Watch this space Lebanon’s exclusive luxury watch market

0

The most expensive wristwatch ever auctioned was sold for $7.3 million in 2015. Two anonymous phone bidders battled for nine minutes, essentially begging to pay over $7 million for a stainless steel watch with no diamonds or obvious opulence. A real watch aficionado knows a watch’s worth does not come from a simple coat of bling – it is what is inside that counts. The record-breaking Patek Philippe 5016A is made of over 500 parts (when the average high-end mechanical watch has about 200-300). It combines three high complications: a tourbillon, minute repeater and perpetual calendar with retrograde date, and it is the first and only version of the 5016 series made of stainless steel, which is a rare metal for such a complicated timepiece. Not only that, it is a unique piece created especially for the biannual “Only Watch” charity auction. This winning combination of mechanics and scarcity is evidently worth 7 figures.

The IWC boutique in Beirut Souks

The IWC boutique in Beirut Souks | Photo: Greg Demarque

The name Patek Philippe is one of the most respected in the world, and the watchmaking giant just opened a monobrand boutique on Foch Street in downtown Beirut with local distributor Cadrans, part of the HOLDAL group. The elegant store is next door to A. Lange & Sohne’s new boutique and around the corner from Richard Mille and the Cadrans multibrand store. This cluster is just down the street from Beirut Souks, where several other luxury watch brands, including Jaeger-LeCoultre and IWC, have single brand boutiques.

No time is the right time

WATCHES_PATEK2

The Patek Philippe boutique in downtown Beirut | Photo: Greg Demarque

Despite socio-political issues, instability and little to zero economic growth, the world’s top watch brands are clearly investing in Lebanon. The new A. Lange & Sohne boutique is one of only 16 in the world. Though the brand has been present in Lebanon for 13 years, the single-brand store opened in May 2016. Why invest here, and now? It is part of a long-term plan, says A. Lange & Sohne CEO Wilhelm Schmidt, explaining the decision was made two years ago when the outlook was better. Unfazed, he says, “If you wait for the perfect time you’ll never get anything done and we always aim for the long run, so it doesn’t matter if we start on a low or high – business and markets are cyclical.” The brand’s only other boutique in the region opened in Dubai four years ago (an Abu Dhabi store was also opened but has since shut down). A. Lange & Sohne has no points of sale in the whole of Africa, and going further east, it has single-brand stores only in Hong Kong and Japan.

WATCHES_L&S2

A. Lange & Sohne’s newly opened boutique on Foch Street is one of only 16 in the world | Photo: Greg Demarque

When asked who the strongest buyers of the niche brand are internationally, Schmidt admits it is hard to think about it in traditional terms because many clients purchase watches in countries they do not live in. “Currencies do funny things so if you buy a watch for $300,000 and the price difference is 10 percent, that $30,000 makes a difference and is worth a flight,” he quips, asking, “If an American is buying a watch in Japan, is that a strength of the US market or the Japanese market?” Instead, he says their main client base is best described as watch collectors, and 70-75 percent of their clients are repeat customers.

Jaeger-LeCoultre is happy to be in Beirut too, despite the situation. The brand’s Middle East Regional Brand Director Marc Panafieu says, “Lebanon is a very important market for us because it has a very unique profile. Being between the Middle East and Europe, Lebanon has the best of both worlds in a way. Our style, and what we stand for – craftsmanship and understated luxury – speaks a lot to the Lebanese customer.” He adds that the situation is complex in the whole world right now, not just in Lebanon.

The beauty of the craft

Though watches were originally tools for telling time, today they tell a lot more than just that. Connoisseurs clients do not necessarily follow big names, but instead research to understand what brands stand for. Wearing one brand or another may reflect a certain image the wearer wants to convey. “I would go as far as saying that sometimes the purpose for which the watch was made, which is telling the time, is not the primary use for the watch anymore,” Panafieu admits.

The core reason these watches are considered luxurious is the craftsmanship and technology that go into each piece. “What makes a watch beautiful is the caliber inside the watch, as well as the design,” Panafieu says. He describes it as: “taking what’s happening on the universe level and putting it in tiny components. This is how watchmaking started – using the sun and stars.” Schmidt calls A. Lange & Sohne watches “little miracles” and “mini machines,” explaining that most of their designs are quite understated on the outside, but the mechanics are visible through a glass bottom when the watch is turned around. “Our design is elegant, but when you turn it around it’s quite opulent. We do everything for the owner, not so much for the public,” he says.

WATCHES_IWC1

Photo: Greg Demarque

 

Many brands produce all watch parts in house. “By doing everything in-house we maintain our patrimony and ensure consistency. People want authenticity, they want to know where products were made, by whom and using what technique,” he explains, adding that they have always produced everything themselves, but competitors who did not always do so are now shifting to in house production too.

Legendary IWC watchmaker turned brand ambassador Kurt Klaus explains that watches must be assembled by hand, explaining that even though machines produce the tiny parts that go into a movement, a machine could never put them together. “Every piece has to be adjusted, oiled in the right place – and this is a highly qualified watchmaker’s skill. Most of our watches have a glass bottom so the movement must be very good looking too, with finishing and polishing,” he explains, adding, “Often at IWC, we say that our hands are our most important tools.”

But the trade has changed. Klaus fondly recalls moving from drawing board to computer screen. “I got my first computer in 1988 and I didn’t know exactly what a computer was. I had heard about something called computer aided design (CAD), and thought, ‘what is this? I must have it!’ It was a very good instrument,” he observes.

While some consider this level of quality a luxury, others shy away from the term and what it implies. “I struggle with the word luxury a lot, I’d rather talk about exclusivity – that’s far more difficult to achieve than luxury. Everybody is using [the word luxury]and it’s inflationary, some people don’t know what it stands for. The worst thing I’ve ever heard was when a US company advertised ‘the most luxurious muesli in the world’ because it had more raisins in it – that for me is how the word luxury went down the drain,” quips Schmidt.

WATCHES_JL1

Photo: Greg Demarque

Watches are not only toys for the rich, they are often sentimental items. “When you talk about a mechanical watch there’s a lot of emotion. No matter the age of the person buying the watch, that person has, maybe at the back of his or her mind, the idea of giving it to the next generation,” Panafieu says.

Brand loyalty

WATCHES_L&S1

Photo: Greg Demarque

A person who buys one watch in these price ranges does not usually stop at just one watch. So how do brands persuade clients to keep buying? Schmidt says that during periods of economic lows, sales are not as important as brand loyalty: “We need to make sure these watch collectors, even if they may not buy anything at the moment, stay loyal to the brand,” he says, adding, “We don’t [profit]from the masses, but from very few people, and I have no doubt there are strong watch collectors around in Beirut.”

This year Jaeger-LeCoultre celebrates the 85th anniversary of its iconic Reverso model, an elegant but robust reversible watch with a slide-and-flip case, originally created for Polo players. As part of the worldwide celebrations, in Lebanon guests were invited to an event showcasing the history of watch and an exclusive dinner was organized for select local watch collectors. “It’s not in every market that we can gather such a qualitative crowd of watch collectors and aficionados,” Panafieu says of the approximately 20 dinner invitees.

Other brands indulge Lebanon’s watch collectors with unique experiences. In May IWC invited 10 top clients to attend a watchmaking class conducted by Kurt Klaus. Guests got a chance to disassemble part of a watch movement and put it back together. “People are fascinated, they love to see the inside of a movement,” says Klaus, explaining that despite being over 80, he still has the same fascination he has always had for watches, and it is now his job to pass on this love for mechanical watches to others. “This is very important for our relationship with clients,” he adds.

Icons and innovation

Klaus has countless stories of how he developed innovative watch movements, coped in times of crises and devoted his life to the craft. On his wrist he wears an IWC watch named after him – the Da Vinci Perpetual Calendar Edition Kurt Klaus, released in 2007. It is a tribute to his 1985 creation, the automated perpetual calendar, a revolutionary movement that took five years to develop. “The perpetual calendar existed but ours was a new generation because before, the system was very complicated to produce, and complicated for the user,” explains Klaus. It was a huge success: “We presented the Da Vinci chronograph perpetual calendar, and I will never forget the price, it was 14,500 swiss francs in a gold case, which was about 10,000 less than the competitors’ price.” Jaeger-LeCoultre’s Reverso, too, earned its icon status in part because when it was launched in 1922 it was a response to a technical challenge and a major innovation in the industry.

WATCHES_PATEK1

Photo: Greg Demarque

Today, to stay ahead of the game, companies must continue to develop new movements, complications and features that are smaller, faster, and more advanced than ever. Panafieu says, “one way to innovate is to continue pushing the boundaries of watchmaking and discovering new techniques,” giving the example of the unique Jaeger-LeCoultre semi-spherical gyrotourbillon that makes the watch case significantly thinner, and the groundbreaking duometer, which has two power reserves, one for timekeeping and one for other complications. A. Lange & Sohne launched several new movements this year at the Salon International de la Haute Horlogerie Genève (SIHH) and Schmidt wears one of them: the Datograph Perpetual Tourbillon featuring a flyback function. While they strive to always do things differently and at the highest possible technical level, they would never sacrifice function for innovation, he insists. “Our design language is very German. The watches are always [functional]pieces; we would never come up with a watch where you would struggle to read the time, for example,” he says.

Jaeger-LeCoultre is also innovating in other ways. This year they launched a collaboration with shoe designer Christian Louboutin to create a line of watch straps (red on the inside, of course.) “Bringing in someone new, with a different background, influences and tastes, you end up naturally creating something that has never been done before,” Panafieu says. The brand also launched Atelier Reverso this year, a platform where clients can customize a watch through an in store app, and later on the company’s website, choosing strap, colors and other details such as customized engravings and enamel paintings on the spacious underside of the Reverso case. “Because everything is done in house, in a way there’s nothing we can’t do,” says Panafieu, adding that exceptions would be requests that are bad for the watch’s performance or go against the brand’s principles.

The purpose is to make the watch more accessible says Panafieu, explaining, “the Reverso is such an icon and we want to avoid it reaching a stage where it’s considered untouchable.” That said, with this kind of freehand customization there’s a fine line between original and gaudy (think velvet Porsche and platinum Bentley). Customization also allows the watches to become a lot more personal and therefore more sentimental; one client engraved a marriage proposal on a Reverso he gifted his future wife, while others choose to have enamel paintings of family pets, as well as elaborate diamond-encrusted designs.

A league of their own

While some have suggested that smartwatches could threaten the mechanical watch market, similarly to the Quartz Crisis of the 70s that Klaus helped IWC survive, others say there is no comparison. “Smartwatches are not a threat,” assures Panafieu. “They are useful tools but what we do is totally different. When you talk about a mechanical watch there is a lot of emotion to it. I doubt someone will pass his smartwatch on to the next generation,” he says. Klaus agrees: “They are two different worlds. IWC clients buy watches because they love them. All our watches have history and people like mechanical watches,” adding that some collectors might even wear smartwatches from time to time, but it would not be a replacement.

Panafieu points out that becoming part of the Jaeger-LeCoultre family does not necessarily come at a high cost. With a starting price of a stainless steel Reverso at around 6,000 euros, it is indeed much more affordable than other luxury watches, while remaining one of the most recognized and respected styles to date. Klaus makes the same claim: “Our luxury is at a realistic price, not like some other luxury factories who only have watches in the $100,000 range. We also have similar watches in that range, but we have a very large price segment. A simple stainless steel watch is still a luxury product because it’s a movement, it’s IWC,” he says proudly.

Share.

About Author

Editor, Executive Life

Leave A Reply