On sustainable development: the scoreboard of the watch industry

0


Like their counterparts in sectors such as fashion, construction and automotive manufacturing, Swiss watchmakers face increasing pressure to prove their commitment to sustainability. But what that means in practice differs depending on who you ask.

Some brands, such as Oris and Mondaine, have made carbon neutrality the cornerstone of their manufacturing strategy. Other brands, such as Breitling and Panerai, use recycled materials in an attempt to attract environmentally conscious buyers. Still others see sustainability through a financial lens – and wonder what the current consumer craze for a quartet of brands implies on the health of the watch industry as a whole.

We asked three people familiar with the high-end watchmaking business – a collector, an environmentalist and a stock analyst – to rate the industry’s scoreboard for sustainability. Their responses have been edited for clarity and condensed.

A collector with about 25 watches, based in Farmington, Connecticut, and a member of the New York chapter of Red bar, a global community of watch collectors

How do you approach sustainable development as a consumer?

I am a vegan. It plays a role in every aspect of my life: what I choose to buy and what I choose to wear. I try to get most of my food from a CSA, community-supported agriculture, on a local farm. I try to do things that minimize my environmental impact. It’s about seeing where things come from and how they get to where they’re going, because that has a huge impact on sustainability.

How do your environmental concerns manifest when you buy a watch?

Watch straps. Lots of brands do leather bracelets and for me it’s a non-starter so I talk to brands when I buy watches to get a bracelet. In addition, many companies are now turning to alternative leathers, whether they are vegan leathers or synthetics. It definitely ticks the box when looking at watches.

But I also look at how the business is run – things like, are they climate neutral or are they taking steps in that direction? How do they invest their profits? Do they put them back into the business or do they put them back into the world in the face of climate change? A lot of brands have moved into this space, so I’m not just focusing on watches, but how they make them.

You mentioned Oris, who announced at the end of August that it has become climate neutral. Are there other brands that you think are doing a good job on the sustainability front?

Oris has been on my radar for quite some time, in part because they’re generally affordable – the amount of watches you get for the dollar is pretty good – and they’ve consistently made watches that raise awareness about climate change or climate change. other issues. They recently released a watch with a dial made from recycled PET plastic. They made watches for coral reef projects. Their climate neutrality announcement was a big thing for me.

IWC is another brand that is working in this direction. They use renewable energy in one of their manufacturing facilities. I know Chopard only uses ethical gold in its watches and has invested in small mines in South America. I try to keep the brands that do the right thing on my radar.

Many watchmakers are criticized for their lack of transparency on the sources of their raw materials. Is this kind of information important to you?

I try to be an informed consumer as best I can. How they affect the world, how they treat their employees, where they invest their money – it all plays a role. Some companies, like Rolex, are very secretive and you need to use common sense. But as a smart consumer, you want to know where your money is going and how it is going to be used.

What are some things you would like to see watchmakers do to become more sustainable?

Packaging is a big deal. I would like to see watch manufacturers reduce packaging on watches. But also the transparency you mentioned: where do they get their materials from? Are they trying to invest in local communities?

Do you feel like you are an anomaly among your collector friends to worry about these issues?

If you have a $ 250,000 watch, durability might not be your first concern – again, it can very well be. A lot more people are thinking about it now.

Even the ancillary manufacturers – the companies that make accessories and things like that – are starting to get on with it. Wolf, who makes watch winders and watch boxes, made a watch box for RedBar out of vegan leather, and that made me very happy.

Head of Markets at WWF Switzerland, a division of the international organization for the conservation of wildlife

In November, WWF Switzerland plans to publish a follow-up to its 2018 report on the jewelry and watchmaking industries. What changed ?

Some luxury groups have stepped up their commitment to the climate and the Science-Based Targets initiative. Richemont and Kering sent their target commitments. And there have been some early attempts to bring transparency to their supply chains.

But overall, not much has happened. I have been working in this field for quite a while. I remember the retail industry was challenged – you asked them where their resources were coming from and they said, “I have no idea. Now they have huge areas of sustainability as the watch industry still seems to be stuck in the ’70s or’ 80s.

When I spoke to WWF Switzerland last year about where watch companies get gold, I was told that the Swiss watch industry does not take care of the biggest problem of all: the raw materials that go into their products. Is this still the case?

Yes, unfortunately this is still a huge problem. Responsible sourcing of raw materials is indeed the most urgent subject facing the watchmaking and jewelry sector. Mainly because raw materials such as metals, diamonds or colored gemstones are often mined under harsh conditions that turn biodiversity-rich tropical forests into lunar landscapes. And they are often associated with human rights violations.

Have watch brands made progress?

To cite an interesting example: Inspired by the WWF report in 2018, a start-up called ID Geneve was founded, and it has a totally circular and responsible sourcing approach. However, to our knowledge, most companies still have too little knowledge of their value chains.

Are you optimistic about the industry’s chances of improving its sustainability record?

I am still very optimistic. I wouldn’t last long in this job if I wasn’t. I firmly believe that businesses have the capacity to improve – they just need the right incentives. A very good incentive is pressure from investors.

The problem with this industry is that many companies are private. In this case, we hope that consumer pressure can increase. We hope for a tipping point that will lead to the development of leapfrog.

Luxury Products Analyst at Vontobel, a private banking and investment management group based in Zurich

Four independent brands – Rolex, Patek Philippe, Audemars Piguet, Richard Mille – are seeing soaring demand for their limited production. But what is happening to the rest of the industry?

There is a polarization. The brands you mentioned – as well as a few small producers like De Bethune and FP Journe, with production going up to around 2,000 units per year and with a very high average price – are doing very well. Between the two, it’s a mixed picture.

In the low-end segments, we have seen a recovery from 2020, but there is huge pressure from smartwatches, i.e. Apple, which now sells more watches than the rest of the world. Swiss industry. And then there are watch brands like Breitling, which was bought out by private equity a few years ago and is now doing very well.

If we want to create a clear image, the independents are very strong and the brands owned by the large groups – Swatch, Richemont, LVMH Moët Hennessy Louis Vuitton and Kering – are suffering.

How do you explain the surge in demand for the Big Four and the small independents who are following in their footsteps?

I have a very simple answer: CPO, or Certified Pre-Owned – the second-hand market and the price transparency it allows. Consumers want to have some value when they buy a watch. And the CPO market has been a tremendous booster. I bought a Blancpain in 2017 and the value has dropped by 30-40%, while Rolex continues to rise. Audemars and Patek – you’ve seen the prices; they are amazing.

There are many companies very active on the second-hand market: WatchBox, Chrono24 and Bucherer, which has just bought Tourneau. It is a very dynamic market, already at 20 billion Swiss francs (around 21.7 billion dollars).

Look at, say, the Rolex Daytona, which sells for 12,800 Swiss francs and when you go to one of those sites, they sell it second-hand for 40,000 francs. The math is easy.

What does a polarized market mean for buyers?

In the high end, we are fixed for a few years with these brands at the top. But don’t forget that you still have a few brands in the mid-segment. I mentioned Breitling and a few newcomers, including one with a good concept: Norqain. They have started to make noise, have fabulous management and an interesting concept. And another brand: Maurice Lacroix belonging to DKSH here in Switzerland. They were in the middle segment and tried to go high, but they’ve stopped and are now producing very easy and affordable watches at prices of 2,000 to 4,000 Swiss francs – and they’re not doing too badly.

For years, the volume of Swiss exports declined, even as values ​​increased. What does this suggest about the sustainability of Switzerland as an industrial base for the watch industry?

There will be market consolidation in the years to come. The low end is about to die a slow, painful death. And so that the Swiss made label remains competitive, Swiss made watches will continue to move towards the high end.


Leave A Reply

Your email address will not be published.