need to please everyone. So that's. Yes, that's an outlier. It was the second biggest growing, but let's say the fastest growing from last year's ranking. So they were at plus 14% year on year. The fastest growing was Christopher Ward which joined this year. They managed to produce quite an impressive growth, but they just joined. So yes, Jacob and anomaly, that's the good words to qualify what the brand is about.
- [46:09]
A
It's interesting though, those two brands are very different. Christopher Ward and Jacob and company. They couldn't be more different in many ways. Yeah, talk a bit about Christopher Ward, obviously a British based brand that makes Swiss made watches in bien. Yeah, they've entered the chat, as it were, at number 48, around 51 million if it's translated to Swiss francs in sales per year. I mean, what has that brand done from your perspective in order to have increased sales this year and be among the top 50?
- [46:46]
C
Christopher Ward is very interesting because I'll be a little bit critical on one part and then full of praise for the other part. Critical because the narrative of the brand is not very outstanding to say the least, but the product is, the product is very interesting, very nice product at a very accessible price. And the other magic trick they do, 100% D2C direct to consumer. So the team of Christopher Ward is traveling all the time, going to get togethers, meeting their clients, explaining why this, why that, etc. That's the magic trick. And again, if I were to predict 10 years ago what would happen with those get togethers, I would probably have told you, you know those exhibitions and get togethers, it's old stuff. The young guys go digital and then they took digitally and the exchange and one day you're being sent the watch to your home, but no, nothing Changed. It's just like 40 years ago. People want to meet, they meet with Christopher Ward, with the people and obviously they are doing a great job at explaining what they do, why they do it, etc, etc. And they manage to sell as of today, 100% of their watches direct to consumer, which allows you of course to capture the whole margin. But on the other hand, you have to invest a lot of time to go to those small exhibitions around the world, etc. But they're successful for that. And that's another proof that you can be successful on those price levels. But you have to come up with something which differentiates you on the product that Christopher Ward. I know some people are a little bit critical, but the product is strong, it's a good value for money. Proposition for sure.
- [48:50]
A
And I wanted to ask you specifically about Tudor. We saw Tudor move up a bit in the rankings and I guess sales increased by I think about 2% you're saying in 2025. But I believe that. Did you revise the results from 2024? Just talk a bit about that. And yeah, they're now gaining I think 30 basis points of market share. Yeah.
- [49:17]
C
Yes, Tudor, we had. That's also in our methodology that we explain that we can revise figures year on year. That's why, you know, I don't like journalists to take old prints of the report because we, we do it but we don't republish it. So if we have good intel or good motivation to think that, that I was wrong. Because if there is anything wrong in the numbers, it's me. I am the person to blame. And Tudor, my estimations were too low for 2024, but they were still. It's my estimate again, they were 17% down. They came back this year with growth. What? From my information, TUDOR performs very well, for example, in the US and we all know that for the last few years most important market bringing the growth for the luxury industry overall and for the Swiss watch industry. And TUDOR is strong there. They are in a very competitive environment. Do they take advantage because they are owned by Rolex? Yes, of course it's helpful. Of course it's helpful. If you go to third party retailers and your Tudor and your dad comes, which is Rolex and says, you know, we also appreciate a lot that you carry Tudor. Then you have a hard time telling the guy, I keep Rolex, but I don't take Tudor. That's of course helping a lot. But apart from that they were very China dependent, very, very much. Twenty years ago they would sell about 90% of their watches to China. And the product collection was reflecting that, that now they came up with the Black Bay, the Pelagos, et cetera, which are more, much more attractive for young buyers. And if you look at the overall collection of Tudor you see that they have substantially reduced the other product lines and they are slowly but surely focusing on Pelagos, Black Bay and yeah, it's a good product, it's very well priced. In the mid price segment they are competing against people like Breitling, like Tag Heuer, but also Omega and they do a good job. Yes, I believe that they will further gain market shares in the coming years.
- [51:51]
A
Yeah, no, it's interesting. Yeah. I mean basically reducing some of that exposure to China which has been obviously a very challenging market for all the Swiss brands. And indeed interesting that the report will revise previous numbers to update your more accurate understanding of the situation. Now obviously, yeah, we, you know, we're focusing on these independent, either family owned or otherwise brands that are not part of the big groups. Richemont, Swatch and lvmh. But there have been, you know, we talked about Cartier which has obviously continued to gain market share and is now the second biggest brand in terms of, you know, the watch brand in terms of revenue and sales. But there's been, you know, some other marks within Richemont have managed to grow sales last year as well. IWC and Jaeger Lecoultre and that sort of, you know, goes against the, the, the overarching narrative of brands within the big group struggling. What do you think they did to stand out and to grow sales?
- [53:03]
C
Yeah, IWC declined year after year after year until obviously now they have reversed that negative Trend and finally 2025 they got back into growth. I think at IWC they have refocused their product collection. They are maybe a little bit more careful about the prices, et cetera because that was also an. When you're competing against such strong brands as Breitling and Omega, you have to be very careful. Jaeger Lecoultre, it's a little bit another story. One of my favorite brands by the way because it's an extraordinary product and verticalized manufacturer since ever One of the most iconic products, the reverso, a new CEO Jerome Lambert, who knew the brand inside out because he knows the brand pretty well. Yeah, pretty well, yeah, yeah, indeed. And Jerome Lambert, you could also see that the latest product launches were very well positioned in terms of prices because the issue there again the people before Mr. Lambert, they thought I don't Know why all of a sudden they could just, you know, a little bit increase and increase to catch up the downturn on volumes, they would increase the prices, et cetera. And all of a sudden they were pushed out of the markets and to start with by Cartier. I dare to say if you go into a shop and you have two ladies watches on one side you have the magic of Cartier and on the other one, the Jaeger Lecoultre, one watch is at 3,000 something Swiss and the other is at 6,000 Swiss, the one from Jaeger. I dare to Predict that probably 99% of the cases the person will walk out of the shop with the Cartier watch. So that was an issue that Mr. Lambert is slowly but surely addressing. They have to rework. They have the Reverso, which is the most iconic, one of the most iconic products overall in our industry. And on the other hand they have the master line which they need to regenerate, make it more attractive for younger people. I love those watches, but I'm an old guy so I shouldn't be the focus.
- [55:30]
A
Yeah, no, no, indeed, but certainly, yeah. I mean, you know that things are shifting at both those brands and it's interesting to see them doing well within that corporate structure, within Richemont, improving that they can do so. I mean, you know, but we still do see such a situation of have and have nots. I mean, you talk about the industry profit pool basically for the Swiss watch industry, 7.9 billion, almost 8 billion francs. But the top four brands are capturing about 76% of that. You know, where you know, and that's being Rolex, Patek Philippe, Audemars Piguet and Richard Mille. You know, where is this all going? How is this going to shake out, do you think? You know, over the next few years, what are we going to see in terms of what this industry, you know, what these numbers tell us about what this industry is going to look like in a few years. Do we think so?
- [56:34]
C
There is a virtuous dynamic and that's very basic what I'm going to say, that the better you perform, the more margin you get, the more profitable you are, the more money you can reinvest in your branding and so on and so on. We have seen it with Audemars Piguet, we see it with Rolex for decades. My prediction is that those brands will get stronger and stronger and it seems to be after nine, Morgan Stanley reports that those trends are unchanged. There are too many brands out there. I know I shock people when I'm saying this every time people tell me, yeah, but Mr. Muller, it's extraordinary, all those new micro brands coming up, et cetera, et cetera. No, there are two way too many brands out there. There are people, some are meaningful, some are not. And so the long term will be a concentration on less brands, just as it happened in other industry, in the car industry to start with, when I was a small kid, there were still brands around which today have disappeared or have been integrated into others. And sometimes just like as in the car industry, in the watch industry, you have a Richard Mille coming up and finding its place within the industry. So a lot less brands, stronger brands, brands over performing and around those blockbusters brands, you will have those niche positioning with artisan watchmakers, with micro brands at the more accessible level. We talked about Christopher Ward or Raymond. Well, or Frederic Constant. They have their place in there because they serve a purpose and obviously they manage to get the differentiation. But the main trends will remain on the people overperforming the market. And you have named them. And apart from them, we have the others exceptions as the Cartiers, we should mention also Vacheron Constantin, which is a little bit less performing the last two years, but still an extraordinary brand which will go back to growth probably in the near future.
- [59:06]
A
Interesting. And yeah, and I mean obviously we've seen what may be the first of more to come in Richemont deciding to strike a deal to sell Bohemin Mercier and you and I talked about that when it happened. From your perspective, do we think we're going to see more brands being reshuffled or leaving corporate groups as part of this shakeout?
- [59:32]
C
Definitely. I'm not going to say that I can look into the future, but I was expecting Beaume Mercier to be deconsolidated, sold by Richemont. I think it's a good decision. It's not because Baume Mercier is not a good brand. It's an excellent brand, but it was a misfit with the overall brand's portfolio at Richemont of a group which is focused on luxury. Bourmet Mercier, it's mid range and I think it will do a lot better with the new owners. I wish it does, at least. And then we have other brands within the Richemont brand portfolio, what they call the specialist watchmakers. There were eight, now there are seven left because Baume Mercier will leave. I think Roger Dubuis is definitely not fitting. It's not a brand. That's my personal opinion. It's not A brand which has the potential to grow substantially, it would be well off with a private owner that can be a private equity fund or private owners, they will do a much better job. And then we, you know, can talk about Panerai. Panerai doesn't perform as it should and so on. So yes, the only one I don't agree with, I know this is rumor which came up strongly the last few weeks, which is Jaeger LeCoultre. I don't think that would be a good decision and I think it's not more than a rumor because Jaeger Lecoultre is a integrated manufacturer. It's an important part of the whole watch strategy. Okay. The brand is not performing like it should but Mr. Lambert is addressing currently that part and I don't think they will get rid of that. And would other competing groups we well advised to do the same thing, of course. And you can figure out at whom I'm looking right now. Swatch Group would be well advised with 16 brands to maybe consider selling a few of them and refocusing the whole whole thing. At LVMH we could think also of maybe one brand which doesn't make sense in their long term strategy. I know it's not nice to say because again it's a nice brand called Zenith, but does Zenith has all it takes to come back to the position that people dream of? Because, you know, because projecting a brand where it never was is a collector's thing. But when you are back into business life you have to look at figures and you have to look at market shares and to figure out does it make any sense that LVMH keeps investing money on that brand? I'm not so sure.
- [62:40]
A
Yes, indeed. And LVMH has said very publicly, as had Zenith, that they are not for sale. And obviously there's been a bit of a shift in strategy at Zenith. Whereas obviously to continue to enhance and produce the brand, but they're also producing more movements for other brands within the LVMH group. So let's end it with Rolex breaking the 11 billion franc sales figure for the first time this year. Basically a third market share. Is Rolex getting too big, too dominant? Do they play too much of a leading position in the industry? Is this a risk for them? As we see the industry, you know, that profit pool as we, as we talked about becoming more and more concentrated.
- [63:33]
C
Basically Rolex is just playing the perfect book playbook of what they need to do in that market positioning at the price level. They are, they have Done the last decades they have done and just a perfect job. You like or dislike the brand, the products, etc. But the results are there. Is it a systemic problem or issue for the rest of the watch industry? I wouldn't subscribe to that. My point is Rolex is so over dominant because as I said, it's a virtuous dynamic and the stronger you become, the more muscle you. You make up and the stronger you are. That's, that's very simple. I said a few years ago that one day they will capture their own retail. Everyone was telling me, everyone was telling me, Mr. Muller, you are wrong, they will never do that because of blah blah blah blah. And one day they bought Bushierer which are about now 8% of the their worldwide sales. And I dare to forecast that they won't stop there. There was one CEO of a competing brand which one day told me Rolex is becoming a normalized brand. And I asked him what do you mean with that said? Basically Rolex is now competing again. For decades, you know, they were a little bit above everyone else and saying we are Rolex, we are not watchmakers. That those were the words of a predecessor of Mr. Dufour, the CEO. He said not Mr. Dufour, his predecessor said we are not a watch brand, we are Rolex. But it's, I can tell you that's really their brand DNA. And they do such a great. Last year the land dweller with the Dynapulse oscillator escapement. I mean this is so outstanding in terms of industrial excellence and the rest, you know, all the things they do is just perfect. Is it becoming a problem? No, it's a problem for the other brands to figure out how they can compete. Cartier does it. Audemars, Piguet, Patek, Richard Mille, they are there. And. And just to finally conclude one very quick anecdote. In 1971 I was a small boy living in a town called Bien and my father was working for the ancestor of the Swatch Group in the financial department. And opposite our house there was an old factory. And on top of that factory there was the sign of the brand and that read Rolex. My parents didn't know what Rolex was. That was 1971. With this I just want to say that people are looking at Rolex like it would have been the number one of watchmaking since a century. And it's not. They have done their revolution. They were very smart at getting out of the. The quartz crisis which ended mid-80s, which started mid-70s. They were very clever getting out there and all their branding is just perfect. There is no other word.
- [67:13]
A
Oliver Mueller, the founder and principal at Lux Consult. We'll leave it there. Thank you so much for joining us and helping give us insight on the critical Swiss Watcher Annual report with Morgan Stanley. Thank you sir.
- [67:29]
C
Thank you very much, Andy. It was nice talking to you.
- [67:36]
A
And that's the business of watches for this episode. We hope you enjoyed. Please head on over to Hodinkee.com where you can join the discussion and leave any comments or questions about this episode or the business of watches in general. Who knows, we might even answer your question on a future episode. Thanks for listening and see you next time.