This was to be another fairly classic interview with Peter Stas, of the kind he has been giving since the late 20th century and in which he keeps us up to date on the double-digit growth of his Frédérique Constant and Alpina brands. At least that was the plan.
In practice, during this friendly meeting, the CEO was asked a traditional news-related question: with Apple on the verge of giving its annual keynote address that same day on September 9th and thus unveiling its projects that are now out in the open, it was pretty natural to enquire about his stance on smartwatches, while expecting to get a pretty straightforward reply along the lines that this market is still pretty far removed from his horological core business. Instead, Peter Stas casually dropped a bombshell: “I’m already spending more than 50% of my time on this”.
A new production centre to be built two years from now
This is indeed big news: the Frédérique Constant group, headed by its CEO, is actively working on developments in the field of connected watches. While R&D secrecy means not much more can be divulged at this stage, this response certainly sheds new light on the transformations that the group is currently undergoing.
It was in fact just the day before, on September 8th, that the group announced it had obtained planning permission for the extension of its production centre. “Extension” is an understatement, since no less than 3,000 square metres will be added, thereby virtually doubling the current 3,200 sq.m. surface area. This huge facility in Plan-les-Ouates will be physically linked by various walkways to each floor of the current building.
A new operating board
Meanwhile, Peter Stas has taken the opportunity during 2013 and 2014 to reach the goal he had long since set for himself: namely of stepping back from the operational side of the Manufacture. This approach was already apparent in the appointment of Guido Benedini as CEO of Alpina on March 1st 2013, and further confirmed this year when Frédérique Constant got a whole new board. The latter’s mission is to handle the day-to-day activities of the brand, with its estimated 135,000-unit output for 2014 – and potentially to double that figure over the long term, the underlying goal that Peter Stas takes little pains to conceal.
The Manufacture naturally has its ups and downs, like any other business. Peter Stas readily admits to having been “caught out” by the drop in the Hong Kong market: “We were certainly not expecting to see a -45% downturn, but the local market is still buoyant enough for us to maintain our presence there”. Especially since the Frédérique Constant group as a whole is doing extremely well: +26% growth (in value) for the first half of 2014 compared with 2013. A prosperous firm that gives its CEO the peace of mind required to focus on his plans for the future.
Ceramics and smartwatches
These projects thus clearly include connected watches: “The future of the market is definitely in Switzerland, provided we believe in it and that we don’t make the same mistakes as during the quartz crisis”, says Peter Stas, before proceeding to expand on his vision of smartwatches: “A connected watch must not be a mere replica of a smartphone. It is pointless to try and transfer the same functions from one to the other. I can’t see a watch receiving alerts nor a consumer talking to it on his wrist. The future lies elsewhere and will be based on apps and added value”. In which domains might that be? While the CEO salutes Apple’s initiative in the area of biological functions and sports, he resists the famous app stores business model: “For a smartwatch to be first and foremost perceived as a watch, it has to have the latter’s essential attributes: namely being a piece of jewellery, and a durable one at that. A watch is the exact opposite of a gadget, and must remain so if we want to establish ourselves on this market”.
In parallel, Peter Stas evokes the ceramic future of Frédérique Constant: “We were one of the first to implement silicon in our regulating organ, from 2008 onwards”, he reminds us, as if to set the record straight. “We are currently investing a good deal in ceramics, and in particular in a ceramic lever. We have reached the sixth-generation prototype stage and it is functional. This involves considerable R&D efforts in conjunction with a partner, and we will be testing it to ensure its viability during 2015 and 2016 – the goal being to introduce a limited series in 2017”. So the word is out: it will be definitely well worth keeping a very close eye on Frédérique Constant over the next couple of years.
