It’s official, Audemars Piguet has just announced that Ilaria Resta will officially be taking over the reins from outgoing CEO François-Henry Bennahmias starting 1st January 2024. The new appointment follows Bennahmias’ announcement last year that he would be departing the brand by the end of 2023.
Bennahmias has been with Audemars Piguet for nearly 30 years and has been at the helm for 10 of those years. Under his stewardship, the brand has grown immensely. Sources indicate that when he first took over as interim CEO in 2012, the brand was doing CHF 600 million in revenue with around 30,000 pieces sold. The most recent figure was CHF 2 billion in revenue for 2022.
The appointment of Resta is also incredibly interesting as she is now one of the very few female CEOs leading a major watch brand and also, she comes from a completely different industry. She brings with her 26 years of experience, most recently as the President of Global Perfumery & Ingredients at Firmenich, a large privately-owned perfume and taste company. If the mixed reactions stemming from the launch of Code 11.59 is any indication, there will probably be a lot of opinions on her appointment as CEO as well.
The latest Code 11.59 by Audemars Piguet in stainless steel
According to Audemars Piguet, Bennahmias will remain fully engaged with the brand until the end of 2023 to ensure a “seamless and orderly transition of leadership with the next CEO.”
“[Ms Resta’s] proven record of delivering results through a clear strategic thinking based on deep consumer insights will keep AP’s legacy relevant for generations to come and ensure long lasting growth. Ilaria’s belief in the empowerment of teams and her accomplishments as an inspirational leader in corporate sustainability fully align with Audemars Piguet’s long-standing values as an independent family-owned company.” Alessandro Bogliolo, Chairman of Audemars Piguet.
Disruptions to supply caused by the pandemic have exacerbated an existing production issue, which was previously dominated by spurious complaints about brands artificially limiting production. We say spurious here because brands do intentionally limit supply, oftentimes based on their ability to do the kind of watchmaking they want, and to manage quality. Rolex, to use the example of the largest maker of watches above CHF3,000, takes about a year to make one watch, start to finish. This is according to independent estimates from a variety of trade publications, forums, Quora and Watchfinder.com. In any case, this illustration can be scaled down to work with brands that make significantly fewer watches. Keep it in mind when you consider the production information from the brands.
Image: A. Lange & Söhne
Take the example of A. Lange & Söhne, whose Odysseus model is one of the most sought-after in the luxury sports watch category; it sold for almost three times its retail price at a Phillips auction in New York in 2020. The brand continues to emphasise that it produces approximately 5,000 watches annually, and does not intend to go far beyond that. This is despite the fact that the Odysseus model only debuted at the tail-end of 2019.
Image: Piaget
The Glashutte firm has been saying something like this for more than five years, and possibly as long as 10 years. Fellow Richemont brand Piaget has likewise been saying its production levels for watches remain at 20,000 pieces annually since 2008. These kinds of numbers might seem like smokescreens, but we should always remember that contemporary watchmakers prefer to keep their production at optimal levels, rather than going for maximum results. This combines with the fact all brands — including Rolex — sometimes release clunkers or just models that will eventually be retired. When entire collections such as the Audemars Piguet Millenary are retired (at least in a typical gent’s style), the resulting capacity is simply assigned to other collections.
Speaking of retired collections or models, these are the truly rare watches out there. These will hardly ever be present in large numbers on social media, reselling platforms or brick and mortar stores. After all, whatever is discontinued cannot be found in stores brand new, except for whatever stock remains unsold, and brands will probably act to buy those back to protect their brand value. We have mentioned this earlier and will illustrate the point further with some official statements and quotes. In advance of that, we will take a stand here and suggest that if scarcity is the marker you trust best to establish value, then whatever models you do not see for sale are truly scarce. That makes sense from the perspective of Rolex stores without anything to buy… Or is this just a sign that some watches are so popular that watchmakers are having a tough time meeting demand? Indeed, we think that excited watch buyers are confusing popularity for scarcity.
All this is well and good, and represents a cursory examination with some random evidence that might appear to be tailored to fit our argument. For the avoidance of doubt, this segment includes all public information and statements from the brands on current market conditions. We begin with the most famous of all official words, from the unlikeliest sources: Rolex.
“The scarcity of our products is not a strategy on our part. Our current production cannot meet the existing demand in an exhaustive way, at least not without reducing the quality of our watches — something we refuse to do as the quality of our products must never be compromised. This level of excellence requires time, and as we have always done, we will continue to take the necessary time to ensure that all our watches not only comply with our standards of excellence, but also meet the expectations of our customers in terms of quality, reliability and robustness. Rolex does not compromise on what it takes to produce exceptional watches.”
“All Rolex watches are developed and produced in-house at our four sites in Switzerland. They are assembled by hand, with extreme care, to meet the brand’s unique and high-quality standards of quality, performance and aesthetics. Understandably, this naturally restricts our production capacities — which we continue to increase as much as possible and always according to our quality criteria.”
“Finally, it should be noted that Rolex watches are available exclusively from official retailers, who independently manage the allocation of watches to customers.”
That was the official Rolex line to Yahoo Finance, and it was picked up by every watch specialist, from Hodinkee to WatchPro, with some additional silliness that seemed to be just for the fun of getting the Geneva firm to open up. The above statement though does a bang-up of telling us all what we already know, albeit in words that we can rely on as canon. Patek Philippe, Audemars Piguet and Swatch Group brands can all say different versions of the same thing (minus the bit about the retailers, because Rolex is the only one to rely exclusives on authorised dealers, without brand-run boutiques).
On the new manufacture building and production: “Today, the building is too big for us but tomorrow, we will need it. My children, if they want to develop the company, they will need it… If we talk about quantity, maybe we will increase by 1-2 per cent (over the course of years) so we need the space for that too. Even with our current production, we have to expect all these watches to return to us for servicing, so that’s another reason I decided on this type of expansion.”
The above is a quote from an interview we published in issue #59. Patek Philippe makes roughly 60,000 watches annually, and the firm will not be running at full capacity in the new building in the immediate future. Even without the pandemic in the mix, the idea is to scale production up gradually. Sustainably even.
On discontinuing Ref. 5711/1A-010 (as told to the New York Times in February last year): “We are doing this for our clients who already own a Patek Philippe and to protect our brand from becoming too commercial. I can continue to make this fantastic product, or sell 10 times more of them. But I am not working for numbers. I am protecting the company for the future, for my children.”
“This is an opportunity to teach a lesson to my kids, who are the first ones to say, ‘Dad, are you crazy?’ They have to learn, just as my father taught me: When you have a fantastic brand like Patek, you have to protect the brand and not just one product.”
And finally, the statement Patek Philippe itself released confirming the end for Ref. 5711/1A-010, edited here for relevance: “We seize this opportunity to reiterate that the priority for Patek Philippe is not to generate short-term profit, but to focus on creating a variety of new models that provide exceptional quality while preserving the value of our customers’ existing timepieces…we will maintain a balance in our collections without focusing on one specific product.” We published this statement in full in issue #60.
As that New York Times article mentioned, besides Rolex and Patek Philippe, Audemars Piguet also has one model in particular (non-vintage) that remains a “wrist-power,” object. This is of course the Royal Oak reference 15202ST, which was also recently discontinued and replaced with reference 16202ST, itself a limited proposition for the 50th anniversary of the watch this year. There will only be 1,000 models of reference 16202ST with the 50th anniversary rotor on the brand new calibre 7121, just like the Series A run of the Royal Oak in 1972. Of course, a production run of 1,000 models in 1972 is quite different to that same number today, but Audemars Piguet has to protect the value of all existing watches in its stable, as well as all vintage propositions as well. CEO Francois Henry Benahmias said as much when introducing the entire new range of Audemars Piguet watches this year.
In response to our challenge to the idea of protecting desirability when it feeds the rapacious flipper mentality, the jocular CEO said the following: “We live in a free world…it is a free market. Who are we to determine what people do with our watches? If someone buys a watch from us and wants to sell it, who are we to stop him? Having said that, if someone buys a Royal Oak from us, sells it on, and comes back to try and buy the same watch from us again the week after, maybe we have a different point of view…”
We take Benahmias’ words to mean that collectors cannot be prevented from buying and selling whatever they want, which is only logical and reasonable. The secondary market (pre-owned and grey market) is estimated to be at least an order of magnitude larger than the primary market (EuropaStar, circa 2020) so shutting it down is certainly impractical. On the other hand, opportunists who see quick profits in iconic wristwatches should be resisted, if for no other reason than self-preservation.
Benahmias and Friedman went on to explain that if Audemars Piguet wanted to make more Royal Oak watches, the firm would have to make less of something else. Other manufactures have made the same point, as we have referenced earlier, and combined with long term growth strategies, all this means that we cannot just have more supply of one or two kinds of watches. Patek Philippe would have to allocate more than 30 per cent of its resources to make more steel watches, and Stern has repeatedly said he does not favour this. It seems logical that Rolex, to use a much larger production business as a counterpoint, would likewise not be interested in growing the volume of its business in steel watches, if it had to do so at the expense of its precious metal watchmaking.
Image: Audemars Piquet
Perhaps if the business in precious metals grows at the same pace, we may yet see more steel watches too, however unlikely it may be that two very different segments would experience the same scale of growth. For the moment, the desire for more of today’s popular models will have to come from the secondary market. This is of course the reason certain older models gain in value over time, when they might have lost a good chunk of the retail value to begin with.
To properly conclude here, there are plenty of brands creating similar watches today, chasing the insatiable desire for symbolic statement watches, such as the Royal Oak and the Nautilus, and dive watches. We have already seen the Parmigiani Tonda PF on one end, and the Tissot PRX on the other. This year so far, the Zenith Defy Skyline is making a play for the same wrist-space. No doubt Watches & Wonders will show us even more dive watches at a variety of price points, and plenty of luxury steel sports watches.
And we have not even discussed the heavily-marketed Bvlgari Octo Finissimo and its part here. Head over to the most popular reselling platforms and see how many of the existing watches we have mentioned in this article (minus the most obvious ones) are available, and at what price. If numbers are really your thing, you will see that scarcity does not always equal eye-watering price tags.
Fine watchmaking has plenty of complicated and difficult to understand concepts. By far the toughest to explain is the enduring appeal and value of watches in steel, with some examples commanding the highest value in all of watchmaking. Even worse are the core collection watches that achieve eye-watering prices by being cased in humble steel. This is the reason steel is sometimes called unobtainium in watchmaking circles, being that it is potentially more elusive than even the same watch in platinum.
Part of the reason for the apparently timeless appeal of steel can be found in the key watches of the 1970s, namely the Audemars Piguet Royal Oak and the Patek Philippe Nautilus. To this, one might very reasonably add the Vacheron Constantin Overseas, the Royal Oak Offshore, the Aquanaut and the Girard-Perregaux Laureato, amongst others, as well as the entire catalogue of all non-precious metal Richard Mille watches. These types of watches are classed together in the luxury sports watch category, and Richard Mille in particular has legitimised extraordinary price points for ultra-lightweight watches.
In a totally different vein, Grand Seiko brought fine finishing to the sports watch category, and has thus given tangible form to what prestige sports watches could look like. Not for nothing, Grand Seiko has also brought timekeeping innovation to the table, with Spring Drive being the most exciting chronometric achievement (in series production no less) in the last 20 years. Such exercises in chronometric excellence, combine with Richard Mille’s excessively engineered options, to cite just the entire automatic winding system, to provide a showcase of what fine watchmaking can bring to the table, in terms of robustness.
Richard Mille, Hublot, Roger Dubuis, Panerai and Audemars Piguet have also taken luxury watchmaking into never-before-explored realms of high-tech material science. The amazing growth in value — even at the level of detail — of these sorts of watches represents a triumph of marketing. Not necessarily the sort of marketing that creates desire, but the sort that emphasises the real need for these innovative moves.
This is not to say that the non-precious metal watches are a gimmick — Rolex has yet to endorse even titanium but that probably has more to do with its internal logic than any distaste or distrust of contemporary alloys and composites. The proof for this lies, chiefly, in the presence of ceramic, titanium and bronze cases in the Tudor assortment. Watch collectors have been eagerly awaiting the introduction of titanium cases in the Rolex range, and that would indeed have a transformative effect on the overall watch trade. The key to this lies in which price segment such watches would find themselves.
Currently, watches cased in titanium are typically more expensive than steel, and Rolex would likely only use titanium if it could get the same sort of high sheen that stainless steel can deliver. Such innovation in finishing (or in material science) would require a higher price point, thus playing into the hands of the so-called premiumisation forces currently dominating the market.
Here, the example of Audemars Piguet is most useful because CEO Francois Henry Benahmias has demonstrated the effectiveness of banking on selling fewer watches at ever higher price points. By relentlessly applying this strategy, Audemars Piguet has raised its revenues to within striking distance of Patek Philippe, while producing fewer watches. Intriguingly, Audemars Piguet, unlike Patek Philippe and Rolex, is firmly on the titanium path, and has actually made a Royal Oak reference in titanium, but that was for Only Watch. Nevertheless, Audemars Piguet could have changed things up in the Royal Oak game by introducing titanium for the standard 16202 model, but it opted not to. It could also do the same with ceramic, as it already has in complication territory, while also charging a premium price because of the difficulty in achieving the desired finishing.
Given how the Audemars Piguet numbers look, it is only natural that rivals are keenly studying the situation with regards to premiumisation. The playbook would be simple — establish a popular steel model, and then instead of increasing production of that model, introduce precious metal variants, and focus on selling ever greater numbers of those. There will be questions about where the best margins lie, but this may vary from brand to brand. Tissot illustrates an accelerated version of the premiumisation story with its insanely popular PRX model. It began with a quartz model, followed up with an automatic, and now has a steel and gold version. We have no doubt that all versions of the PRX are successful to some degree, because the aforementioned playbook works like a charm.
Watchfinder and other specialists are saying that gold is the next go-to material, and perhaps Patek Philippe will endorse this with exclusively gold versions of the Nautilus, as it did with Ref. 3711. It certainly feels logical to shift the collecting conversation away from steel, at least for awhile. Gold changes the value proposition considerably, and raises the asking price at retail accordingly. This becomes more important, and ever more pressing, as prices on the secondary market for steel watches approach those of the gold versions — they already exceed them in some cases.
Image: Patek Philippe
To close this segment on materials off, we return to Rolex. The brand is doing a masterclass in convincing people to move up the value chain, so to speak, and get precious metal models if steel is simply out of reach. Consider the example of the Rolex Cellini, which is never spoken of as a must-have model, and also that of the Datejust, for broader context. In the first case, you will be hard-pressed to even find a Cellini watch to try on, much less to buy immediately. Here too, you will have to register your interest and wait.
In the second case, we can report that you can still see and try on Datejust models, but you will also be unable to buy any immediately. The Cellini is only available in gold, and a significant proportion of the Datejust range is also only available in precious metals. Clearly, demand for Rolex watches is going far beyond the professional steel sports watch category, but let us look at what a typical watch buying journey might look like for just this one brand.
You would begin, like as not, with the Oyster Perpetual — it might be your first serious watch. After a few years, you might decide that something more substantial might be called for, and now you look to the Oyster Perpetual Submariner with date. From here, you might also consider a Rolesor version of the same, or perhaps even the full gold model. If your wrist could handle it, you might even opt for the Sea-Dweller. From there, you could go in a lot of directions, but you will now have charted a rather specific course in watch collecting.
So, the progression here would be from a simple time-only collection, exclusively in steel, to another collection that also offers gold and half gold options. Well, we say that this is typical but you will find it very difficult indeed to execute this course at this time. It might be that you will have to go straight for that Rolesor Submariner… Once again, if there is any watch you want from Rolex, and fortune favours you, do not hesitate.
The business of pre-owned watches is nothing new, no pun intended. In fact, this section might be punctuated by puns but none are intentional, unless otherwise indicated. There is a lot to get through so we will try to play it straight.
The advance in the pre-owned watch business has transformed the watch collecting in unforeseen ways. It has done this primarily by changing the perceived value of watches. Now the idea behind buying a watch that’s got some wrist time on it is the same as buying a used or secondhand car. Everyone accepts that when you buy a car, what you have is an object with depreciating capital value. In fact, you will lose value on your purchase the moment you drive it off the lot, as they say in the movies. This is also true of watches, by and large. Of course there are exceptions, and those typically prove their worth at public auctions over the years. This has been true for so long that only these few lines were necessary to explain buying a watch pre-owned. Things are quite different in 2022.
Image: Omega
There are new fair market prices for many watch models, totally divorced from the recommended retail price, and you might buy a current production watch several years old that has never been worn, from a third or fourth owner. It would have been unimaginable, just five or six years ago, to buy a current core collection watch from a second-hand dealer at anything even close to the recommended retail price. Try getting a new Rolex Submariner with that mindset and see how far it gets you. Welcome to a world where the now-discontinued Patek Philippe Ref. 5711/1A might cost you more at a secondhand dealer than, say, Ref. 3711 (a watch in white gold mind you). For collectors, which Patek Philippe Nautilus reference to acquire is a serious question, to which there could be many answers. There is a simple problem here that we can use our previous automobile example to elaborate on.
Sticking with the Patek Philippe Ref. 5711A, let us fast-forward to 2026, which happens to be the 50th anniversary of the Nautilus watch. For this exercise, let us also imagine that Ref. 5711A is your grail watch, and you have come to this decision — or realisation as it may be — after years of consideration. While Patek Philippe itself is inviting you to celebrate the anniversary with a specific reference that marks the occasion, you decide to pull the trigger on Ref. 5711A instead. By chance, in the swirling eddies of the deepest reaches of the Internet, you have found a dealer with the reference you want. It is unworn and still in its box — LNIB or like-new-in-box with factory seals intact. By this time, the premium on this model has achieved stratospheric heights that owners of the Ref. 5711/1A can only smile ruefully at. Would you buy this watch, unseen in the metal, take delivery and actually wear it? If so, take a moment to consider the state of the watch you are buying.
Patek Philippe factory warranties are good for two years so you have passed that mark — as noted previously, time starts ticking on the warranty from the moment it is sold by the authorised dealer. The manufacture recommends service intervals of between three to five years, and this is a standard advice from most watchmakers. Given all this, buying a watch that has been sitting in a safe or something for beyond this period, never having been checked even once by its owner, seems suspect. Would you buy a car that you intend to drive in this way?
Of course, this is an extreme example, and traders certainly do not intend to hold onto their inventory for extended periods (as noted earlier). They are not enjoying their watches, after all. Standard fare such as the Rolex Oyster Perpetual, Tudor Black Bay or Omega Speedmaster must all be turned around as quickly as possible, while the market is hot. Even something that might be a little special, such as the Audemars Piguet Royal Oak reference 15202ST will be treated the same. Traders are, as Watchcollecting.com’s Adrian Hailwood said, only buying watches because a market exists for them; to them, the watches may have no value beyond the market price.
It is for this reason, if no other, that we prefer to buy from people who actually wear their watches. They will at least know the state of any watches they are selling, and spend a little time taking care of their pieces. They might even be a little sad to sell certain watches, and we can relate to that. To be perfectly clear, we support the idea of collectors selling their own watches, especially if they have stopped wearing them, or any given watch stops being interesting to them. It happens that one falls out of love with a watch, even if that watch is the Patek Philippe Sky Moon Tourbillon, or the Rolex Daytona. Such a watch will certainly be sought-after by plenty of people, and they ought to have a shot at it. And this brings us to a sustainability issue…
Although it is mainly fashion brands that get the bad press about destroying their own unsold inventory, watch and jewellery brands certainly do the same. Just as Burberry continues to be mentioned for a 2018 decision to destroy US$38 million of unsold goods, Richemont admitted — also in 2018 — to buying back and destroying US$560 million worth of watches from Cartier, Piaget and Vacheron Constantin (according to Forbes). In watches and jewellery, brand executives tell us that they always attempt to recycle their raw materials, and that is the approach they prefer to take with unsold inventory.
Nevertheless, we are gratified to see older watches get their due at Cartier, which now sells restored pieces in their own boutiques. These are limited to watches from the 1970s to the 2010s so it is broad enough to include pieces that have passed their prime. Such services are really quite useful because entire collections have been known to come into their own long after their debuts. This includes the now mighty Cosmograph Daytona of course — in watchmaking, it takes time to build an iconic reputation.
