Jean-Claude Biver officially retired from frontline duties as CEO of TAG Heuer and head of LVMH Watchmaking Division earlier this year, but it has in reality been five years since he began handing increasing responsibilities to his team, in particular Ricardo Guadalupe, CEO of Hublot. He now tours the world acting as an ambassador for the entire Swiss watch industry, which he feels has the potential to double in size over the next 20 years. Hot from handing Mr Biver a Lifetime Achievement Award at this year’s WatchPro Awards, Rob Corder caught up with the inspirational leader at Dubai Watch Week for a chat.
In watch circles, Jean-Claude Biver needs no introduction. As he swoops through Dubai Watch Week, people grab for their phones to take pictures. A signing session for his autobiography has a queue snaking around and out of a café.
The non-executive chairman of LVMH’s Watchmaking Division has stepped away from daily running of the business and now acts more like an ambassador for the entire Swiss watch industry. And the veteran of over 40 years in the business believes the luxury watchmaking business is just getting started. “We are on track to double in size in 20 years because more and more professionalism is coming into the industry,” he predicts. “We are in a startup industry,” he adds.
Given that Vacheron Constantin can trace its history back to 1755, and is one of many brands that are several centuries old, labelling the entire Swiss watch industry as a startup is open to challenge.
“Think about this calculation: we have exports of Swiss watches worth CHF 21 billion per year. But LVMH is doing CHF 50 billion turnover alone. They do the turnover in five months of the entire Swiss watch industry. Either LVMH is a giant or the Swiss watch industry is small,” Mr Biver begins in defence of his hypothesis.
“Apple makes $22 billion profit every quarter, so in three months Apple’s profit is the same as the turnover of the entire Swiss watch industry in a year. If you compare the Swiss watch industry to LVMH or Apple, you can conclude that it is really a startup. It is very small,” he continues.
Exports of CHF 21 billion today is a substantial figure by any comparison, but it should be much larger, Mr Biver argues. “Let us assume Rolex makes one million watches, and that they are sold in roughly 100 countries. That means one million watches divided into 100 countries means 10,000 watches per country, if they are all considered equal size. Thank about 10,000 watches in a country like China with a population of over one billion people, or America with over 300 million people. Goddamn, it is nothing. So we can really say we are a startup industry,” he suggests.
The only way is up, according to Mr Biver. “Because we are so small, we have huge potential to grow provided we can still convince people for many reasons: history, beauty, emotion, to buy watches. If we can achieve this, the industry will double in size in 20 years,” he predicts.
Events like Dubai Watch Week (DWW) will be vital to keep spreading the word about the history, beauty and emotion of precision-made mechanical watches. But another topic kept getting in the way: waiting lists.
Ahmed Seddiqi & Sons, the largest multibrand retailer in the Middle East, and host of DWW, was remarkably open about the challenges it faces when waiting lists for the most desirable watches from Rolex, Patek Philippe, Richard Mille and Audemars Piguet can be more than 10 years long, and have many hundreds of customers waiting for watches they have practically no chance of ever buying.
Mr Biver’s view is that waiting lists can be a positive sign of strong demand, but they start to damage the industry when they get out of hand. “It depends on the magnitude. If a waiting list is five years or more, that is not good. Two to three years is OK. It is like wine. It is good to have two glasses of wine, but to have a whole bottle is bad,” he says.
It also depends on what people are waiting for. The most ridiculous waiting lists today are for Rolex steel professional watches like the Daytona, Submariner and GMT Master II; watches created in volume to give customers an affordable and simple entry point into the brand. Mr Biver thinks that is much more of a problem than waiting lists for extremely rare grand complication watches. “A waiting list for a steel watch that retails for $10,000? That is questionable if it is more than a few years. If the waiting list is for a $2 million grand sonnerie watch, everybody will understand that they are very scarce and will take time,” he suggests.
It was refreshing to attend the forums at Dubai Watch Week, where controversial issues like waiting lists, pre-owned watches, soar away auction prices and the grey market were openly discussed. The Swiss watch industry is famously tight-lipped and on-message, so wide-ranging discussions between brands, retailers and customers were fascinating and enjoyable. “The more we talk about watches, whether that is waiting list or auction prices, that is good because we need to sell watches to people that do not buy watches. It is good because we are in a startup industry. Any talk about the watch industry is welcome because anybody talking about a startup is good for the business,” Mr Biver says.
Another topic that gets Mr Biver fired-up is when the conversation turns to how well the major publicly-listed groups — Swatch Group, LVMH and Richemont — are treating their brands. Perhaps Swatch Group should not be considered part of the discussion, because it is entirely focused on watches and movements, but the luxury conglomerates do have lessons to learn about how best to handle their watch brands.
“Big groups think that if you have been performing well in the car industry, cosmetic industry or fashion industry then you can be transferred into the watch industry and the same rules will apply. But it is not true,” says Mr Biver, the man who oversaw all watch brands at LVMH.
Those watch brands — TAG Heuer, Hublot, Bulgari and Zenith were estimated to have contributed turnover of CHF 2.1 billion in 2018, according to estimates from Morgan Stanley, from a total turnover of LVMH of CHF 50 billion. That is just 4% of turnover, and almost certainly far less in terms of profit. Mr Biver appears to suggest that the top brass at the group need to treat the watch brands as a special case that does not fit with many of the models that work for fashion, cosmetics or fine wines. “We are still artisans and start-ups. More and more people are understanding this today, and if they handle the brands in the right way then they will really get the profits out,” he believes.
One of the greatest problems, and WatchPro hears this regularly from watch retailers, is the revolving door of management at the groups. “We change CEOs in the watch industry every three to five years. And if we do not change the CEO, we change the sales managers in different territories so that the manager in the Middle East moves to China and the president of North America moves to Switzerland. All of these moves are extremely bad because in luxury you need stability, eye contact, and personal relationships,” Mr Biver states. “That is why I am more successful today than ever, because I have been in the business for 45 years and people trust me. This trust cannot be built up in three years. You lose it when the guy gets a promotion to another country or another company. In luxury this is negative. Luxury is about personal relationships, shaking hands, eye contact and eating together. Luxury is about proximity.”
This belief in building and retaining a team of the right people leads Mr Biver to conclude that he could never take on another watch brand because he could not bring the people he would need together. “Should I be interested to make my own brand, I would say no for many reasons, one of which would be that I do have a team. My team has split. Ricardo is here [Hublot], Jean-Frédéric is there [Rolex]. So, with whom can I build a brand? My team is gone. And I do not complain that I have lost my team because I am 71-years-old. I say to my wife, I will be lost if I try to make a brand because I do not have my team. And I do not want them to come back because I cannot pay them. I cannot ask Jean-Frédéric to come back to me,” he concludes.
The reality is that Mr Biver is far more valuable to the Swiss watch industry as a roving ambassador, free from toeing the corporate line and fired up to talk about the business, with all its strengths and weaknesses.