Life begins at forty

Life begins at forty

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< CEO Speak >

Audemars Piguet CEO Philippe Merk tells Mitrajit Bhattacharya that besides the collections of Royal Oak and Royal Oak Offshore, which will complete 40 years soon, the brand is banking on Jules Audemars 

You have just taken over the reins of Audemars Piguet. What are your priorities?
For me the biggest priority is managing this company through what people believe is going to be a challenging time and to understand what is really happening. My reading for the moment is that things are not so clear in this industry. It is known that in the watch industry things are a bit slower. Overall the year was still reasonable. We certainly knew that after a boom in the last four years, there was a tendency to slow down.

So, is it a correction according to you?
It can be called a correction. I think demand in the future will also depend on how many interesting solutions and products we can deliver. We cannot change the macro climate but we can certainly do something as a company with innovations and new products like we are doing this year to stimulate demand and hopefully also steer our production in such a way that we produce the pieces that we can really sell.

The feedback from CEOs that we have been getting is that there is no need to change strategies because these are long-term ones. Do you believe in this too?
Yes. Otherwise you can’t call it a strategy. It would be opportunistic behavior. If you reduce certain activities or adjust volumes to a new equilibrium, then that is a change of strategy. That’s not for me. I do not think we are going to stop fundamental activities in this company like the manufacture movements.

Royal Oak Offshore Chronograph

But would you see any difference in the product mix, market mix or the geographical market mix because some markets are more affected?
That is possible but extremely difficult to say at the moment. Everybody is talking about the United States. It may be a little bit more affected but the differences are not huge.

What about Japan?
Japan has been a difficult market since a long time. It is a slow market in terms of progress.

How important is Asia? And how important is India going to be for Audemars Piguet?
Asia, obviously, is a big priority for us, as it is for any other brand which wants to be among the global players in this industry. I think it is a promising region. It has established markets like Japan and Singapore. And then there are countries like China and India which are extremely interesting. India is a territory that we hopefully will conquer very soon. The plan was to do that last year but it was somehow delayed because of the terrible events that occurred in your country, especially the terror attacks. I think it will now depend on the market development in general. It’s clear that a brand like ours needs to be in a country like India for a long haul.

The Audemars Piguet booth at SIHH

What are the key changes you see in the luxury industry? Do you see strong brands becoming even stronger or the weak getting weaker?
I think a phase like this can exactly lead to a phenomenon like you are describing. The consumer goods industry has a tendency for concentration and the scale has certain importance. If you are among the small ones then you really have to go for a niche strategy. If you are amongst the bigger players then you can certainly deploy the means in marketing, distribution, manufacturing and innovation to stay in the game to be successful.

Would it also be a good time for any kind of acquisition?
Of course. This is the time when opportunities arise.

At a strategic level, how critical is Royal Oak for Audemars Piguet and how do you see that changing in the next five years?
I think it is very critical. The collection of Royal Oak and Royal Oak Offshore will soon be completing 40 years. That is something unique. I also sense certain potential in the other collection: Jules Audemars.

Where do we see the haute jewellery segment in the women’s range going in next five years?
This is a challenging topic for us. I think we have beautiful stuff. We have extremely elaborate know-how, but we will see whether we can do better here. I feel this segment will not be so easy to conquer and gain market share in.

We saw some very good launches this year from your side. Would you like to pick your launch of the year?
The overriding theme is complicated watches. And for me the launch of the year was this piece which we call internally ‘chron-AP’. It’s a piece that is firmly rooted in the tradition of what watch making is all about, with hightech solutions, and that’s absolutely fascinating for me.

Could you take us through your manufacture facilities? You have added a new section. Is it going to take care of the supply side?
It maybe a little too adventurous to exactly put it that way, but what we have done is to build an entirely new facility because of the explosive growth of the company. We are transferring these individual cells which have been a bit scattered all over the place into a single operation, with very logical workflows. If you have optimal working conditions then the watchmakers can really do an excellent job. We also have state-of-theart equipment.

By what percentage will the new facility increase your capacities?
We can assume a growth of 40-50 per cent.

Does that make Audemars Piguet the second largest after Jaeger LeCoultre in the Valle de Joux in terms of workforce?