NSOW 8-19 Watches and the West

These are my notes from a recent youtube video I've done looking at the destination of swiss watch exports and what that says about the importance (or not) of the countries broadly considered as "the west" in the watch industry.  Please remember these are just notes so a little rough.

The vlog is at: https://www.youtube.com/watch?v=VxQQlGlEDpc

Also - it looks like the links in my notes broke but they should still work if you cut and paste them into yout browser.

YOU KNOW HOW THERE’S ALWAYS THAT THING YOU KNOW YOU SHOULDNT DO BUT IT JUST SEEMS SO RIGHT? THAT LAST PIECE OF PIZZA, THAT LAST BEER, OR IN MY CASE RECENTLY, THAT COMMENT ON THE INTERNET THAT IS SO LACKING IN SELF AWARENESS IT JUST BEGS FOR A REPLY.

WELL THAT REPLY LEAD TO AN EXCHANGE THAT WAS LIKE THAT LAST BEER  YOU SHOULDNT HAVE AND THAT SEES YOU TAKING PORCELIN BUS FOR A SPIN.   I BAILED AND BLOCKED ASAP BUT LIKE - WOW!!!!.

SO WHAT WAS SO TASTY I HAD TO HAVE A BITE?

OVER THE PAST YEAR A QUESTION HAS BEEN RATTLING AROUND IN MY HEAD AND THIS COMMENT BROUGHT THAT QUESTION INTO FOCUS.  THAT QUESTION IS?

JUST HOW IMPORTANT ARE WE WESTERN COLLECTORS IN THE GLOBAL WATCH COMMUNITY, ESPECIALLY THE SWISS WATCH MAKERS.

AND I SUPPOSE STEMMING FROM THAT HOW REPRESENTATIVE ARE WE OF WHAT THE WATCH MAKERS ARE SELLING AND WHEN WE TALK ABOUT COMPANIES CATALOGS AND DIRECTIONS ARE WE TALKING OUT OUR ARSES?

LETS START AT THE TOP WITH LOOK AT GLOBAL DESTINATIONS FOR SWISS WATCHES BY REGION GO TO THE FH SITE:

https://www.fhs.swiss/pdf/regions_170112_a.pdf

ASIA: 12 MILL UNITS: 10  BCHF 50% - +5%
EUROPE: 8.6 MILL UNITS:6.7 BCHF 34% - +2.6%
AMERICA: 3.4 MILL UNITS: 2.8 BCHF 14% - -2.7% (GROWTH IN SOUTH)

OK - SO WE ARE IMPORTANT BUT:
NOT THE BIGGEST MARKET SEGMENT
GOING BACKWARDS
SOUTH AMERICA PLACE TO WATCH!

NOW FROM HERE THE DATA COULD TAKE US IN ALL SORTS OF INTERESTING DIRECTIONS BUT I WANT TO KEEP THIS MANAGEABLE.

LOOKING AT THE COUNTRY TABLES (AND ASSUMING MOST HK WATCHES GO TO CHINA)

https://www.fhs.swiss/pdf/mt3_170112_a.pdf

CHINA + HK = 4.6 BCHF.  MORE THAN 2X USA

SO A COUPLE OF QUICK GOOGLE SEARCHS AND LETS SEE WHAT SWISS BRANDS ARE BIG IN CHINA.

FIRST I CAME ACROSS THIS ARTICLE FROM THE SOUTH CHINA SEA MORNING POST:

https://www.scmp.com/magazines/style/watches/article/2135109/5-luxury-swiss-watch-brands-driving-sales-recovery-china

THE POST IDENTIFIES THE FIVE BRANDS IT CONSIDERS IS DRIVING SWISS GROWTH IN CHINA:
THE FIRST IS LONGINES
THEN CAME A COUPLE OF PREDICTABLE CHOICES, PATEK AND OMEGA BUT THEN:
PIAGET? BEFORE ROLEX???? EVEN IN THE SAME LIST AS ROLEX? FOR US HERE ON YOUTUBE THEY ARE AN IRRELEVANCE.

OK - MAYBE THAT’S A QUIRK, A MEDIA MAGAZINE PUFF PIECE BOUGHT BY THE BRAND THAT MISREPRESENTS WHAT’S ACTUALLY HAPPENING.

ANOTHER ARTICLE - THIS ONE FROM BARRONS:

https://www.barrons.com/articles/cartier-watches-are-top-choice-for-chinas-wealthy-1490232676

THIS ONE ISN'T LOOKING AT SALES SO MUCH AS CONSUMER RECOGNITION AND SENTIMENT. THEIR FINDING ARE A LITTLE DIFFERENT BUT BROADLY IN LINE.  THIS ONE FOUND CARTIER ON TOP AS THE BRAND MOST LIKELY TO BE PURCHASED WITH LONGINES IN SECOND. OMEGA AND ROLEX SLIPPING TO 3 AND 4 OVER PRICING CONCERNS. ALSO IWC AND BULGARI - BULGARI - ARE FAST ON THE RISE.

OK - SO WHAT IS THAT TELLING US:

THE STAPLES OF THE SWISS (OMEGA/PATEK/CARTIER/OMEGA) ARE CERTAINLY ALSO BIG IN CHINA BUT...
BRANDS THAT ARE PERIPHERAL IN THE WEST LIKE PIAGET AND BULGARI ARE BIG AND GROWING, HOWEVER .
I THINK THE MAIN TAKEAWAY IS THAT LONGINES - A KIND OF AFTERTHOUGHT MALL STORE BRAND IN THE WEST - IS THE DOMINANT SWISS BRAND IN CHINA.

CERTAINLY DIFFERENT TO HERE IN THE WEST BUT NOT SURE WHAT THAT REALLY TELLS US - SO NOW HOW ABOUT A SEARCH ON LONGINES AND THEIR POSITION IN CHINA AND WHAT DO YOU KNOW:

https://www.europastar.com/time-business/1004089866-longines-an-empire-in-china.html

LONGINES, AN EMPIRE IN CHINA:  CASE STUDY

STARTS WITH THE SECTION:

HANG ON - BACK UP THE BUS. LONGINES - THE BRAND WITH THE BLOATED INVENTORY OF TRASH WITH A FEW INTERESTING HERITAGE PIECES IS THE FOURTH LARGEST WATCH BRAND IN THE WORLD!?!?

GOT TO CHECK THIS. HOW? OK LETS LOOK AND SEE IF THE SWATCH GROUP REPORTS TELL US MUCH…..

https://www.swatchgroup.com/en/services/archive/2018/swatch-group-key-figures-2017

NOT A LOT OF DETAIL BUT TWO SNIPPETS:

2017 REVENUES FOR THE GROUP WERE AROUND 7.9 B CHF
LONGINES ON TRACK FOR 2 B CHF IN MEDIUM TERM

OK - WHAT IS “MEDIUM TERM” ETC BUT STILL - GUESSING LONGINES CLOSE TO 25% OF ENTIRE SWATCH SALES. AND WHILE HARDLY A SLAM DUNK IT LENDS SOME CREDENCE TO THE CLAIM OF 4TH BIGGEST BRAND.

SO BACK TO THE LONGINES CASE STUDY

NOW - LOTS OF TALK ABOUT CONSERVATIVE/CLASSIC ETC BUT NO REAL IDEA OF WHAT THAT MEANS UNTIL THIS:

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SO LETS UNPACK THAT FOR A SECOND:
90% OF SALES ARE MECHANICAL
50% OF LONGINES SALES IN CHINA ARE WOMENS WATCHES
60% OF SALES ARE SOLD AS “PAIRS”

LOOKING AT LONGINES CATALOG THAT REALLY POINT US TOWARDS THE ELEGANCE, MASTER AND RECORD COLLECTIONS. IN ALL THESE WATCHES LONGINES MAKE “PAIRS” OF MENS AND LADIES WATCHES WITH SOME AROUND 25MM AND OTHERS 38MM .  THESE ARENT THE SUPER CHEAP QUARTZ STUFF BUT THEY ARE WATCHES NONE OF THESE GET ANY REAL COVERAGE IN THE WESTERN MEDIA

FREDERICO ON LONGINES - I LOVE FREDERICO - ONE OF MY VERY FAVORITE YOUTUBERS

https://www.youtube.com/watch?v=54BkTpVoP3Y

https://www.youtube.com/watch?v=oH648j1r96Y


CUTTING COSTS. HERITAGE LINE OK BUT OTHERWISE  TOO MANY SKUS. UNSURE WHERE THE DIRECTION IS.  UNCERTAINTY OF AUDIENCE.

BUT IS THAT TRUE?
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ITS CLEAR TO ME WHY FREDERICO IS CONFUSED - HE, AND BY EXTENSION THE REST OF US - ARENT THE AUDIENCE.  WE CANT FIGURE OUT WHY LONGINES IS DOING THIS TO US AND IT NEVER OCCURS TO US THAT LONGINES IS BARELY THINKING ABOUT US AT ALL.

FOR ALL I KNOW THERE’S SOME ASIAN LANGUAGE FREDERICO OUT THERE COMPLAINING THAT IF ONLY LONGINES WOULD STOP CLOGGING UP THEIR INVENTORY WITH STUFF LIKE THE HERITAGE DIVER THEY COULD REALLY MOVE FORWARD.

SO - LETS WRAP THIS UP.  HAS DIVING DOWN THE RABBIT HOLE GOT ME ANYWHERE.:

SO BACK TO THE QUESTION (S):

JUST HOW IMPORTANT ARE WE WESTERN COLLECTORS IN THE GLOBAL WATCH COMMUNITY, ESPECIALLY THE SWISS WATCH MAKERS.

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WE IN THE WEST ARE IMPORTANT BUT A LONG WAY FROM THE ONLY GAME
CHINA - AND ASIA MORE GENERALLY IS HUGE AND GROWING FAST.

HOW REPRESENTATIVE ARE WE OF WHAT THE WATCH MAKERS ARE SELLING

MAYBE 50:50.
CHINESE/SWISS SIMILAR BUT ALSO KEY DIFFERENCES
SOME OF THOSE DIFFERENCES ARE HUGE AND INDICATE THE PRIME FOCUS OF VERY LARGE BRANDS ARE NON WESTERN MARKETS.

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WHEN WE TALK ABOUT COMPANIES CATALOGS AND DIRECTIONS ARE WE BEING WESTERN CENTRIC DICKS AND TALKING OUT OUR ARSES?

NOT ENTIRELY - BUT MAYBE

TAKE AWAY:
IF YOU ARE STRUGGLING TO UNDERSTAND A BRAND OR WANT TO REALLY GRASP HOW A BRAND IS SHAPING ITSELF  -  STEP BACK AND CONSCIOUSLY TAKE A GLOBAL PERSPECTIVE OR RISK GETTING IT VERY WRONG.