Watchmakers and luxury jewellers blur the lines
Watchmakers and high jewellery brands are facing off as each stakes a bigger claim in the other's market, writesAbid Rahman
One of the biggest stories in the watch industry this year was Graff Diamonds, the London-based jewellers, releasing the US$55 million "Hallucination". Behind the 110 carats of rare diamonds and the extraordinary price tag, however, the Hallucination was the clearest illustration of a shift in priorities for both the watch and jewellery industries, and the increasingly blurry distinction between the two.
Of course, there have been companies that, for much of their history, straddled the line between watchmaker and jeweller. Cartier first found fame as a jeweller and today it is highly respected in both categories. Similarly, Piaget and Chopard have strong reputations in both watches and jewellery, and, over the past decade or so, Harry Winston has also gained credibility in both disciplines.
Historically, however, a company that operated in both fine watches and high jewellery was more the exception than the rule with sales often helped by being specialists rather than generalists. What's changed in the past five years is the sheer number of fine watch companies now pushing into jewellery, with a steady stream of jewellery brands pushing back in the opposite direction.
"The jewellery business is the least exposed to luxury brands," says Jean-Marc Pontroue, CEO of Roger Dubuis, at a round-table discussion at January's Salon International de la Haute Horlogerie in Geneva. Roger Dubuis launched a jewellery collection in 2010, but Pontroue is keen to ramp up that side of the business given the undoubted potential of the market. "Less than 10 per cent of jewellery sold is branded compared to, say, 70 per cent in leather goods. So, jewellery is something we've identified as something that could be a great opportunity," Pontroue says.
The motivations of predominantly masculine and technical brands such as Roger Dubuis and Richard Mille putting more focus on jewellery is an obvious strategy to attract more female buyers who are not as enamoured by tourbillons and other complications. Indeed, Richard Mille himself declared 2014 as the "year of the woman" at his eponymous brand. "[There is] a really rich array of models and materials of all kinds, specifically for women. So, one could say that 2014 is a bonanza year for the fairer sex," says Mille.
With the crackdown on luxury gifting by the Chinese government still proving a drag on fine watch sales both in Hong Kong and on the mainland, watchmakers have looked to broaden their businesses with complementary products.
While reporting its performance for the first half of 2014 on Tuesday, Swatch Group, the giant Swiss luxury conglomerate that owns Omega, Blancpain and Breguet, warned that watch sales in Hong Kong and on the mainland would continue to be sluggish with the added worry of further pro-democracy protests causing uncertainty in Hong Kong and retailers buying fewer watches at wholesale.
To lessen the reliance on watch sales, Swatch Group brands have aggressively pushed into jewellery. Omega has been among the proactive, and what started as a small collection of necklaces and rings spun out of existing watch ranges has evolved into a thriving jewellery business with their own dedicated collections.
The US$750 million acquisition of jeweller Harry Winston in 2013 was yet more evidence that Swatch Group was looking to diversify its holdings into both watches and jewellery.
The acquisition also had other positive implications for the Swatch Group, says Martin Ganz, vice-president of Breguet, Hong Kong and Taiwan. "It made total sense to buy Harry Winston," he says. "What we gained were the expertise and knowledge of the jewellery business that Harry Winston has, as we all buy precious stones."
Breguet, one of the oldest and most respected Swiss fine watchmakers, doesn't have a history of making jewellery, says Ganz, but the company's increased activity in jewellery is an obvious next step in his brand's mission to provide exclusive and exceptional products.
"Breguet started making jewellery more than five years ago and the idea wasn't to become jewellers but to offer our customers complementary products. A high jewellery ladies watch such as the Reine de Naples obviously looks good with matching necklace, earrings and rings, so it was a natural addition," says Ganz. "We found some of our watches sell better when they are sold as a set, with the jewellery, so the demand is there."
If the move into jewellery for watchmakers, at least in a commercial sense, is quite straightforward, the business case for jewellers making watches is less clear cut. Graff's Hallucination is the spearhead of an aggressive push by the jeweller into watchmaking this year that also saw it debut a multimillion-dollar booth at Baselworld, the world's largest watch and jewellery fair. Graff entered the watch business in 2009, following another London jeweller and the world's oldest diamond company Backes & Strauss, which began making watches in 2006.
While previously, Graff and other jewellers focused their attention on creating simple high jewellery timepieces, in recent years, jewellers have released complicated watches featuring tourbillons, moon phase indications and skeletonised movements in a transparent play to attract watch aficionados and collectors. The key features of the Graff GyroGraff this year are a double axis tourbillon and a moon phase indication, with a diamond-encrusted bezel almost an afterthought when one looks at Graff's earlier watches.
Graff's move into watches, as with Backes & Strauss, Swiss jeweller Di Grisogno and others, is to achieve what they haven't been able to do in jewellery, the very thing that's attracted so many watchmakers, as Pontroue points out.
Watches give jewellers an easier opportunity to brand their products, whereas typical Graff products such as engagement rings are unbranded.
However, the watch industry, more so than the jewellery business, is built and sold in large part on heritage and technical competence. So many industry insiders remain unconvinced that jewellers such as Graff will gain traction with their timepieces and will have a harder time moving into watches than watchmakers will experience moving into high jewellery.