How’s the Food? It’s Actually Like the Watch Industry

The watch industry is a very complex environment. While it is fascinating in the sense that it thrives off selling obsolete mechanical watches, it continues to baffle many watch collectors. I’ve assembled a simple analogy for the industry. This analogy includes the classic brands as well as the newer prestige brands entering the fray, and also micro brands. As an owner of both traditional Swiss watches and micro brands, this analogy brings both into perspective for me. The analogy starts down a road directly to my heart — food…

watch industry like food industry

(U.S Navy photo by Mass Communication Specialist 1st Class Chris Fahey/Released on Creative Commons)

Think of the Watch Industry as a Village, and Watchmakers are the Restaurants.

Blancpain was the first of the early restaurants in a village to survive into modern times. Then a 2nd restaurant called Vacheron Constantin (VC) set up shop. Many other restaurants came and went, but these two endured for 100 years when a flurry of other restaurants opened up: Jaeger LeCoultre, Patek Philippe, Audemars Piguet (AP), Rolex, etc. Restaurants continue to pop up all over the village with wonderful chefs creating excellent and exquisite menus. Finally, the village is saturated with restaurants, from fast food to fine dining. Then a drought comes for 10 straight years and there is little food to sell (i.e. the quartz crisis). People stop coming to the village to eat and go to other villages that are growing new crops (i.e. the quartz watch). Finally, the drought ends, but most of the restaurants are either boarded up or on the verge of failure.

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watch industry food

(author’s photo)

Another restaurant opens shop and starts selling the new type of crops (quartz watches) from the surrounding villages and people like it; his restaurant does very well and he names it Swatch. He also decides to buy up some of the weak-performing restaurants. Two rich residents (Richemont Group & LVMH) move to town and buy up some of the other weak-performing restaurants. There are a few independent restaurants (Rolex, Audemars Piguet, Patek Philippe, etc), but a lot fewer than there used to be.

To save money, each of the two big conglomerates start having their restaurants share supplies, and sometimes even the same kitchen. While each restaurant claims to serve you the best meal of your life, it comes to a point that every restaurant is basically serving the exact same thing. Diners continue to go to the restaurants, but they are open to something new; they’re ready for variety, but that’s hard to do because the conglomerates own so much of the market and are in the driver’s seat for setting trends. People even see an old German restaurant (A. Lange & Sohne) reopen its doors in the town after being closed for many years and get excited — something new!! Only to find out it too is owned by one of the rich guys — they make great German food, but still the same restaurant group.

Epos 3424SK

One of the chefs at the restaurants is tired of the rat race and tired of shifting focus away from food towards boosting his marketing and sales. He loves food and wants to share it with people who also love food. He wants to cook with love; his food is a way to share his love. He goes to the fields and talks to the farmers and understands what the farmer uses as fertilizer, where he sources his seeds from, how he cultivates the crop. He goes to the dairy; he even buys his own cows to ensure the best quality milk. All of this extra effort, this interest and passion — it comes through in the taste of the food (micro brand watch). He inspires other chefs to follow in his footsteps, these chefs open restaurants with different flavor profiles in the same village. Soon the big restaurant conglomerates still own most of the market, but there are new restaurants on the scene (prestige micro brands), appealing to very specific customers.

While this is going on, a foodie (aka loves food as a hobby) gets an idea. Why are chefs the only ones opening restaurants? He thinks to himself:

I know that many people are bored of the same food in this village. What if I opened a restaurant serving my most favorite dishes? I’m not a chef, but I do know food. Maybe, I can find a chef who will help me realize my vision for becoming a restaurateur. So, where do I begin? (and starts another afforable micro brand)

These entrepreneurial chefs and foodies with an idea to start a whole new type of restaurant are the startups of the watch industry. These are the stories of micro brands: how new “restaurants” are trying (and some able) to break into the industry dominated by three huge conglomerates.

watch industry food

(author’s photo)

Who are the conglomerates?

You really have to understand where the three behemoths (Swatch, LVMH, and Richemont) came from and who they actually are. Have you ever worn a Richemont watch? I never have, but I have worn plenty of watches made by the companies they own. You have probably heard of Swatch, who actually makes watches, but Swatch Group is actually a conglomerate of many companies including Omega.

Richemont Group

a lange sohne movement

(author’s photo)

This company is more or less a Private Equity holding company that is now publicly traded on the Switzerland Exchange. It was started in 1988 by a South African by the name of Johann Rupert who bought up many of the struggling watch companies in the 1990’s. The current brands owned by Richemont include: A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Officine Panerai, Piaget, Roger Dubuis, and Vacheron Constantin. Ever heard of any of those? (wikipedia)

LVMH

TAG_Heuer_Monaco_40th_Anniversary_re

By Ferengi – Own work, CC BY-SA 3.0

They are the largest luxury goods holding company in the world with over 35B euro in yearly revenue. In addition to watch companies, they also own Louis Vuitton, Dom Perignon champagne, Hennessy Cognac, Christian Dior fashion company, DeBeers Diamonds, and many other luxury goods companies. The watch companies they own include Hublot, Tag Heuer, and Zenith. (wikipedia)

Swatch Group

omega speedmaster professional

(Source: By Torsten Bolten – Own work, Public Domain)

Many people have heard of Swatch watches, made famous in the 1980’s with their inexpensive price, fun colors, and quartz movements. Swatch is more nuanced than the other two powerhouses and accounts for 20% f global watch sales by value. It is the largest watch producer in Switzerland. Swatch Group was formed through a series of mergers and bankruptcy reorganizations, starting with Omega and Tissot in the 1930’s, who then went bankrupt in the 1970’s, and reorganized in the 1980’s to become the eventual core of Swatch Group. The actual Swatch watch was launched by ETA (the movement company, included in the conglomerate) in 1983. Swatch’s ownership of ETA, who makes the automatic movements for many watches, has given Swatch a competitive advantage in the industry. Brands owned by Swatch Group include: Omega, Blancpain, Breguet, Harry Winston, Rado, Longines, Hamilton, Tissot, among many others. (wikipedia)

So What?

So I conclude by asking: how’s the food?  Is every place serving the same thing or are you able to eat a wide variety of all food types, whether they be German, Italian, Eastern European, Asian, American, or Swiss? Are you open to the new chef upstarts? How about the foodies that know consumer tastes and are opening up their own restaurants?

The industry is in a massive flux with decreasing sales, a lagging approach to marketing, and growing inventories. Only time will tell how it shakes out. While this may not be the most concise analogy, I hope it helps explain the industry to include the conglomerates as well as the micro brands entering the industry. Finally, I hope it spurs a conversation on the state of the industry and causes consumers and producers to ask “how’s the food?”  Check out the recommended further reading if you’d like to learn more.

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I have a passion for watches and am a collector of luxury watches. I write opinion-based articles that try to bring the business lens to my writing to provide readers with a view of the business, marketing, and strategies of the watch industry companies I look into. In addition to Watch Ponder, I do speaking, freelance writing, and publish in other watch blogs and magazines. I do this as a hobby and because of my passion for watches. I am also a member of the National Association of Watch and Clock Collectors.

  • Steven Lee

    Great article and I love the analogy. I think that makes us micro brands (www.dufranewatches.com) the food trucks on the industry!

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