In the previous installment of this article, the owner of a jewelry store Orlando explained to us why luxury watch brands cost a lot more money than mass-produced watches. Luis’ answer started with 3 big differences: materials, craftsmanship, and the innovations developed by luxury watchmakers in the movements making their watches tick.
His answer actually covered more than these 3 aspects, and Part II of our original article expounds on other differentiators that explain the price gap between the two ends of the watch market.
Here they are, in Luis’ words.
1. Brand History and Prestige
Luxury brands often have long, well-established pedigrees which contribute to their prestige and the value of their watches. Each brand has a story of its own, and people who can afford these watches love feeling that they are a part of this history. Let’s take some examples:
Rolex: Founded in 1905 in London by Hans Wilsdorf and Alfred Davis, Rolex originally imported Swiss movements to place in watch cases made primarily in England. Rolex quickly distinguished itself with its emphasis on precision and durability. The brand moved to Geneva in 1919 to be closer to the source of Swiss watch movements. Rolex introduced innovations such as the first waterproof watch case, the “Oyster,” and the first wristwatch with an automatically changing date on the dial (the “Datejust”). Rolex has always focused on a relatively small range of models.
Jaeger-LeCoultre: Located in Le Sentier, Switzerland, Jaeger-LeCoultre was founded in 1833 by Antoine LeCoultre, who invented a machine to cut watch pinions from steel. Jaeger-LeCoultre is known for its innovation and has produced some of the most iconic watch models, including the “Reverso” (1931), which features a swiveling case originally designed for polo players, and the “Atmos” clock, which is powered by temperature changes in the environment.
Patek Philippe: Established in 1839 in Geneva by Antoni Patek and Adrien Philippe, Patek Philippe has been at the forefront of watchmaking innovation since its inception. The brand has over 80 patents to its name and is known for producing watches with highly complex movements. They made the first wristwatch and are renowned for their perpetual calendar, chronograph, and minute repeater watches.
Cartier: Cartier was founded in Paris, France, in 1847 by Louis-François Cartier, but it was his grandsons who transformed Cartier into a world-renowned brand. Known more for its jewelry, Cartier also played a significant role in the evolution of wristwatches. The “Santos” watch, introduced in 1904, was one of the first practical wristwatches, designed for aviator Alberto Santos-Dumont. Cartier’s “Tank” watch, introduced in 1917, is another iconic design that remains popular today.
These brands, to the exception of Cartier, are either born in Switzerland, or have a long history in Switzerland. This is no coincidence.
2. Switzerland: The Cradle of the Luxury Watchmaking Industry
The history of watchmaking in Switzerland began in the late 16th century, driven initially by Huguenot (protestant) refugees from France who brought their watchmaking skills with them. The Swiss watchmaking industry truly began to flourish in the 19th century, with the introduction of factory systems. Geneva and the Jura mountain region becoming large centers for watchmaking. On the other side of the Jura mountains, in France, watchmaker Lip grew a famous brand (though for people with more modest means) until its demise in the 1970 due to a long economic crisis.
Why Switzerland? Luis believes that the Swiss luxury watchmakers were helped by a combination of factors: an abundance of skilled labor, a carefully maintained tradition of precision and quality, a strong networks of suppliers (a feature shared by the German and Japanese industrial companies), and possibly Switzerland’s neutrality during the World Wars which allowed the Swiss watch industry to continue production while other watchmakers had to close their workshops.
Despite the “Quartz Crisis” in the 1970s and 1980s, when cheap, accurate quartz watches from Asia threatened the Swiss mechanical watch industry, brands like Rolex, Jaeger-LeCoultre, Patek Philippe, and Cartier have maintained their commitment to craftsmanship and mechanical innovation, reinforcing the prestige and desirability of Swiss watches. “Swiss made” has become a label, just as much as the trademarked noun “Champagne” has become the symbol of luxury and sophisticated fun in the world of wine.
3. Limited Editions and Exclusivity
“What is rare is expensive”, as the saying goes. From time to time, high-end watchmakers release special limited editions that are so remarkable and in such little numbers that they make history and become the crown jewel of a luxury watch collection.
Such is the case of 4 models that continue to this day to enjoy an extraordinary fame:
Rolex Daytona “Paul Newman”: The original Rolex Daytona watches were not a success and were produced in limited numbers. However, when actor Paul Newman was seen wearing a specific variant with a unique dial, these models ― now known as the “Paul Newman” Daytonas — have become some of the most desirable watches among collectors. In fact, Paul Newman’s own Daytona sold at auction for $17.8 million in 2017.
Patek Philippe Henry Graves Supercomplication: Created for banker Henry Graves Jr., this pocket watch was the most complicated watch ever made when it was completed in 1933. It held that title for more than 50 years and remains one of the most intricate and historically significant watches made by Patek Philippe. It sold at auction for $24 million in 2014.
Omega Speedmaster “Snoopy Award”: Omega has released several limited edition Speedmaster watches with a “Snoopy” (the Peanuts cartoon adorable dog character) theme to commemorate NASA’s Silver Snoopy Award that Omega received in 1970. These watches are highly prized by collectors for their rarity and fun design.
Jaeger-LeCoultre Reverso Tribute to René Magritte: In partnership with the Magritte Foundation, Jaeger-LeCoultre released a limited edition of its iconic Reverso watch featuring a day-night indicator inspired by the paintings of the surrealist artist René Magritte. It was limited to 75 pieces and only available in Belgium, making it a rare collector’s piece.
As these examples show, sophistication coupled with rarity, exclusivity, and even celebrity status, keep the reputation of the Swiss luxury watchmakers in a league of its own.
4. Resale value
Any collector market is partly defined against its capability to accumulate and store value. People with money invest into what will appreciate. There is an element of risk to this type of investment strategy as the value tends to reside in the name itself, more than in the object. This is very much the case in the art world, where painters become cultic objects but may return to obscurity once the fad has died.
The Swiss luxury watch market dampens that risk somewhat because of its longevity. The market has already proven to be resilient to crisis, as was the case in the 70s and 80s with the “Quartz crisis”, when quartz-powered movements fascinated people of all walks of life with its incredible precision.
However, the large luxury watch brands survived the crisis, whereas quartz movements fell down to the lowest rung of the ladder in the global watch market. The resilience of the “Swiss Made” label has proven it to be a reliable store of value.
This has encouraged wealthy people to invest into high-end watches and keep them as heirloom pieces, thereby sustaining market prices and the resale value of these timepieces.
Resale value is also a function of the mythical appeal of a brand, and the big Swiss watchmaker take great care of their reputation, make sure nothing damages their brand.
