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- [00:00]
Rob
Foreign.
- [00:06]
David
It'S been a while. There's a saying to the effect of some weeks feel like decades and some decades feel like weeks, and if you believe that, that while might as well have been a millennium. My last series of articles spanned roughly March to May of last year, 2024, and in those pieces I lamented the state of a watch industry that seemingly catered only to the ultra rich while careening towards a downturn fresh off a once in a century so far pandemic induced bender. Now look, I'm not that petty. I don't usually gloat. But I was right, wasn't I? Clearly I'm not in a position to give you next week's lotto numbers. After all, if I'd somehow tried to predict everything that's happening exactly as it is unfolding now, you'd likely have asked me what drugs I've been able to finesse out of the French health care system. But the overall lines I drew those at this point in 2025, after a long break from articles and with the two big trade shows now behind us and a new world order forming, there's a lot we can discuss about the current state of the industry and where it might go from here. First, I want to talk about the ongoing bifurcation of the watch industry. On the producer side, I'm not going to sit here and tell you that I didn't see some cool stuff, but watches and wonders and time to watches. When I see things like an ultra complicated Vacheron Constantin or a gold JLC with a Milanese bracelet, my lizard brain goes nuts. But I'm not buying them. I simply can't. I couldn't in 2024. After that year shows, I still can't now, and I probably will never be able to. A bit lower down the luxury pyramid, Panerai showed off some nice watches and IWC unveiled a 35mm Ingenieux, which perhaps flew a little under the radar, but is my pick for what I'd most likely buy if it didn't cost over €11,000? Further down still, the usual suspects Nomos, Tudor and their peers unveiled more down to earth watches relative to the usual standards. But does the industry really want a world where the lower caste of consumers has to make do with a new Tudor every year, even more so than before? I believe the answer to that question is a resounding yes. Bigger picture we can't talk about segmented watch consumption without contrasting two of its biggest markets, the US and China. Without going into the details, China drove one of the last watch super cycles in the 2010s before government crackdown on gifting, bribing really sent the industry into a slowdown. China remains a key market for the watch industry, but is a nominally communist country, one where the government must at least appear to care for the general public, and where the ultra wealthy are occasionally reminded who's in charge, it presents challenges. Enter the only growing market in the world, the United States. Let me put this to you in blunt terms, though the United States hates poor people, in many circles it is absolutely socially acceptable to treat those with less than you with disdain. And as you accumulate money, you can be certain that your license to operate however you please within that system will grow as well. Being around all this has driven quite a few big life changes for me. On a smaller scale, the cynicism I've picked up about the watch industry since 2020 stems from the watch buyers, new and newly emboldened, who entirely bought into these beliefs and with no hesitation to put them on full display, contributed to that territory's massive growth. Speaking as a European, I do not believe the Swiss generally share these ideas. But in catering to this growing market whose national motto might as well be Screw you, I got mine. Its watch industry has, subconsciously or not, it really doesn't matter adopted the worst of its beliefs. Let me put it to you this way. I'm not part of the 0.1% and I no longer feel welcome as a consumer of what you'd call traditional luxury brands. Do you? It was with that in mind that I sort of, yes, cynically had to smirk at the idea of 31% tariffs on Swiss watches into the US at the time I'm writing this. They've been paused for three months. But regardless, why was there so much panic in the first place? This should have been nothing for the watch industry to deal with. Rapid price increases on the same watches have been the M.O. for years, right? With so much practice under the belt, these tariffs should almost have been welcomed as the ultimate disinfectant for the luxury watch industry, an acid test for just how elastic watch demand is in its dominant market, and a chance to push the tacky and insecure bros, making the whole thing look bad to the exits. Because a tariff usually does not come with stimulus money. So the relief from a pause on tariff seems to me a relief that everything can go back to just how it was intended to be indefinitely into the future. And this producer standpoint brings me to one aspect of my columns from last year where I'll admit I was wrong. In conclusion to a list of measures I thought the industry could take to soften the blows of slower sales, I wrote, quote though I do believe that a downturn is coming and that the watch industry will emerge differently than it entered. It will emerge. And when it does, I for one can't wait to see what the newly hardened brands have to show us. On one hand, it's kind of Switzerland's thing to thread the needle through geopolitical turmoil. So yes, it it will emerge. I was right about that. But on the other hand, will the luxury watch industry emerge changed meaningfully or at all? I'm not so sure. But here things take a slight turn for the better. Let me lighten this all up for a moment and say that it's not all terrible. Assuming you know where to look far away from the gigantic booths and boutique experiences with maybe a little cake and other goodies on the menu, you'll find at the Micro Brands weird, wild, colorful, polarizing and accessible micro brands. There are so many to name that we could spend hours discussing our favorites. But to me, this is now the segment where watch lovers with an opinion rather than a need for validation can spend their time. I hope you liked that joyful pause, because it's time now to get grim again. These diffuse but important players in the watch game are about to face the same scenario playing on everywhere, where the haves get more and the have nots get crushed. Going back to the Panerais, iwcs and similar offerings of the recent shows, how many of them will actually store windows? Some certainly will, and I do hope they bring their owners happiness. But others will sit idly. Others will find their way to the gray market. I suppose it doesn't really matter even thinking about it, because the big brands will never go anywhere. Regardless of where those watches end up. There are very few, if any consequences of business as usual, even during times which are anything but. No matter how few people buy these SKUs, no matter how much the brands overproduce, they will go nowhere because they have big group money behind them and their tariffs have been lifted. But the micro brands are only beginning to face the crucible. The accessibility of microbrands comes from the enthusiasm with which they embrace the capacity and, yes, quality of the Chinese manufacturing system. In a way, the accessibility of micro brands prices are paying forward the extent to which China made its own manufacturing capacity accessible. In fact, I go so far as to say that without China, there would be no micro brands in the way that we view them today. I think we'd probably be talking more about high end independent watchmakers. You could say that about a lot of industries. So really the only thing unconventional about microbrands are their designs. From an execution standpoint, they followed the exact same path as the rest of the globalized world. And by the way, that includes some well known Swiss brands as well. The only difference being that they run as much on enthusiasm and passion as they do on cash flow. Perhaps more. As a failed micro brand entrepreneur, I can confirm that the math is delicate and that operating model is now going to be pushed from precarious to the breaking point. Because while the Swiss have for now dodged a 31% tariff into the US, there remains a tariff on Chinese products, the tune of 145% coming into what must also be a massive market for microbrands. Of course, the big brands will be fine. They always have been, they always will be. Tariffs lifted, money in the bank, and enough heritage marketing fuel for another decade of vaguely nostalgic releases. But the microbrains, the independents, the ones who don't seem to hate their customers and make genuinely fresh, exciting stuff, they're going to be in trouble. And not because their products lack merit, but because their ecosystems are fragile and they never had the cushion of being too big to fail. So where does that leave us as consumers, as watch lovers? Really, it's very likely nothing that we do will alter the course of the big brands. Because as the world shifts all of its wealth towards about 20 or so people selling €30,000 watches like just another Bob will means the watch industry will pay more and more attention to those 20 or so people buy used if you can or have to. That's me. And for sure, for absolutely sure, pick a favorite micro brand or two. Why not? You alone won't save a company with marginal finances that's been pushed over the edge by a pointless trade war. But you, me, Alon, Rob, Scarlett, the person with whom you exchange watch hot takes and so on and so forth. That can mean something. In the meantime, take care of yourselves and your watches and I hope to be back soon with more opinions but much, much less earth shaking news.
- [09:37]
Rob
Always good to get David back on the mic with another article. It has been quite some time or a while, as he puts it, at the top of the rundown, let's dive into this very current topic that is obviously still evolving all around us. I should point out that David wrote this soon after the initial announcement of a tariff, but after listening back we realized everything was still fresh and still in action. And nothing really is set in stone. So let me kick it over to the author himself just to give us his immediate feelings on the subject right now, today, as we record in the middle of June. David, where are you?
- [10:12]
David
Hey everyone. Bonjour. That should be a clue. I'm still in France like I have been for the last couple years. It is great to be back and to everyone who listens, if you're used to these, then you know what you're in for. But if you haven't listened to one of these articles before, get a nice soothing cup of tea, maybe do some breathing exercises. Because we're going to get controversial today.
- [10:30]
Rob
We certainly are, or at least we imagine that we will, because it's a topic that is far reaching and it could go in many different directions. I made some notes as I was listening through the article myself. A really interesting position to have taken and some great things to have thrown out there. Alon, can we get your initial feedback on the write up?
- [10:47]
Alon
Thank you David. That was fun. Not only did we miss the articles, but our community did, definitely. So they've been repeatedly asking for articles. So your wish is our command, dear listeners. Keep the feedback coming. I listened to the article during one of my morning runs and I got triggered on several levels and on several topics. I would call this a Zeitgeist episode. It's a momentum. You've summarized it on different levels very well actually. Interesting. We could take it and talk about the status right now, few months after the fairs in Geneva in April and that's where Trump announced the tariffs. We could discuss that. We could discuss if we want to do a bit of provoking. You are the provocateur, aren't you? So something that triggered me is yes, we the people, the collectors, can rise up to the group so we can discuss that something, maybe a sidestep. Is that triggered me as well is your comment about the Ingenieur 35 by IWC. Two things. First of all, I agree with you 100%. I added it to my top 15 in an article that I wrote as an independent journalist about my top 15 watches launched at Watches & Wonders. The gold one is stunning, but there we hit the sore spot. Pricing. You've specifically said, Ooh, 11K. That's not something I'm willing or wanting or able to pay. So without disclosing too much, but I know you've invested more than 11k in watches and I do know your watch budget is bigger than that and I have a hunch it will become bigger in the Future that watch budget, you've clearly stated you never ever will buy that Jaeger or that Vacheron that you were referring to in the article. But what I wanted to ask you is two things. Don't you ever want one, because I'm quite sure you'll make that money. You're very young, you're very smart and you'll hit the honeypot. You'll make that money and I hope you do, David, because you deserve it. So let's assume you'll make that money. Are you simply not willing to allocate that budget to such an expensive watch and deriving that trail of thought to boiling it down to that 11k comment? Do you simply don't agree by putting your X amount of watch budget into one watch, do you need to have more watches? So we could take it that route? Gentlemen, Mike is yours.
- [13:41]
David
Okay, so I mean, let's talk about that. And we could spend an hour, I think, just talking about how people make purchase decisions, watch pricing. But I'll try and address all of your questions and hopefully I get them an order that makes sense. So you're right, I have in fact invested that much into watches. But you'll know. And so for the audience, if you don't know, I also divested quite a bit of money. This was about two years ago and I did that via Ace Jewelers. So this is not a plug. I just knew Allan and the experience was really good. And I used that money to buy my wife a watch. So a Cartier. I traded some of my watches for Cartier, got her one as well, and I used the remainder of that money for other things. I was buying a house at the time. I had other projects going on. And to your question about pricing and do I ever see myself spending that much money in the future? So I keep a running list of watches I think are cool and there's a lot that comes out, but I keep kind of a tally of, okay, if I won the lottery tomorrow, what I like to spend it on. But realistically, Alan, to your point, I just, I don't know if that's going to happen because €11,000 on a watch, I mean, look, fine, if I wanted to, I could spend it today. I'm in a very fortunate position. I think it's fantastic. I can say that. But at the same time, it would make me choose between a lot of other things I need to get done. It would also make my wife angry, which just be honest, like we're married, we have to make these decisions together. And it just feels like so, you know, there's this meme that everyone says online, like watch companies hate this one simple trick. Well, when you wear the watches that you have, it seems unnecessary to buy more. And I think that is why I feel so alienated as a watch customer, because I've realized that call it 9 out of 10 new watch announcements I see, or for things that I will never practically be able to afford. And the watch industry seems to be basing its thesis on everyone just being able to drop $10,000 for an IWC, 15,000 for a Panerai. And as good as those watches are, because I pick on the usual suspects, but they make great products. It just seems like the. I'm not, I'm an average consumer for watches, but I am not an average consumer. And that has been completely neglected and that strategy has carried on. And so, yeah, when they get hit with a 30% tariff at the time when this happened back in May, they panic because they have nothing else to fall back on. So those are my thoughts for now. What, what do you think?
- [16:19]
Rob
I found that topic quite interesting that you raised that tariffs. These tariffs could have been exactly what the watch industry maybe needed for a reset. Because you were saying like, oh, escalating prices, that's happened ad nauseam. Over the last five years. We've seen mainstream brands accelerate away from any kind of realistic accessibility for. Okay, obviously it's never going to be the majority of the public, but a huge swath of willing watch buyers have been cut out by the fact that, for example, an Omega Speedmaster now costs more like 8,000 rather than more like 4,000. That's a huge jump. It's a real world jump. It's not in line with inflation. It's something that was stimulated, one would imagine, by the intense rush of interest in watchmaking during COVID which has now obviously waned because a lot of people that took a passing interest in it or saw it as an investment opportunity during those days have peeled off and gone on to their next new hobby. It's interesting that you, as a willing watch buyer, and that's a term we've not used before, I don't think, but I think it's maybe a good one to use here. Someone that would like to buy these products if they were accessible, is now turned off by big brands like iwc. Perfect example, because the ingenier was a great example of a watch that came out a little bit too late. It missed that moment. It missed that period of time where it could have shifted unit after unit for 11k during COVID because people would have been looking for something that wasn't a Trapez Antarctique or a Royal Oak or a Nautilus, something that was in the same vein but available. Those brands now are not something that you would be interested in investing that much money in. And you postulated that that might have manifested in a welcome reset to the market. What concerns me about this potential theoretical reset is that it would be a reset to zero. Like these brands will struggle to walk back their pricing with, with the same model lines. That's reputational death because you're basically admitting that what you priced those watches at was inflated for whatever reason. And you said maybe it opens up a market to the micro brands. Now we'll get into that in a minute, but I know you have something to say on that topic, so before I go too far, please respond.
- [18:41]
David
Yeah, so I just caught on LinkedIn before we started recording. Oliver Moller is a well known industry analyst and he basically said that watch for this, for this latest data. So I guess it would have been June or May, whatever the latest publication of data was. Imports into the US were actually down quite significantly after they had shot up because people were just rushing to get products into the borders before, before tariffs took effect. And so the tone was pretty negative saying, you know, this is, this is a real thing and it could get worse. So the data is showing, showing that. But also to your point, Rob, about a hard reset, like I don't have a ton of sympathy because just yet I think it was just yesterday, which is a company that comes up frequently released and finally, finally a 38 millimeter 50 fathoms in steel with a STR and titanium with a strap bracelet like this is the thing that saves your company. You could just sell, I don't want to say truckloads because it'll never be a Rolex sub, but this might be the most significant watch in the past. I mean two decades of Blancpain's company history and almost without fail the comments are like size check, historical watch check, price. Yeah, no way, I'm out. Because in steel it's like $15,000 or 15,000, was it Swiss francs on a bracelet? Who's really buying that? Basically? So a reset. I agree cutting prices is hard, but introducing watches at prices that are palatable is much easier. And they didn't do that.
- [20:15]
Rob
Well, they had an issue there because the 38 has got to be tethered to the 42.3 and the 45 or whatever it is the three different sizes. They can't, like, uncouple that smaller model and make it distinctly cheaper because they're powered by the same movement. So that's a tricky one. It's a great product. I actually think, to be honest, to be quite frank, although you say 50 fathoms will never be a Submariner, more power to it. I think the 50 fathoms is a more significant and exciting watch than the Submariner. I always thought that. And Bontpin is a much more impressive brand than Rolex in terms of its watchmaking. And so I would. Well, that's my opinion, but maybe many of you agree with me. That's actually not a bad price, relatively speaking, in the current context. I don't think that the 50 fathoms is wildly overpriced. I think the Ingenier, when it came out, was pretty wildly overpriced. I think the 50 fathoms, because of Blanc Pan's cachet, has always occupied a surprisingly attainable point for a maker. That is right up there. As we spoke about the other day with Breguet, in the Swatch group hierarchy, I love this.
- [21:21]
Alon
We can take it anywhere we want. We can discuss anything we want. There's so many things going to my mind. So Blompe. We've discussed them a lot. We've discussed them also during our 250 episode. My question to you gents, isn't the 35 too late? Why didn't they do it earlier? Why didn't they listen to the market?
- [21:42]
Rob
Do you mean the 38?
- [21:44]
Alon
Yes, sorry, the smaller cases. They've been asking for them for donkey years. Isn't it too late, though? Didn't they miss the boat? Shouldn't have not done it before the Blancpain Swatch collabs. And on topic of pricing, David, I agree with you. Who buys them? I don't know. I hardly see them on wrists. But hasn't Blompin always been on the high side of things? Ever since Jean Claude Beaver revived it. And isn't that the raison d' etre of the brand?
- [22:12]
Rob
I'll let David respond to that directly, but that's kind of what I was driving, I think, for Blancpain, that's a pretty decent entry point, as it were, for a 50 fathoms. To your comment on the sizing and whether a little bit late to the party. That's an interesting one. So I don't think you're ever too late to produce a good watch that people will want to buy now. I'm A relatively slim wristed guy. Most people in the world are actually. So it's the modal average 16.5 cm. It's not shockingly slim. It's not large or robust in any way. It's a flat sided wrist. So it can carry a larger watch than many 16.5 centimeter wrists can. But I ask myself, do I need a 38 millimeter Blancpain 50 fathoms? Is the point of the Blancpain 50 fathoms not to be bigger rather than smaller? It's an interesting one. When a classic like this that is designed for a function and its form is therefore informed by that function to come out with a wearable piece that maybe shirks some of the original function. Obviously the smaller watches, the more illegible it will be if a design remains just transposed down a couple of millimeters. That's just a fact. It's just harder to read because it's smaller. Is that a good thing? I don't know. People want to buy into the 50 thousands legend. That's great and I'm happy that they can do that and I'm happy that they can wear it. But I would still probably take the 42.3. Now I was listening to an episode of Openwork, the podcast from Gabe and Asha from Collective Horology over in California. If you don't listen to it, add it to your list. It's a great show. It's one of the very best watchmaking podcasts, one of the few that I listen to in addition to the Real Time show, obviously. And they were talking about perceptions in the industry, myths maybe, and the reality that they encounter on a daily basis as traders of luxury watches. And one of the things that they talked about was the size of watches. Now for the last, I don't know, maybe a decade almost now, people have been saying, oh, everybody wants smaller watches. The industry is reverting to classical diameters. Now there's a truth to that in a sense that there was a dearth of small watches being made by major brands for a long time. And there was a very vocal group of people that was perceived to be a majority shouting for smaller diameters. As it turns out in reality, that vocal group may well have been a minority and actually a more significantly minute minority than one would imagine. Because what gave an asher a scene from actual watches Sold is that it's the sizes between maybe 39 and 42 that are still flying off the shelves. And there's a little reticence from a lot of watch buyers Those who never opened their mouths and complained about the size of the pieces, about the fact that something may be 37, 36, 35 millimeters, they get put off. Now, as they mentioned very clearly on openworks, I'm just lifting this directly from their chat. The lug to log is a more significant measurement than the diameter in terms of how the watch is going to wear. But it's certainly true that people have these preconceived notions of what a watch will look like at certain diameters. 38 millimeters is not the kind of size you'd imagine a diver to be. Certainly not a diver of a broad bezel like the 50 fathoms. Do I think it's a gorgeous piece? Yes. Do I think they've done the reduction in size very well? Yes, I do. Do I think they've missed the boat? No, Because I'm not sure the boat was ever as big or as willing for people to board it as we imagined. So what do you think of that, David?
- [25:38]
David
Ah, but see, you don't know that. And people that have listened to this show for a long time will know I love data. And sometimes one of my hot takes about the watch community is that they'll say, oh, companies should do this, company should do that. And this is to your point, Rob, but the just the facts absolutely will say otherwise. So classic take is the Tudor black bay is too thick. Okay, fine, but they still sell truckloads of them.
- [26:04]
Rob
Yeah, but what if it was thinner? You don't know that well, but so.
- [26:07]
David
So okay, so, but this gets to. So you're right. But at the same time, this is one of those things where I don't think you're really going to know until you try. And if we take this back to the 50 fathoms people for years have been asking for, because it was what, 45 millimeters at some point the original was like 42, I think. So the historical size, I looked this up, I think was around 42 millimeters. And how are you going to know if a 38 doesn't sell? Well, but the trouble is they're introducing this. So the situation basically is they're introducing this now several years past the crazy peak that we had. They're doing so as a brand that doesn't have a ton of name recognition. I mean, when was the last time ballpow was name checked in the popular culture? And they're doing this at a, at a price that's, what, 50% more expensive than a submariner? And most people, I think if they're getting a diver. Unless they're part of that.0001% for whom it's like buying a cup of coffee. They're just not going to go for that.
- [27:04]
Rob
Yeah. But take Rolex out of the equation, which we should in many cases because Rolex is barely a watch brand. It's a phenomenon. It's its own thing. It stands on its own two feet. It's a different kettle of fish entirely. Take that out for a minute. You write that. Okay. Blancpain doesn't have much recognition on the street. If you ask someone to name the top three watch brands. I would almost be happy to wager my house or watch collection on the fact that not even one in 100 people would mention it as their top three watch brands. Because it just isn't in people's consciousness in the way that Rolex, Omega, Longines, Tudor, Hamilton, Tissot even are. Okay. I get that. I agree with that. So what we know is Blanchman is pitching to that 0.0001%, and they always have been and they likely always will be, unless they suddenly become like Drake's choice of watch or something. I don't know. You say, I don't know that a 38 millimeter won't sell. Well, nobody knows anything. I don't know that a 31 millimeter 50 fathoms won't sell. But I can. I can assess the market and the demands thereof and the realities that Asher and Gabe were talking about and say it's likely that this won't do as well as you think it should. Now do I think it's a bad branding move to have a 38 millimeter 150Fathoms? No, I do not. I think it's fantastic. I think it's great news. I think it scratches the itch. I think it gets people off their back. It stops that conversation of, oh, we've only 38 millimeters. Now we'll see if people put their money where their mouths are. Because if you've got someone going, oh, I love the 50 fathoms. I'd love to buy it. But they don't want to get at least the 42.3, which was previously the smallest version available. Now they've got an option. And if they don't buy it, Blancpain knows, and at least Blanc. This isn't going to cost Blancpain a huge amount of money. Right. It's not like crazy research and development. It's not groundbreaking. It's not an innovation. It was timely. Perhaps Yeah. A year or two after what would have been a great time to drop it, but it's still current enough. We'll find out. Yeah, but to say oh, you don't know if that's going to work is just like saying, well, you can't do anything unless you, unless you know. You can't know until after the fact. You can't. Placebo or release. It's like it's genuinely impossible to do the same release into the same market, targeting the same demographic twice in two different ways. You just have to analyze the data that's available to you and also read it with your market feeling and then just go for it and we'll see, won't we?
- [29:17]
Alon
David, I have a business idea for you. Since you love data so much, I hate in the watch industry, I wanted to say how opaque everything is, but it's not even opaque. The murky waters, it's so untransparent that out of this frustration, more than a decade ago I co founded watchbase.com because I simply wanted an anchored independent database and that came out of the need what is manufacture, what isn't. And, and that wasn't even that relevant. I wanted to know what calibers were in watches and what base caliber was used because it was so opaque. Now we started with pricing, but we hit several brick walls because you don't simply can't get that data. Even aggregating was a problem. So we just worked with rrp, so those are uploaded with skus. At a certain point we would have auction results which are rather factual, you know what the price was with a premium we would list them. So you have two graphs on every sku and then we let it go. And then Obviously you had Chrono24 which tried to do an index and they had Chronolytics which was a spin off company. I don't know if it still exists, but they have a kind of an index with pricing. The problem is Chrono24 has I guess 80% of the data. Not everything is sold on Chrono24. Definitely the publicly listed ads of the watches on there are the going rates. So you can't derive an actual factual pricing model from that. Chrono24 has data if a watch is paid through their platform, but not everything is paid through them. And we as dealers do a lot of lead generation to Chrono24 but they come into store or E Boutique. So Chrono24 is there but definitely not up there. Then of course ebay has A lot of data and the third one that is kinda objective and I say kinda is watch charts. They don't have their own data, they don't have proprietary data. Just, just scrape listings and if I'm not mistaken, and guys correct me if I'm wrong, the majority of the scraping is obviously ebay. They probably do Reddit. I don't know if they have access to Kranener24 but they technically could scrape it off the web. They don't have obviously access to their backlogs. So what popped into my mind now, dear David, I was actively involved with a startup that was called AlphaStar which was sentiment analysis, meaning aggregate as much as possible data mostly obviously the social media platforms around stocks on the stock exchange and then later for DeFi so cryptocurrencies etc. And then with the sentiment predict what course will do. So my business idea to you, dear David, is why don't you do and I know you create a lot of bots using AI generated and LLM data. Why don't you start a sentiment analysis on this? Because we might state yeah, people like the smaller case Blancpain, but how many actual comments do you analyze? I mean IF N is 32 for the minimum to run statistics in the academia, then who does this actually? So either you, David, or one of our dear listeners, please let me know if you run with this idea. I'm very curious to hear if it works.
- [33:06]
David
Well, this is goes to the heart of something I wanted to ask you to because on one hand like these product launches, Rob, I know you said it probably didn't cost marginally that much, but it costs something and to develop these watches, to market them, someone's got to be looking at this. But what I wanted to ask you both, and I think this was something that was in my mind as I was writing the article, was the tariffs were announced basically day two of the last big watch shows and you were both there on site. So two, you have any commentary on what the mood was at this show pre and post tariff announcement and then maybe compare that to what we were what you were feeling last year because I, I what we're having is a replay. As far as I remember, we're replaying a lot of the high points which says to me that even though the world has changed a lot in a year, the watch industry really hasn't changed.
- [33:58]
Alon
Course I will answer that. I just wanted to add something that I've remembered that just now when I muted my mic is I was one of the first well I was the first in the world to retail IWC and therefore the all the Richemont brands that we were authorized dealers for and then Swatch group and then LVMH brands and then the independence like Breitling, etc. I did a lot of keynote speeches within Richemont internally to their teams in all the brands in London, in Geneva and one type of they took me to the Lions Den, the Tech Lions Den and I'm talking about 2007, 8, which was very interesting. They were triangulating what gray markets are doing to compete discounts and gray markets. So that was interesting. So they were looking at supply pricing and they tried to see what actually sells to monitor a should we reduce or raise supply on their end and close dealers that supply the gray markets. So just to close off that topic, to answer your last question for me, it was crystal clear we were there, Rob and I, the day before the fair started. Good sentiment. And then the first two, three days, I think Trump announced on Wednesday or Thursday, if the fair started on Tuesday. The mood was, I would dare even to say, not optimistic, but euphoric almost. And then the tariffs was announced and everybody was in a mourning mood. So. As if somebody died. It's literally as if a chocolate souffle came out of the oven, wasn't prepared well and deflated like a balloon losing all its helium. What did you think, Rob?
- [35:53]
Rob
Yeah, I think deflation is definitely the word. It really took the wind out of everybody's sails or the air out of their souffle. That's a nice analogy. It looks, in my mind, it just is a perfect corollary to people's moods and the questions that were raised, the uncertainty to throw this into the mix, into an industry that is still, to be honest, recovering from a lot of the backlogs built up through Covid manufacturing issues. The way that many brands pivoted their strategy, tried to internalize a lot of manufacture when it looked like they could sell snow to a snowman, and now they're struggling to sell luxury watch to a luxury watch collector. It's, it was devastating and it was scary and it's existential for many, many brands. Now the big brands here, they're not going to suffer in the same way as smaller brands. And I think this is a great segue in a moment for us to turn our attention towards the micro brands potential that David referenced in the article because this for me is the biggest topic. There's a price point where even a 31% tariff, which now we're not looking at at the moment, like most of the tariff news I hear that is concerning people is 10% on EU products. There is this question about 50% tariff on steel and whether or not that applies to what watch cases. Although with practical experience that I've had thus far in shipping these things to the States that hasn't actually been picked up on by border agents. So maybe that's not as devastating as we thought it might be. But let's say even with the highest tariffs that were ever announced for Europe, 31%, there's a price point where that doesn't manifest in a huge real world difference. So let's take a look. Anything from a thousand euros and below. So that's €310 on top of a thousand euro watch. It's not chump change. It's still 31%. It's 31% whether it's €1,000 or €100,000. But in practical terms it may not be the decision between buying that watch and not buying it for a 10 grand Submariner. That's another 3,000. That's a car, secondhand car in England at least. And that's real money, the €310 or something. Let's say, let's take a brand that's really skyrocketing at the minute, one that's doing exceptionally well. Denison, their watch is around £700, right? So you're talking about £217 on top. Now that pushes it up close to a grand, but it's still under a grand and it's still a great watch for the money. So will this be an opportunity for them to make hay? I would say yeah, there's potential for small brands to make. But there's two points that I want to touch on and I'd like your responses on it. One, a lot of brands that are in that price bracket aren't doing a huge amount. That is interesting. In fact the vast majority aren't doing much that will stimulate the minds of watch collectors like us, like advanced collectors that have been in the industry for a long time that expect a great deal of complexity or excellent design. And maybe the latter is something we could hope for from these brackets. But they're going to have to push even harder than they have been pushing already to create that storm of interest around them. And the second thing is for micro brands that are striving to do something special, let's take a couple, let's take three examples of smaller independents in this kind of micro competitive sphere and then One other like legacy brand that has a different problem to Countenance. Let's take Annordain, Archenault and Schofield, okay? Three brands that have existed for 10 plus years. Some of them like Anodyne, very, very entrenched in the industry. Part of the furniture. It's going to exist for generations. Schofield, more of a one man show. It's all about Giles and Giles's designs and his genius. Will that continue beyond Giles? Good question. We don't know. It might just be a playground for his creativity. Archonaut, it's a team of striving individuals, myself included, who want to do something special. Now there's one similarity between these three brands. They don't have big margins. They already don't have big margins and in some cases, in the case of Arkanal, especially less so Schofield and not at all at the moment. And ordain people have already commented on the prices. Now I know for a fact that these brands do not have big margins. And whatever anyone says on any comment section of any website, oh, this watch would be great if it was €500. It's like, yeah, of course it would. So a house would be nice for 1500 quid but unfortunately it costs more than that to make. So what can they do in terms of price suppression? They can't lower the prices. In fact the prices should be higher for all of those things, relatively speaking when it comes to comparing them to mainstream brands. So they're in real trouble because if somebody on a blog to watch commenting on an Archonaut article thought it was expensive at $5,000 with tariffs added on top, then it becomes crazy expensive. If somebody thought a Schofield was overpriced because, oh, it's got a bog standard movement in it, then they're not going to feel very good about paying another 30% on top of that. Thankfully it isn't 30% at the moment. But just theoretically discussing that topic as we are, and then there's an ordain which came into the market extremely underpriced. Extremely underpriced. People would be willing to pay more for an anodain and they will have to eventually because those prices have to go up if the company's going to be sustainable long term and it has the reputation, it has the products, it has the structure in every way other than maybe the product price to be a generational brand in this climate they can't step up the prices alongside the addition of tariffs in the way that they really need to without Getting. Getting extreme heat all of a sudden. It's these brands for which I worry, because these brands are interesting. These brands could satisfy our desire for interest and novelty in the watchmaking industry if they weren't potentially hamstrung by these crazy tariffs.
- [41:51]
David
Yeah, so lots of lot to unpack there. Couple things just on, I guess the nuts and bolts of the discussion, as far as I know. And things change pretty rapidly. The tariffs on Swiss imports, well, imports into the U.S. exports from Switzerland were paused for 90 days. So as far as I know, they could still be on the table. The other important point is that when I wrote what I. I narrated in the article, it was based on the assumption that just as with the broader luxury watch market, the micro brands also derive a lot of their business from the U.S. so maybe Rob would sell some point you can, without divulging anything too confidential, just kind of say whether or not that's the case for Arkanaut or some other micro brands. But that was. That was the main premise. So if we kind of put that to the side, I do want to say that I wouldn't be so sure about a 30% price hike not making a difference because I think back to when I was in my early to mid 20s. It probably would have have made a difference if you told me the watch that I wanted that was 500 bucks. Well, was all of a sudden 30% more expensive. I think it would have. Now, where it doesn't make a difference, and this is where I'll agree with you, Rob, is where you are experienced and you might have already bought 1520 watches over the course of your. Your fandom, we'll call it. And so now you're back down. And I just use that as a descriptor, like you're back down in price now because you are exploring everything that's out there. That's something Ariel Adams from A Vlog to Watch has said. He's like, when you get tired of the expensive stuff, work your way back down. And that's where it gets exciting. Because the problem. And I see, Rob, you want to interject here, but one of our faithful listeners, Matt, has said before, like, no one's buying their first watch as a micro brand. It's just not happening. And so you have this broken system. Broken is my word here, where the established brands that people usually would aspire to are pricing themselves out. And so there's really no platform to get in and get excited about watches.
- [43:51]
Rob
And so.
- [43:51]
David
So that leaves micro brands at a point where they're really only catering to the hardcore. And you can see this all just really feeding into itself and not looking very good as far as I'm concerned for at least the next couple of years.
- [44:04]
Rob
To Matt's point, no one's buying their first brand as a microbrand. I'm not so sure that's true anymore because I think the microbrand community en masse has gained enough credibility and traction within the industry to be like a legitimate first point of contact for somebody that falls in love with watches but just cannot afford to buy, certainly these days, a heritage brand. Michael make it, or even a Longines or something like that. I think that if you're into watches, okay, when you get into watches. Well, our generation of guys got into watches and it was before we could actually afford to buy a proper watch. What did we buy? Probably Casio G Shock. I know personally, I had a police watch for a few years when I was like 19 or 20 and I loved it. Thought it was the bee's knees, it scratched the itch. It was what I could achieve at that point. And I was, I was always a realist in this situation. I wasn't embarrassed by the fact that I couldn't afford a bigger purchase. I was like, well, one day maybe I will be able to. But I love watches and I want to buy the best of type at this price point that I can afford at this moment now to, to feel like I'm part of this movement, part of this industry and so on. Although Matt says people won't buy microbrands, that was probably very true six, seven years ago. But now I think the scene is so established and so ingrained in the minds of existing watch collectors like heavy hitters like Ariel. Ariel's a great example. It's a great advice that he gives to go back down the tree, you know, find the creative stuff that's happening for, you know, no money, relatively speaking. Now talking of money, relatively speaking, as you said, David, when you first bought a watch, or if you were thinking of buying your first watch at 500 quid and suddenly it was 650, that might have put you off. That would have put you off more, I would guess from means rather than principle because again, I go back to the practical difference. So €150 difference. Now, if you're earning 300 quid an hour as a consultant, then obviously that's 30 minutes work to make up that difference. If you're working in a bar washing pots and you're earning like, I don't know what the minimum Wage is now like 8, 9, 10 quid an hour or something, which is great by the way. I, my first job I got paid £2 36 an hour. But you know, people don't know they're born these days. If you're washing glasses and you're earning that, and that money is really like, it's hugely important. It's paying your rent, is buying your food, is paying your electricity bill, for God's sake, these days, then that's going to take you a couple more months, maybe three months, maybe four months, maybe six, maybe 12 to save up for that extra 150. It's no mean amount of money, but it is still the same amount of money, so it is practically more attainable. Last thing you asked me, without divulging too much, I'll happily divulge anything. This is the real time show, for goodness sake. And you know, when it comes to Archonaut's operations in the States, they make up a huge number of our purchases. Most of our watches go to either the US or the Middle East. That's, that's the God's honest truth. And I would say that probably about 40% to the US, probably about 35, 36% to the middle east and then the rest to Europe, Oceania, Asia, etc. Etc. But very, very, very, very, very important for us is the US market. Every single brand you speak to says the US market is the most important because they're the most willing to take a chance on something new.
- [47:24]
Alon
Amen. And I wanted to say I'm 100 with you. You, Rob, Matt, thank you. But these days are gone. Indeed. As a retailer, I see it every day. It changed. The market evolved, consumers evolved, the millennials, Gen Z, even Gen Alpha coming up. And, and, and we can have a discussion about microbrands or the Indies or the lesser known brands or let's call them the, the, the, the group brands or the omegas of this world. But it's not a gateway drug. You don't need to start with a Rolex or Amiga. And if you don't have the means with the famous criminals, so the T cells of this world, and I don't know what you see it happening, so I agree with you, the world has changed, the market has changed, consumer behavior has changed and something else. And we don't need to address it now because we're running out of time, but maybe for a future episode. David, what triggered me in the article was as well that you said they'll be here forever. You know what, mate? They won't be here forever. And I've said this many times on the podcast, if our kids do not want mechanical watches or quartz watches, then they're dead in the water. And don't think that Rolex and Patek were almost invincible. Bulletproof. They almost kicked the bucket. I know stories of retailers where Charish Stern's dad, Philip Stern, almost begged his retailers to buy more to keep the company afloat. So nothing is forever. And those that are sitting in their ivory towers think they're bulletproof. Well, wake up, buddies.
- [49:06]
David
No, I think that is probably a good place for. For me to close on. I. I am always happy to be corrected. And it sounds like Robin, Alan, you have more of a data set than I do to comment on people's watch purchases. So that was going to be what I was going to say. Alan, it's like you read my mind. Maybe we're going towards a world in 20, 30, 20, 30 years, maybe even before that, where Studio Underdog is making the next Unobtainium watch or Archinaut or any one of these similar brands. And maybe the big group brands have. Have folded up some of theirs and kind of packed up and gone home. But at least we can tell ourselves that we. We saw it coming first by discussing it here today. But that's my thought.
- [49:45]
Alon
It's funny you raised to the Underdog because yesterday I called Rob, which is very funny. I'm like, dude, I need to call in a favor. I won't mention names, but a English friend of mine in the watch business for almost all her life asked me if I can arrange her a watermelon Studio Underdog. So I said, rob, I don't have that direct ties to Studio. No. Do you know what the gist is of these watermelons? Are they coming back? Do I need to source one prion? Can we call Studio Underdog? Are they even made? So he's like, dude, just wait for another drop. I'm like, what do you mean another drop? So his drops sell out in a jiffy and he keeps on selling out. So not one day Studio Underdog will be that brand. Richard bank and his brand are there already, David.
- [50:33]
Rob
It's Richard Bentz. Rhymes with fe. Oops. Okay, let's get. That works. Okay.
- [50:37]
Alon
Oops.
- [50:38]
Rob
Long, long, long running fact drop that we have on the real time show just for anyone that's interested in buying a Studio Underdog. The drops don't sell out. They're time limited. So Rich will open the order window for like a day at a time. Or nine, ten hours at a time and they'll receive thousands of orders at once. But you're not gonna, you're not gonna, not gonna be able to get the watch that you want. If you just wait for the drop and you patiently save up your money and then wait, when the window opens, go ahead and place that order. It's a brilliant business model that he's established. He's become one of the most beloved providers of watches in the industry, and maybe this is his moment. Everything has fallen into place for Studio Underdog since they launched, like during COVID I guess, I guess it was during COVID wasn't it? And then they took off. But they managed to build, consolidate, they've grown the team, they've, they're endlessly creative, they're collaborating with other brands and media titles, they're doing good work in the charity space, and they do it with a smile on their face. And maybe in these dark times when there are so many questions and black lives hovering above major established brands that still seem to refuse to pull out an umbrella, that's exactly what we need. So let's wrap up this article analysis there. It was a great one. To be honest. I'm so fired up by the conversations we're having and the directions in which they've gone that I could stay on the mic for another 45 minutes quite comfortably. But we'll call it a day there. David, you have to write more because these are the things that people tune into the Real Time show for. So thank you for that. Thank you, Alon, for your contribution as well. If any of you would like to get in touch with us with ideas for articles or comments on this one or any other shows that we've recently aired, then please do. You can contact either Alon, David or me via our personal email addresses, either Rob alon or David herealtime show via the official Instagram handle herealtime show, or via the contact form on the website www.therealtime.show. we'll be back soon with more top quality watch content and incisive commentary on the industry. Until then, stay safe and keep on ticking. SA.