As the global economy recovers from pandemic shock, watches are definitely back in the black. Data published by Richemont Group on November 12th indicate so. For the first six months of its fiscal year, its watchmaking division (which doesn't include Cartier timepieces, consolidated within the jewelry business unit) are up 74% year on year. As 2020 provides too favorable a basis, comparison with 2019 data is more eloquent : +7%. The watches division is also back to a pre-pandemic operating margin, at 22.4%.
These figures say nothing of an altogether different category of watchmakers, invisible to the financial community's eye, which are commonly referred to as independents. They are currently experiencing a surge in demand so high they cannot keep up anymore. « Over the past eight years, our modest yearly production of about 215 pieces sold without too much trouble. The past 18 months have been a paradigmatic shift, said Max Büsser, CEO at MB&F. Now, all limited editions are sold out before even being launched and non limited products have a 2 to 3 year waiting list. » A situation DeBethune is also experiencing : « Our delivery time has jumped from 4 months to almost two years in a few months time, said CEO Pierre Jacques. This rise is mainly due to that of exclusive products.” Kari Voutilainen, founder of the eponymous brand, also confirms : “We're overwhelmed. Our delays are beyond two and a half years, or even three.”
A first bellwether came on September 13th 2021 when small Dutch shop Grönefeld issued a statement declaring they were plainly not accepting orders anymore, as they didn't know when nor how they would be able to honor them. A situation that revealed more widespread than anticipated. « In some instances, our LM101 steel for example, we are not accepting orders or down payments because delays have become too long for us to deliver in any way”, said Max Büsser.
The watch market was already known to be focused on the big names, Rolex, Patek Philippe, Audemars Piguet and the likes. So much so that they're dramatically driving interest and prices up on the second-hand market and, to a certain extent, of new, unworn pieces on the auction market. Yet this is an unprecedented phneomenon for the smaller independents. It rewards a creative bunch that's grown in quality. Long gone are the days when a reputation of poor reliability plagued them. They learned the lesson well and are now reluctant to hastily expand capacity. « Ferdinand Berthoud's 12 months delivery time is due to a combination of factors, including our decision not to increase production to the detriment of a quality level we've adamantly been maintaining since our beginnings, said Jonathan Richard, Marketing Manager at Chronométrie Ferdinand Berthoud.
Could this be due to a shortage in parts ? «Supply times for gold, cases and crystals have doubled since january 2021”, said Bertrand Savary, CEO at Arnold & Son and Angelus. But these longer delivery times are not just the product of disorganisation or production delays caused by lockdowns, since Switzerland experienced just the one. It effectively shut down production for two months during the Spring of 2019. « Demand much higher thant anticipated drained our parts inventory faster than we are able to replenish it, said Benoît Mintiens, Ressence founder. Delivery times keep getting longer, which doesn't help our reactivity. »
Consequently, buyers are turning to inventory available at brand boutiques and authorized dealers. « Our 2021 production will top at almost 270 pieces, but sell-out, the number of pieces effectively bought at stores, will reach 400 units, said Max Büsser. There will be virtually nothing to buy.”
No longer are these small brands marginalized by their originality, although it contributed to their fame. They're not getting the cold shoulder from collectors and buyers anymore. Their special touch and consistency are now being rewarded. Their ability to embrace the market's digitisation too. “ Our shift towards more direct sales, social media and drop launches of more desirable, exclusive and sought-after models have led to an explosion in demand, said Manuel Emch, delegate board member at Louis Erard.
As watchmakers rejoyce, buyers wait in line. Just for how long begs several questions. How will they react to ever increasing scarcity ? As they are denied their beloved GMT-Masters and DB25s, will they turn to those other brands still waiting for growth like rain ? Or will they further increase demand on secondary markets, where speculation is already at an all-time high ? It would be further good news for second-hand specialist Watchbox, invited at the Dubai Watch Week, and Chronext, as they inaugurate their Paris lounge.
