Audicle Analysis — Will The Swatch Group Save The Watch Industry ONCE AGAIN!

Summary

The Real Time Show: Audicle Analysis — Will The Swatch Group Save The Watch Industry ONCE AGAIN!

Release Date: January 5, 2025
Hosts: Rob Nudds & Alon Ben Joseph

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Introduction

In this compelling episode of The Real Time Show, hosts Rob Nudds and Alon Ben Joseph delve deep into the critical role of the Swatch Group within the global watch industry. Centered around David’s insightful article titled "Will The Swatch Group Save The Watch Industry ONCE AGAIN!", the discussion navigates through the historical significance, current strategies, and future prospects of the Swatch Group in sustaining and potentially revitalizing the watchmaking landscape.

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Historical Context: The Swatch Group’s Lifeline to the Watch Industry

David opens the conversation by revisiting the tumultuous period of the 1970s and 80s when the Swiss watch industry faced severe challenges from the influx of affordable and accurate quartz watches, primarily from Japanese manufacturers. Traditional mechanical watchmakers were on the verge of collapse, with many historic brands disappearing entirely.

David (00:00): "The 1970s and 80s marked a tumultuous period for the Swiss watch industry... Enter Nicholas Hayek and Jean Claude Biver."

Nicholas Hayek and Jean Claude Biver emerged as pivotal figures who introduced the Swatch watch in 1983, offering an innovative, affordable, and aesthetically appealing alternative that captured a new generation of watch enthusiasts. This strategic move is credited with providing the necessary lifeline that breathed new life into the beleaguered Swiss watch industry.

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Swatch Group’s Diverse Portfolio: Bridging the Gap

David highlights the Swatch Group’s unique advantage through its diverse portfolio, which includes renowned brands like Longines, Hamilton, Certina, Tissot, Nomos, and Tudor. Unlike luxury conglomerates such as LVMH and Richemont, the Swatch Group has meticulously segmented its brands across various price tiers, catering to a broad spectrum of consumers.

David (05:00): "Brands such as Longines, Hamilton and Certina... They are objects that will last a lifetime with proper care, come from a rich lineage, and are fairly priced."

Notable products like the PRX line from Tissot and the Longines Spirit series exemplify the Group’s ability to adapt to consumer feedback by offering diverse sizes, colors, and designs. Additionally, the introduction of the Moonswatch is lauded as a strategic move to make iconic designs accessible to a wider audience.

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Current Challenges: Luxury Brands and Market Distancing

The conversation shifts to the present-day challenges facing the watch industry, particularly the trend of luxury brands distancing themselves from aspirational consumers. Secondary market prices for iconic brands like Rolex, Patek Philippe, and Audemars Piguet have softened, while MSRP prices for other major brands continue to climb, making high-end mechanical watches increasingly unattainable for many enthusiasts.

David (08:00): "Owning a high end mechanical watch has become an unattainable dream for many enthusiasts."

This scenario underscores the necessity for the Swatch Group to step up its efforts in attracting new customers and reviving the industry’s appeal to a broader audience.

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Strategic Positioning: Save or Sustain?

Rob, Alon, and David engage in a nuanced debate about whether the Swatch Group will save, sustain, or potentially destroy the watch industry in the coming decades.

Alon (12:40): "Swatch Group did save the industry in 1983... but now they are sustaining it."
Rob (22:50): "Do you think over the next 20 years, specifically the Swatch Group will save, sustain or smash the industry? Sustain for me as well."

The consensus leans towards sustaining the industry. While the Swatch Group has been instrumental in saving the industry in the past, their current strategies focus on maintaining the market through their extensive brand portfolio. However, concerns are raised about the Group’s monopolistic practices, such as restricting movement supplies to third parties, which could stifle innovation and limit the growth of independent micro-brands.

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Internal Dynamics and Brand Management

A significant portion of the discussion revolves around the internal dynamics of the Swatch Group and its management of various brands. Alon criticizes the Group for maintaining high prices and failing to adequately differentiate and innovate among its luxury brands like Omega, Blancpain, and Breguet.

Alon (21:25): "Brands like Colloquium, Space One, Biasly... are offering an alternative at a reasonable price point."

Rob adds to this by pointing out that the Swatch Group’s broad branding strategy may lead to a homogenized market presence, limiting the distinct identities that could attract diverse consumer bases.

Rob (16:05): "I think that if we look at the movement, monopoly abandonment was just boneheaded."

The hosts suggest that injecting fresh blood and fostering more dynamic and creative approaches within the Group’s brands could enhance their market competitiveness and appeal.

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Competition and the Rise of Independent Brands

The discussion touches upon the burgeoning landscape of independent and micro-watch brands that are emerging as significant competitors to the Swatch Group’s dominant brands. Rob asserts that these micro-brands, while niche, play a crucial role in attracting new enthusiasts who may eventually aspire to own luxury brands.

Rob (20:30): "The industry needs what people want is to be able to buy a nice watch that they see advertised in an airport or in a magazine."

Alon emphasizes the importance of these independent brands in providing innovative alternatives that challenge the Swatch Group’s market dominance, potentially leading to a more vibrant and diversified watch industry.

Alon (23:15): "Brands like Colloquium... are really trying to do something new."

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The Role of Swiss Made: Diminishing Significance?

The episode also explores the relevance of the "Swiss made" label in today’s market. While traditionally a mark of quality and prestige, its importance appears to be waning among consumers, especially with the rise of global and diverse watch brands.

Alon (25:30): "Does it matter as much as it did? I think that it really doesn't matter as much as it did even three or four years ago."

Rob hypothesizes that the Swiss government’s protection of the "Swiss made" label indicates its continued, albeit reduced, significance in the industry.

Rob (30:46): "I hypothesize Swiss made still matters... I think it could be stronger."

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Future Prospects: Strategic Recommendations

Rob proposes a hypothetical strategic shift where the Swatch Group could spin off its higher-end brands like Breguet and Blancpain to focus more intensely on its lower and mid-tier brands. This move could allow the Group to act as an incubator for emerging brands, fostering innovation and catering to a wider consumer base without diluting its luxury segment.

Rob (36:19): "What if you spun off these higher end brands and just focused on that lower end of the market?... an incubator for some of these brands."

Alon supports this notion, suggesting that such a strategy could rejuvenate the Group’s market position and support the growth of independent brands, ultimately benefiting the entire watch industry.

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Maintaining Human Capital and Adaptation

Rob highlights the Swatch Group’s commitment to maintaining human capital by avoiding layoffs despite financial challenges, showcasing resilience and dedication to sustaining their workforce.

Rob (23:54): "They are maintaining the human capital and not being completely reactive to how the market is now."

This approach underscores the Group’s long-term vision and its potential to navigate through market fluctuations without compromising its human resources.

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Conclusion: The Swatch Group’s Pivotal Role

As the episode wraps up, the hosts collectively agree that the Swatch Group is set to sustain the watch industry by leveraging its extensive brand portfolio, economies of scale, and strategic market positioning. While there are challenges and criticisms regarding brand management and market strategies, the Group’s foundational role in revitalizing and maintaining the industry's vibrancy remains undeniable.

Alon (45:05): "Over the next 20 years, specifically the Swatch group will sustain the industry."

The discussion concludes with an affirmation of the Swatch Group’s critical importance in the watch industry, emphasizing that their efforts today are laying the groundwork for future generations of watch enthusiasts.

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Notable Quotes

• David (00:00): "Real questions. Real Answers. Real talk."
• David (08:00): "Owning a high end mechanical watch has become an unattainable dream for many enthusiasts."
• Alon (12:40): "Swatch Group did save the industry in 1983... but now they are sustaining it."
• Rob (16:05): "I think that if we look at the movement, monopoly abandonment was just boneheaded."
• Alon (25:30): "Does it matter as much as it did? I think that it really doesn't matter as much as it did even three or four years ago."
• Rob (30:46): "I hypothesize Swiss made still matters... I think it could be stronger."
• Alon (45:05): "Over the next 20 years, specifically the Swatch group will sustain the industry."

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Final Thoughts

This episode of The Real Time Show provides an in-depth analysis of the Swatch Group’s influence and strategies within the watch industry. By examining historical contexts, current market dynamics, and future prospects, Rob, Alon, and David offer valuable insights into whether the Swatch Group can continue to sustain and invigorate the watchmaking world. For enthusiasts and industry observers alike, this discussion underscores the pivotal role of strategic brand management and innovation in maintaining the legacy and future of horology.

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For more engaging discussions and expert analyses on watchmaking, subscribe to The Real Time Show and stay tuned for future episodes.

Transcript

[David]

Hello everyone. Bonjour tout le monde. It is David, the Real Time Show's resin provocateur, back at you with another article. It's been a long time since I last shared my thoughts with you back in the days of Watches and Wonders. And that's not because the watch industry hasn't seen numerous new releases since then. Rather, it's just that the dynamics of the watch industry are highlighted in that last article. Namely, the watch industry targeting a smaller and smaller and wealthier and wealthier segment of the buying population haven't really changed that much. But you know, there was one thought as I was putting that article together that got left on the figurative cutting room floor. There's one name in the watch industry that we hear all the time, but I don't think we quite give it as much credit as it's due precisely because it is so big and so well known. Enough with the suspense, let's just get right into it. The last piece I wrote for the Real Time show came hot on the heels of Watches and Wonders, and in that article I lamented a trend which seemed to have come to a head in Geneva. You know this theme well, because it's a recurring subject in my writing whereby the industry's novelties, with as always some exceptions, were targeted to an increasingly narrow, deep pocketed group of buyers. One of the thoughts that was left on the figurative cutting room floor when I published the Watches and Wonders review was that there was one company, or rather group, bucking that trend, but you have to look beyond the headlines to find it. Indeed, as I was trying to poke holes in my article by coming up with counter examples to my thesis that basically watches are for rich people now, most of the names were not present at the Tissot, Hamilton, Longines, Mido, Certina, yes, Nomos and Tudor and a few others had something for the laypeople who, let's remind ourselves in the crazy world of luxury watches are laypeople who still have several thousand dollars or euros or whatever kicking around. Exceptions aside, I kept having this recurring thought that the Swatch group, for all the ire it draws sometimes, is perhaps the best candidate to perhaps literally save the long term fortunes of the watch industry Again, today we pass Swatch boutiques more or less without thinking about them, unless you want a moonswatch, but more on that later. But people like you and me know just how significant that brand and its literally cheap and cheerful watches were. The 1970s and 80s marked a tumultuous period for the Swiss watch industry, which was under siege from affordable and highly accurate quartz watches produced primarily by Japanese companies. Traditional mechanical watchmakers faced an existential threat, and many historic brands teetered on the brink of collapse. Some of them even disappeared entirely. Enter Nicholas Hayek and Jean Claude Beauvaire. By introducing the swatch watch in 1983, Hayek provided a lifeline to the industry. The Swatch was not just a watch, it was a statement. Its innovative design, affordability and colorful, playful aesthetic captured the imagination of a new generation of watch buyers. Right around that time, Jean Claude Bivert was beginning his arc in the watch industry by buying the rights of the Blancpain name and eventually driving home the message that a watch was no longer merely a tool, but rather an object of desire. Swatch and Blancpain are two very different organizations, but the idea behind them was the same. The Japanese dominance of quartz was bound to fizzle, because when all you focus on are technical specifications, the race to the bottom begins. But when you focus on design and status, well, then you can differentiate yourself and with some sustained marketing, start counting revenues. And it's perhaps because of the similarities in philosophy that Blancpain ended up joining Swatch watches in the Swatch group. Two very different companies attacking an existential threat from both sides of the price spectrum and swinging the pendulum of the watch industry from selling essential tools for organizing your day to symbols of individualism and maybe even triumph at the game of life. You know the rest. The Swiss watch industry was revitalized, and in the ensuing decades, brands have doubled down on their strategy of marketing watches as a luxury item. With the rise of social media and the global pandemic, only turbocharging the resulting prices. Fast forward to today and the watch industry faces a different kind of challenge. Illustrated starkly by the releases of watches and wonder, luxury watch brands have increasingly distanced themselves from the aspirational consumer. Though secondary market prices for iconic names such as Rolex, Patek Philippe and Audemars piguet have softened, MSRPs for all the other big names continue to climb, in my opinion, even more so arbitrarily, when we're talking about already released models such as the Omega Seamasters 300M or the JLC Reverso. This has created an environment where owning a high end mechanical watch has become an unattainable dream for many enthusiasts. And yet, if you pay attention to what I think are the most interesting recent releases, you see the narrative forming around the Swatch group again stepping up to bring new people into the hobby and swinging the pendulum of the watch industry back a little closer to where it was several decades ago. The Swatch Group's diverse portfolio is uniquely positioned to bridge this gap. Brands such as Longines, Hamilton and Certina are renowned for their rich heritage, and when you combine that with the economies of scale the Swatch Group provides, you end up with absolute banger. Crucially, unlike luxury groups such as LVMH and Richemont, the Swatch Group has conscientiously segmented its brands by price tier, not just among the high end, but really from the low to the high end. And recently the value from some of these brands has been substantial. Off the top of my head you have the smash hit PRX line from Tissot, which has quickly adapted to customer feedback by offering different sizes and colors since the original SKUs were released. Then you have basically the entire Longines Spirit line. Of course you have the Hamilton Khaki Field line, there's the recently released Mido Ocean Star 39, and then you have the Certina DS Super PH1000 meter, especially in the absolutely gorgeous new STC variation. Perfect for this summer and every summer for the rest of your lifetime. I'm sure I'm even forgetting many other similar watches, but with every single one you get all the qualities that come to mind when we think about why we like watches in the first place. These are objects that will last a lifetime with proper care, that come from a rich lineage, that are fairly priced for what they offer, and then you can buy today, no questions asked. And as a bonus, you won't get mugged for wearing any of these, and you won't have to associate yourself with any of the douchery surrounding a Rolex or an ap. And yes, I said douchery. I've been critical in the past of the Swatch Group's higher end brands and how they manage their portfolios. But at the more entry level end, I don't see anything other than an organization firing on all cylinders whose goal is to sell as many watches as possible. Imagine that Sylvain d'lat, the CEO of Tissot, said as much himself recently when he announced that his target was to have the brand sell 5 million watches a year, a large number when you think the Rolex is estimated to sell about a million. And then you have the famous moonswatch. I'm shocked that this was greenlit in the first place, but even if sales potential was a key argument in moving the project forward, I'd like to think that someone, maybe even multiple people somewhere in the Swatch Group offices or the Omega and or Swatch factories were telling themselves, you know what? For everyone that wants a piece of the magic, but whose life doesn't let them have it quite yet, this is for them. It's corny, but the Moonswatch isn't so different from the gorgeous Certina, a piece of watch industry magic and desire made available to everyone by perhaps the only group with the IP and capabilities to make it happen. And that's of course the Swatch Group. I completely understand how we could take the Swatch Group for granted and how each of its releases could be met with a collective shrug. But make no mistake, to me, they are the most important game in town. Rolex, AP and Patek may be the companies forming today's Zeitgeist, but the organization that's priming watch buyers to keep buying those storied brands pieces in 20 or 30 years, well, that's the Swatch Group. There's one missing piece of the puzzle here for the Swatch Group and that's what I call the handoff between brands. Just Tissot and Longines and its higher end brands such as Omega and then even higher up than that, Blancpain and Breguet. Whereas the bread and butter names seem to know exactly what they are and who they cater to and aren't afraid to be really aggressive when offering value for money, their luxury focused counterparts seem to have gotten quite lazy. I know it's controversial, but I've said this before. There's only one strategy it seems like keep prices high and raise them if you can. And repeat. If the Swatch Group could just get their intentions and strategies right for these names, Omega especially, they would have the ideal pipeline set up with which to grow the next generation of watch loving consumers. For now, anyone starting to get into watches will top out at a Longines and then have a long, long way up to find their next piece. But you know what? Is that really so bad? I don't think so. And if you'll excuse me now, I'm off to go drool over that Sertina again. And that is it for today's article. I've shared my thoughts. Now it's your turn. As always, we have several ways for you to get in touch with us. You can use Instagram. My handle is D a V A u c H e R Rob is at R o B N u D D S and Alon is at A L o n B e n J o S e P H. You can also get in touch with us via email. That's just our first names herealtime show.

[Rob]

And if you like to keep things.

[David]

Old school, we are reachable on the web via our contact form. The address for that is www.therealtime.show contact. Thank you so much again for taking the time to listen to today's Audical. We really look forward to having you join us for future episodes of the Realtime show. And in the meantime, take care.

[Alon]

Well, what an insight and good to be back on the mic with David and Alon to tackle yet another article and its ensuing analysis. So I don't really know to start with this one because there's so many things I want to say. I feel like I'm going to have to hand it over to Alon to take the lead and then I'll jump in with a little addition myself. Alon, what did you make of that?

[Unnamed Speaker]

Well first of all, thank you David for being back. Our resident in house provocateur. We've missed you. The TRTS community has missed you. We apologize that has been so long. We have missed it as well. So I'm very happy to be back with you chaps on the mic. When I listened to the article, my feelings and my thoughts bounced all around all over the place. On the one hand, agree with you, I love the article. I love the article. First thing that popped into my mind, did you simply forget Union or did you omit it on purpose? Because for me that's a strange brand in the Swatch Group stables because it's Union Glassute but it's not a German brand because everything is Swiss made. So I was very curious as a first feedback to you David, it totally.

[Rob]

Well first of all, fantastic to be back with you both. And to answer your question, Alan, it totally slipped my mind when you mentioned them just now. I thought oh yeah, they're part of this watch group but they are not the first company that comes to mind when I think of watches and I think that gets to a theme that we'll probably touch on in the rest of the show. But to answer your question, it was not intentional. They just never even came close to being top of mind.

[Alon]

I've got no problem with you forgetting them whatsoever. I think that it's fair enough. There's no reason to be remembering Union Glass Auto. Really. There's one of many brands that I don't even know why they bother to persist with. It's just a waste of time. That's a bit harsh, but it's my honest opinion. Talking of honest opinions, when I was listening to your breakdown. I was thinking, I didn't want to agree with you, but I was instinctively feeling like you might have a point. But then I tried to distill it into. Into three possible outcomes. Could the Swatch Group save the industry? Could the Swatch Group sustain the industry? Or maybe could it be possible that the Swatch Group will destroy the industry? I guess, like if we're just being very glib and superficial, those are the three impacts a Swatch Group could have on the industry. Alon. How do you see that?

[Unnamed Speaker]

Very well put, Robert. Very interesting because I think it's all three, but chronologically and not simultaneously they did save the industry. They sustained it, especially through ita, ETA and all of the other caliber suppliers that they owned, Valjoux and le manga nouvelle, etc. But would they destroy it? They have been accused of trying that simply because they resisted supplying third parties with the calibers. I think that it was kind of malice when they pulled the plug on Basel World, the Trade Fair and didn't rejoin any other and I guess we're going to touch upon that topic because you rightfully so mentioned that David and another brand I, I had to pull up the list of SW brands was Balmain and, and shame on you David, as the, the, the high priest of fashion and Frenchness on the Real Time show that you omitted to mention Balma in that list. But Rob, to get back to your comment, I don't think they will destroy the watch industry or the Swiss watch industry and I want to maybe take a stance in this analysis that SWAT Group didn't do themselves any favor by a reducing the supplies to third parties with the calibers both in image and I think also for the ecosystem and their internal economic ecosystem of the Swatch Group because obviously they're not just about producing watches, they also produce jewelry, but they do a lot of production and nowadays retail as well. And they became stuck in the middle in my humble opinion. And all these brands that you mentioned, yes, they're fantastic. But Longines I think paced forward too fast, filling the gap that Omega left behind with these very steep price increases that you also touched upon, David. So I kind of want to isolate Longines out of that list that you've mentioned which was Tissot Hamilton longinesertina. And it's funny that you've racked up that list in that order because it's not alphabetical and it's not based on price points because Swatch Group was the first to present a pyramid and then stacking their brands on top of each other. So I'm actually very curious what you chaps think are the lowest end of these three because you omitted Flic Flock probably for a particular reason as well. And Swatch, although you touched upon the moon Swatch, so I see hands flying all around. David, I'll give you the mic first.

[Rob]

Yeah, look, I'll just say, I'll go on record as saying that the, the cutting off of movements was just. I don't know who made that decision, but boneheaded. I mean, when you have a monopoly, you flex the monopoly. You don't give up the monopoly. The quick point I'll make on movements is I really, I don't care that there's ETA 2824s everywhere.

[David]

I wish we could see more 2892s.

[Rob]

I think those would make some of these watches a lot more interesting. I think that's kind of a minor point in the show, but I'd love to see more of those going forward. You mentioned Flic Flac, hugely important. You know that didn't come to mind when I wrote the article, but I just bought one for my nephew who's three years old, three and a half years old, who knows where that goes. But I think that is a hugely important brand. And if, if I answer what I think your question is, Alan, just sort of ranking these brands, I think. Okay, let's start with Flip Flop. I think that is a very important brand. Then you've got off the top of my head probably Tissot and Hamilton Tide, Sertina, probably there.

[David]

So I think they're all pretty clustered.

[Rob]

And then Longines, a clear sort of demarked brand above that, who I think actually are justified in some of their prices. But let's set that aside. But I think the point to all this is you've got this coherent low to mid range segment and I think Swatch Group does that very well. I've got some more thoughts on that. But Rob, your hand is up. What are you thinking there?

[Alon]

Well, there's so many good points being made. I don't want to let all of them run away from me. I mean, to your two points, David, I agree with the movement, monopoly, abandonment. I think that was head scratching to say the least. I think they hoped that it would cripple their competitors, but there was enough people to step into that void and fill it and now we have so Prod, stp, Lejeux, Paris, et cetera, et cetera. Flic Flac actually might be the most important brand in The Swatch Group when it comes to the sustenance or the growth of the watch industry because there isn't really another major brand serving children of a time telling learning age. So that's pretty cool that that exists. If you're going to ring fence Longines Allon. I'd also take Omega out of the question because Omega's guilty of the same practices that Rolex is and they have, I think alienated quite a lot of their consumer base, maybe even myself included, by jumping up those prices extremely in the last few years for yes, better, really better products. That is fair enough. But what the audience would love to have seen, I'm sure, is those improvements being made without such a seismic shift in the price. Now, going back to this three possible routes that could occur, I'm sure that Swatch Group did save the industry in 1983, as David references in his article, with the foundation of Swatch, that reformed everybody's perception of what a watch could be. I believe now they are sustaining it, or they have sustained it and they're sustaining this entry level luxury market because again as David mentioned, the economy, the economies of scale enable them to create an incredible product well designed with heritage. In the brands mentioned, the destruction aspect comes from not just the movement move which kind of backfired. So probably hasn't really been a bad thing for the industry itself long in the long run. But it could be the fact that this current almost monopolization of the entry level true luxury heritage market might stifle new creativity and take money away from things that are more important to the growth of the industry. In regards to what it is likely to become, should it persist long into the future. The upper end stuff, the Blancpain, I'd say that's still very valuable because if watches are, as David intimated, it sometimes feels as if they are already becoming the preserve of only the ultra rich, then what we really need to see in the lower end is the creativity, the independence and the dynamism to challenge that notion. Brands like Colloquium, brands like Space One, Biasly, I'll say Arknor, Anordain, Straum, these kind of things that are really offering an alternative at a reasonable price point. David?

[Rob]

Yeah, so I actually anticipated that argument and one of our listeners made this point a couple months ago in a letter to us and I don't mean this in a bad way, I think it's fact and that's that all these micro brands, they're for watch nerds. They're not for people just getting into watches. What the industry needs and what people want is to be able to buy a nice watch that they see advertised in an airport or in a magazine. And increasingly that is becoming more and more difficult because the average person is not going to splash out for a Cartier, a Panerai, you know, pick your, pick your big group brand, but a Longin at ciso that that is possible. What do you think, Rob?

[Alon]

Well, do you not think, and I think it's a very good point, the average person wants to buy these things. But why? Is the question I would always ask. And I think the answer is because they know they exist. And when there's so much noise coming out of a group as massive and as powerful and as cash rich as the Swatch Group, how are they possibly supposed to hear the voices of the more interesting dynamic independents that are more likely to be a pathway to something like an MB and F in the future? You know, if your first watch is a Hamilton Jazz Master, yeah, you might well want to buy a Blancpain eventually because it follows or a Jaeger or something like that. But if your first watch is a space one because you know it's there, then you're more likely to be on that route where you're going to buy a Grunefeld or, or an MBNF or an URVK or something like that. Is that not more important to the industry in the long run? Or do we want to keep people locked into this quite restrictive heritage group of brands that Swatch Group has such a holdover?

[Rob]

Okay, so let's, let's talk strategy because I was thinking about what can I say to really make this interesting? And I hesitate to say this now because there's other points I want to make which I don't think we're going to get to, but what about this? So I think we all three of us agree that Swatch handles the mid to low end very well. Omega is kind of the cutoff. What Omega is doing is very shaky. Brands like Blancpain, Breguet, they're hugely important, they do fantastic stuff, but they're mismanaged. So what if we live in a world where Swatch Group says, okay, you know what, we want to spin these off, so let's maybe sell Breguet and Blancpain to Richemont LVMH companies that will probably do something with them and we're going to focus on this lower end in doing so, they say our strategy is to save the lower end of the market and really encourage people who are Just getting into watches to then aspire to some of these higher end, more experimental brands that we don't own. So we become an incubator for some of these brands. So we acquire maybe a space one or we fund companies like Archinaut. You know, Rob, I'm not putting any kind of, I'm not giving any scoop to readers. I'm just thinking totally hypothetically, but what if you spun off these higher end brands and just focused on that lower end of the market? I see. Alan, you got your hands up. I know you have thoughts. What do you think?

[Unnamed Speaker]

Ooh, now you gotta be fired up because you know, one of the next articles is about me stating that the watch industry should behave more like the tech startup scene. So stay tuned. I'll refrain from answering now, but I guess people that know me know what I think. But I think that's an excellent idea.

[Rob]

David, if I could say one more thing because one thing that Swatch I think is doing well and we've mentioned like are they saving, sustaining, you know, crashing an industry? They, they work to production and when I wrote that article, their financial results were not good because they had inventory built up and it seems to me like they had made the decision not to lay people off, you know, not to cut back. And I think that's important. So I don't know how much we're going to play on that. But as we're talking things that they're doing well, that to me seems to be one of them is they're maintaining the human capital and, and not being completely reacted to how the market is now. So I'll just put that out there and, and let you take that however you want to.

[Unnamed Speaker]

Ellen, I think I want to pause that for our up and coming article and the aim is to do many more this year and to just go back quickly to what Rob rightfully said about Omega. I totally agree. We've discussed that actually in length a lot in the previous episodes and I omitted that on purpose because David in his article actually also isolated Omega and the higher brands of the Swatch group out of the equation. So I left that out and I kind of push Longines also into that bracket because I think that's their ambition. They want to push it up into the more of the haute things of the watch industry. Now what I want to touch upon, if I may, is very interesting. Did the Swatch group actually do a favor to all the new up and coming brands, the indies, the micro brands? Rob mentioned a few brand names, but could it be because Swatch group was slacking a bit dormant a bit that they gave way to all these brands to come up. I would love to hear both your opinions and I want to add to that when you do, please tell me who you think are these competitors of those brands that you, David mentioned in the article. So Tissot, Hamilton, Longines, Mido and Sertina.

[David]

I don't think they have any.

[Rob]

That's, that's the point is I don't think any of those brands find micro brands. We can, I mean all of us could come up with 10 names to, to. For each of those larger ones to sew, Hamilton, Stretina. But I think that's, that's moot because that is not addressing the. The segment and the need in, in the industry that I'm talking about in the article. So even though some of my business school professors would hate me saying there is no competition. Okay. Besides, I think I mentioned Nomos and one other in the article which is a legitimate name. Seiko, to a point. But if we're talking nicely made Swiss watches which does carry weight with the, the consumer segment I'm talking about, I don't think there is any.

[Unnamed Speaker]

And let me. Yeah, let me jump in. I'll shoot names and you tell me yes or no. Let's do a ping pong game. Fred.

[Rob]

Fair. But they don't make sports watches. Yeah, actually that's not true. So yes, point point to you, Alan. Frederic Constant. Yes.

[Unnamed Speaker]

Okay. So I would, I would position Frederic Constant as a nemesis for Longines. Although Longin is moving up quickly, rapidly. But Frederic Constant as well, because they became manufacturer and they're also pushing the limits to 4 or 5k and even making 2 beyonds now an easy one for me, Frederic Constance, sister brand Alpina.

[Rob]

Ah yes. But not very visible and doesn't have a ton of prestige.

[Unnamed Speaker]

Okay, but. But they have the weight to take them on, don't they?

[David]

They're a group.

[Rob]

So I'd say nominally yes, but realistically no, I think Frederic Constant is a much more. That. That's a solid, a solid suggestion. I don't feel the same way about Alpena.

[Unnamed Speaker]

Okay, let's isolate them because they are a group since a few years cuz citizen group bought them. They behave independent, but they are. So you have a fair point. Okay, let me give you two in one go.

[David]

Okay.

[Unnamed Speaker]

Maurice Lacroix and Raymond V. That I have even difficulties always separating the two.

[Rob]

Okay. I think Raymond VI's mil collection, they just came out with the moon phase especially super nice. I Think that that is another. I think Maurice Lacroix. No, that that is one of these brands and maybe I'll write about these. All due respect to them and the professionals who work there, I don't know how they stay alive. It's just not one of these brands that speaks to me and I don't really see who they speak to. I think Raymond Weil, there's potential there that Mila Seam Line could do something. But I think Frederick Constant, still, of the four you've mentioned so far, they're top of the list.

[Alon]

Yeah, I think Freddie C is a pretty good show. I think one thing one might point to is, if we're being honest, a lack of heritage there. I think the advantage that all of the brands that David is referencing in the Swash group, they are old brands, like really old brands that have done very innovative and exciting things in the past. For me, the best thing Hamilton has done in recent years is revive the. Well, Pulsar, I guess, you know, the digital watch that comes alive when you press the button because that's kind of cool. That was a bit offbeat. That is what I would love to see these brands do because they have the power, they have the range, size, they have the production capacity to drop the occasional oddball in there to remind people that they're not just churning out middle of the road field and dress watches for people that see the adverts in the airports and don't know how deep the industry goes. So that was great. I think that was really something worthwhile to the brands that you mentioned as competitors. Alon. I mean, I love Alpena. I think that's a great brand. I think it has a really cool history. But I do agree with David that it's perhaps not as visible. And again, go back to this point that I made about the new, more dynamic independents. Let's sort of not call them micro brands in this context because I think we don't want to muddle the term too much. We're not talking about sort of Kickstarter emulations of brands that have existed for years before, like Steinhardt, for example. We're talking about the brands that are really trying to do something new. And Colloquium for me is one of the best examples. What about Otsuka Lotec? You know, there are watches coming out all over the world from places, different countries as well, which I think deserve more exposure that could really stand toe to toe with these watches and give them a good run for their money. On that point though, David, you mentioned the Swiss label still matters to people. But my question to you both is does it matter as much as it did? Because I'm starting to get the feeling that it really doesn't matter as much as it did even three or four years ago. I think that people that have money and maybe this is just restricted to the watch nerd community that David, you referenced before, but I don't think it is as powerful as it once was.

[Rob]

I don't like speaking in sort of absolutes to that data. So I should have said, I hypothesize Swiss made still matters. I presume it does because otherwise the Swiss government wouldn't protect Swiss made the way that it does. Even if I think all three of us can agree that it probably could be stronger. I know Rob, made in Germany is, is a lot more rigorous. So I think it does. And actually I want to put two more names out there because just in line with Allan's game, I think Oris, I probably could have mentioned the article and Timex, believe it or not, I think is got some really interesting stuff up and coming. So if either of you want to touch on either of those two or the Swiss made label. But again Rob, I have to go back to you. Like all those brands you mentioned, eventually people will get to them, but they have to go through the Hamilton Certina Tissot phase first. What do you think?

[Alon]

Well, I agree that they do right now because I don't think they have much of a choice. It'd be asking an awful lot of somebody completely cold to the industry coming to it and suddenly either discovering them by chance or having the patience to do all of that research to get to those pieces and then have the confidence, having never bought a luxury watch before, to buy it. Because I think one thing that's ripe in the mind of first time consumers, rightly or wrongly, and in my opinion right now, very much wrongly, is resale value. You know, if you buy a Hamilton khaki field for five or six hundred quid, which is very likely to be a large purchase for a first time watch buyer, you're not going to get anywhere close to that money back. And because I mean, who really buys a secondhand one, you know, I mean if you're selling one you're going to want three or four for it. And then if you're buying one, you think, well I'd probably rather spend another couple of hundred quid and have one from, from new with the warranty and whatnot and totally box fresh and all the boxes Papers undamaged. I just, I just don't see it. So to your points about Oris and Timex, Oris is a great one. Oris is really a brand that is almost identical in terms of heritage prestige to something like Hamilton or Satina, maybe even Tissot. And they make good stuff. It's commercial, there's a lot of it. They are very good at marketing. They put a lot of money where their mouth is. That's great to see. I don't think Oris is often as innovative as I would like it to be in the way I would like it to be. But that's only my personal preference. They do do wild stuff sometimes, you know, they do have like some pretty interesting pro pilot models. Although I think my preference is towards more heritage style stuff. I think the big crown point of dates are really great because there aren't many point of dates on the market, certainly not at that price point. And I think that the diver 65 is maybe a little bit overdone at the moment, but there's still potential within that platform to do something really, really strong. You know me and the Aura Spare don't get on, but I have a great deal of respect for him and his furry passions. And when it comes to Timex, well that's a different price point entirely. I mean I bought, I've bought two or three Timexs in the last couple of years because they are just impulse buys. I bought the second Penguin version and I bought one of the, what were they called? Q Times the GMT Pepsis from a few years back. Great made watches, really nice on the wrist, cost barely any money at all. To be fair, I would say that if you're a first time watch buyer, Timex is maybe alongside Seiko or Casio the best place to start because it gives you the opportunity to scratch that itch. Spend a little bit more time researching the industry and maybe somehow get into the community enough so that you're able to bypass an ill advised purchase of a Hamilton Open heart Jazz Master, which I really don't like by the way. There's a lot that I love about Hamilton. I have two Hamiltons in my collection. I have an Ardmore and I have a very old MTA that's a Metropolitan Transport Authority special edition produced for a safe driver which was a gift watch, probably given to someone after 10 years of not having a crash or killing anybody. And I love those watches. They're great little pockets of history. And Hamilton was one of the first companies that I worked tangentially with when I was at the Swatch Group servicing those. So I've got a space in my heart for him, but I just don't think they're pushing the envelope enough.

[Unnamed Speaker]

Especially for you, Rob. Oris brought Miss Piggy to the stable so you can take her on a date at Watches and Wonders.

[Rob]

I saw that.

[David]

That's.

[Rob]

Yeah. Hey, I mean, I think anyone that wants to say Oris doesn't have a sense of humor, well, there you go. You have Kermit Miss Piggy to. To go with.

[David]

Yeah.

[Alon]

I don't think anyone would accuse Oris of not having a sense of humor. That's something they're definitely ripe with, which is wonderful, actually. It's rare in a brand that big and that well known. And just as a slight tangent, what did you think of Miss Piggy? Because I actually kind of liked it.

[Unnamed Speaker]

I did, too. And I replied to their press release. I said, congrats, well done. Interesting. You guys opted for lab grown. Just a little tip. As a diamanter, you mentioned diamond, diamond, diamond, and only in a small font at the last page. There's very little in small font written Lab grown diamond. So just watch out. It's a thing in the industry now that if it's natural, you call it diamond. If it's not, you have to add lab grown diamond to it. So that's a little feedback I gave them. So, interesting choice, but I think it looked well. I think it's better than the green one.

[Alon]

Yeah, I totally agree. I really do. I think that the size is interesting as well because it's quite dinky and I like that shade of pink. You know, Tag did it with a Carrera that I think Ryan Gosling was sporting on his wrist for a while, and I thought it was lovely. I think we need a bit more boldness when it comes to pink because although pink is always proven to be a very successful color when it debuts, possibly because everybody loves it or possibly more, so there aren't many options. And the people that do love it are ravenous to consume whatever comes out in that shade. The hot. The hot pinks, the fuchsias, they are really bold and they are really exciting. So more of that, please.

[Rob]

Rob, if you mentioned tag, and I was thinking how I wanted to weave some of my other favorite topics into this, and it's my impression, and I'm speaking off the cuff, I don't, unfortunately, have the data in front of me to compare, but it seems like LVMH is doing things with their brands that swatch could be doing and I know I'm crossing into another sort of price realm here, but that's been intentional because if you think of TAG Heuer, that used to be the watch that you went to the mall and you picked up and that was what everyone thought of was a nice watch and now it's like proper luxury stuff.

[David]

And when you look at some of.

[Rob]

The marketing they've been doing, the models they've released, I don't think it's unreasonable actually. So do we think that this is something that Swatch has tried to do and not done well or that they they could do? I guess really I'm asking for that particular brand because they have moved up market. You know, what do we think of that with regards to the context of our current Swatch Group discussion?

[Unnamed Speaker]

Interesting David, if I may take this one maybe for our listeners very quickly. So Swatch Group is maybe the most vertically integrated on the production side of things. They do small components to calibers, to ceramic cases, to full watches and obviously retail. LVMH is originally a spirit house, then a fashion house for the watch industry. Their lowest end price ranges are actually Dior and Tag Heuer if I'm not mistaken and they move upwards. Richemont is basically only high end. The lowest brand they have is Beaumercher who's not performing that well and then maybe quartz tank Cartier watches are the lowest price points for watches that Richemont does Carrying is struggling a bit sold off so they are left with Gucci and that's it I believe. And then obviously you have foreign groups out of Europe which are of course citizen and Seiko group us. You have of course Fossil group which you didn't mention David, only Timex. And in Detroit we have an interesting, well it's not a startup anymore Shinola, so interesting things happening. Just a quick comment back to Rob's remark about the diminishing sign signification of significance of Swiss made. I agree. I think it's become less and less important and maybe another discussion is you very much take into account David in this article that consumers care that these brands that you listed are part of the Swatch Group. Although Swatch Group is pushing very much on that communication. I don't know if consumers always are aware and if they actually care. They either come in shopping on a price budget or on a look of a particular watch. So that's very interesting. Now to get back to the comment about lvmh. I think what LVMH does the best is sexiness because they have that fashion haute couture DNA that radiates on all the other subsidiaries. And another thing that I think in the luxury industry is the best strategy is to let the Maisons run their own course. So have their own strategy. I think that of all these groups and let's for argument's sake or for the fun of it, call them the leaders, the dictators, the high are maybe the strictest dictators in the watch industry. Rupert, let things go. The owner, Richemont, the Arnaults are very hands on. But I know that the CEOs have a lot of freedom. So I think that's also one of the downfalls for Swatch Group, especially on this comment that it all becomes 12 in a dozen vibe wise. Because a question I had for you David, after that rub rebuttal is what do you actually think differentiates all these brands? I think TVSO has an own face because it has a long heritage. Longines as well. But Mido, I don't even know what is really a unique selling point for that brand. Sertina. What comes to mind for me is the Turtle and because I love vintage watches, I remember their dive watches and they work with Quark to make watches waterproof. Hamilton obviously is American and I think Waltham is pouncing on them, although way smaller. So first mic to Rob and then back to David.

[Alon]

Well, actually I was just about to touch on exactly the point you've made. I would say that you could probably conflate all of these entry level brands from Swatch Group, Hamilton, Tissot, Satina, Mido into effectively one brand that is focused in different markets. So they kind of do the same thing, they serve the same kind of customer in terms of where they are on their journey. Not necessarily the same stylistic preferences, but that's because stylistic preferences vary from region to region. So for example, Satina is like the second biggest brand in Norway. That's bizarre. I mean like across the board, like it is basically Norway's Omega, it's Norway's Hamilton, it's Norway's rugged go to day to day wearing watch. And then you've got something like Tissot, which is massive in the Far east because of their dressier styles perhaps. Very interesting, I agree with you. But David, what do you think?

[Rob]

No, you read my mind. I know Me though is huge in Mexico, which we're saying these things as if it sounds strange, but I think that's just because we don't have that local context. So I'm sure someone's looking at Swatch and basically saying what we are, which is, well, different brands, you tailored in the different markets. But I do get the impression though, and clearly I was not privy to any of these discussions because they happened decades ago. I don't work in history, etc, etc. But you almost get the impression that the Swatch Group bought these companies at a time when they really were the leaders and they could. So they were like, okay, let's just buy this. And maybe because of, as Alan said, there's this very strict leadership style from the top. They had this huge portfolio that they couldn't really adapt to. And so now they're at a point where that growth engine has stalled a little bit and they haven't really been able to reach that exit velocity to the, to the higher points going forward, I think.

[Unnamed Speaker]

And it's happening. I think that they need new blood. And the one I'm most excited about to see unfolding in 2025 is Breguet. I know it's a bit off because we're not talking about the hotelagerie, but you see now little moves within Swatch Group. Finally, whereas we've seen major moves within Richemont LVMH the last 24 months, big reshuffles actually twice in two years. And I forgot his name. I think it's Gregory Kissinger who was the right hand of Reynald Ashuman at Omega. He was trained a long time and I've said it on air several times that I think that Reynald Ashman is one of the best CEOs within the Swiss watch industry. Hands down, the best within the Swatch Group, together with Sylvain Dolan who is now at Tissot and I have big expectations of him at Breguet. I think that they need to reshuffle more at Mido and Sertina. Hamilton is homegrown CEO Tiso has a rock star CEO Longines. Also a Swatch Group soldier who moved to General was Matthias Brechant. So you see little shifts, but it's all homegrown. Not saying that's wrong. It's the Ajax soccer model, right? They train their pupils and there's their soccer players internally. So they're all homegrown instead of buying them continuously. But sometimes some fresh blood can help. Very much so. And I am actually really looking forward to our next discussion about either incubating watch brands, buying more smaller brands or dumping brands. I think that Richemont, I think that Swatch Group should maybe let go of Mido and Sertina and that could be a nice article when the three of us daydream, what would happen if we would take on Mido or Satina when it's not part of the sword troupe or anybody else for that matter?

[Alon]

Yeah, that would be a good one. We definitely have to put that in the list of articles to write because that list is growing rather quickly, so we should slot that in there sooner rather than later. Okay, we're going to wrap up now, but before we do, we're going to have one more question. Very quick answers please. We're going to go back to David's original point and I want to hear from you. Do you think over the next 20 years, specifically the Swatch group will save, sustain or smash the industry? Alon, one word, sustain, save. And it's sustain for me as well. Okay, well thank you for listening to this article analysis. We will, as Alon said earlier, have more of them in the near future, as well as more Q&As, which have been a little bit less common in recent times due to a lot of traveling and busyness over the Christmas months. So thanks for sticking with us throughout that period. If you would like to get in touch and fill up our mailbag with some more questions for those upcoming Q and A sessions. And please do. You can get in touch either via Instagram. I'm there at R o B N u D D S. You can find David there at D A V A u C H e R and Alon is there at A L o n B E n J O S E P H. You can contact us via email by adding either Rob Alon or David to @therealtime show or via the contact form on the website www.therealtime show. Thanks again for your time. We'll be back soon with more top quality watch content. Until then, stay safe and keep on ticking.