WEBVTT - Breitling CEO Talks Luxury Watches

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<v Speaker 1>Bloomberg Audio studios, podcasts, radio news, let's turn out to

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<v Speaker 1>luxury time pieces and monthly Swiss watch exports have dropped

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<v Speaker 1>the will since twenty twenty is demand seems to be

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<v Speaker 1>plunging in key markets, including China and Hong Kong. This

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<v Speaker 1>all has higher interest rates, shaky economic growth and geopolitical

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<v Speaker 1>conflicts lead consumers to reconsider perhaps splashing out. Joining us

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<v Speaker 1>now is yours Karen He's CEO of Swiss Watchmaker, writing

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<v Speaker 1>thank you so much for joining us to orson out.

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<v Speaker 1>I left my risk there just in case, you know,

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<v Speaker 1>but I see you didn't bring anything extra with you. No,

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<v Speaker 1>do tell us, in all seriousness why this drop off

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<v Speaker 1>suddenly after three years of booming Swiss watch sales.

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<v Speaker 2>What you have to look at is a long, long

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<v Speaker 2>term trend and if you look at the watch industrial,

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<v Speaker 2>luxury industry in general since the nineteen eighties has been

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<v Speaker 2>booming and I'm convinced that this trend will continue. Of course,

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<v Speaker 2>you have a bumpy road right now. You have political instability,

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<v Speaker 2>you have inflation in many countries, and all this impacts

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<v Speaker 2>what we call the consumer sentiment. So some people, especially

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<v Speaker 2>I would say in the entrance luxury price point at

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<v Speaker 2>postponing their purchases. What is interesting to see though, that

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<v Speaker 2>the high luxury is the readly expensive pieces are doing extremely.

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<v Speaker 1>Well, extremely well.

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<v Speaker 2>Well.

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<v Speaker 1>Your strategy over the last seven years has been working really,

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<v Speaker 1>really well. So you tell us what does a Brightening

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<v Speaker 1>with you in charge do at a time like this?

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<v Speaker 1>Do you lean into the very high end.

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<v Speaker 2>You're right, we have been doing very well. But it's

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<v Speaker 2>a package of elements which make a brand more successful

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<v Speaker 2>than anults because in a crisis, what you need to

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<v Speaker 2>do is to overperform the market. So be better than competition,

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<v Speaker 2>and it's better products, nicer products, better marketing, communication, you know,

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<v Speaker 2>being closer to the to the consumer through our boutiques

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<v Speaker 2>for instance. And this is why you know we outperform

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<v Speaker 2>the market.

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<v Speaker 1>So what does that mean if a retailer decides to discount,

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<v Speaker 1>do you have any control over that? Do you want

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<v Speaker 1>your brand associated with discounting? Is it fine?

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<v Speaker 2>No, it's not fine. No brand wants to have its

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<v Speaker 2>product discounted. Thank god, we don't have that problem. Especially,

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<v Speaker 2>the secondary market is much more structured, what we call

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<v Speaker 2>certified pre own. You have much less what we call

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<v Speaker 2>gray market. People selling watches because they need cash. So

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<v Speaker 2>I think the market is much more structured. And no,

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<v Speaker 2>I think we are strong brand and the retailers respect

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<v Speaker 2>our pricing policy.

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<v Speaker 1>So obviously you mentioned China. You know we can. Demand

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<v Speaker 1>from China has been pretty much a big drag. When

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<v Speaker 1>do you see China luxury demand coming back? Given that

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<v Speaker 1>we all better than next growth, But it does seem

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<v Speaker 1>that the economy is not I.

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<v Speaker 2>Think nobody in the luxury we are nowhere in China.

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<v Speaker 2>It's a one point six billion country. There are only

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<v Speaker 2>two or three hundred million people in that country who

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<v Speaker 2>have access right now to the luxury products. I just

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<v Speaker 2>came back from China. If you look as a second

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<v Speaker 2>tier city to your cities, cities you've never heard about it,

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<v Speaker 2>with ten million inhabitants, the potential is huge. Again, you

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<v Speaker 2>know the market will grow into your future and sometimes

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<v Speaker 2>there will be some dips, but the potential also in India,

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<v Speaker 2>in so many countries is phenomenal.

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<v Speaker 1>Are you seeing it as a bit of a land

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<v Speaker 1>grab opportunity then right now? Is that why you're just

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<v Speaker 1>back from China?

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<v Speaker 2>Yes? Yes, and I'm flying tomorrow to India. So there

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<v Speaker 2>are countries with phenomenal potential.

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<v Speaker 1>Yeah, what about the United States, because I imagine in

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<v Speaker 1>the past you've depended on the wealthy bankers and the

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<v Speaker 1>billionaires in the United States. How are they doing? What

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<v Speaker 1>are theyking?

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<v Speaker 2>At the moment? Price the US is doing fine. You

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<v Speaker 2>have this problem in the US because of the interest rates,

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<v Speaker 2>in particular for housing, and you know, they have flexible

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<v Speaker 2>interest rates and they have been raising and I think

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<v Speaker 2>that's a big problem. I hope that the interest rates

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<v Speaker 2>in the US will go back very soon and this

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<v Speaker 2>will help. And we as a Swiss company producing a

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<v Speaker 2>Swiss frank, obviously we have a problem because the Swiss

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<v Speaker 2>frame became so strong. So whatever we gain in the US,

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<v Speaker 2>we might lose a portion of it because we obviously

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<v Speaker 2>report in Swiss frangs exactly.

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<v Speaker 1>And you're obviously looking at what the Federal Reserve does

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<v Speaker 1>just as much as everybody else. So when the market

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<v Speaker 1>drops like it has for the last six days in

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<v Speaker 1>the United States, does that concern you.

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<v Speaker 2>Indeed, we see also that there's a correlation between the

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<v Speaker 2>market development and the consumption in luxury goods. Sure, but

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<v Speaker 2>I'm still positive. I'm still positive.

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<v Speaker 1>Talk to us about your courts inclusion because it wasn't

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<v Speaker 1>something that breaking typically did much of, and it seems

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<v Speaker 1>to be a bit more popular now, is it because

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<v Speaker 1>it's popular with the consumer?

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<v Speaker 2>Yes, we want to be approachable as a brand when

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<v Speaker 2>we talk about exclusivity. Of course we talk about pricing,

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<v Speaker 2>we talk about accessibility of the product, but intellectually, especially

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<v Speaker 2>our sponsorship, our partnerships are all approachable. We're not engolved

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<v Speaker 2>in tennis. We went surfing, for instance with Skelly Slag

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<v Speaker 2>we are in triacline. We try to be approachable as

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<v Speaker 2>a brand, but of course we remain exclusive because of

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<v Speaker 2>our distribution enterprise.

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<v Speaker 1>But those are also very adventurous and sort of extreme

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<v Speaker 1>type sports, right, That must be a little bit of a.

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<v Speaker 2>Strategy too, absolutely, especially after this COVID area where people

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<v Speaker 2>are searching for freedom, carpe DM enjoying life and all

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<v Speaker 2>these sports give that and the society changed a lot

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<v Speaker 2>since COVID.

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<v Speaker 1>Where are you spending your marketing dollars? Facebook, Instagram? What's

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<v Speaker 1>the new place to spend it?

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<v Speaker 2>Indeed, we spend nearly seventy percent of our marketing dollars

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<v Speaker 2>in social media because it's there where people make their choice,

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<v Speaker 2>It's where customers get the information but it doesn't mean

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<v Speaker 2>that they buy online or through e comm They buy

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<v Speaker 2>in boutique, so they get the information online, but they

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<v Speaker 2>want the physical experience of the brand, and this is

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<v Speaker 2>very different.

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<v Speaker 1>The pre owned market has dropped off quite extant. If

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<v Speaker 1>that's the case, then what would you want to have

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<v Speaker 1>as the price point that you sell us. How do

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<v Speaker 1>you attract people who know that this is not maybe

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<v Speaker 1>something that they'll resell in the future.

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<v Speaker 2>After COVID, everything boomed, and I think in both in

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<v Speaker 2>the primary market and the secondary secondary market, the market

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<v Speaker 2>has normalized. Let's not forget that we are far ahead

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<v Speaker 2>of pre COVID. Of course, some brands suffered since last year,

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<v Speaker 2>but the year after COVID was totally absolutely not normal

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<v Speaker 2>and the market normalized. Also. The certified pre owned market

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<v Speaker 2>now decrease a little bit, but it's still at a

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<v Speaker 2>very high level and has been normalizing. So we should

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<v Speaker 2>We shouldn't compare it to the post COVID year, but

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<v Speaker 2>we should compare it to the year before COVID, And

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<v Speaker 2>here the whole industry is doing very well.

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<v Speaker 1>I'm a VP of Common SACS. We didn't do too

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<v Speaker 1>badly last year. What's the works that I pick out.

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<v Speaker 2>Of britlingk for instance, this one it's a too Bion.

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<v Speaker 1>You told me that was twenty five thousand dollars, whereas.

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<v Speaker 2>Yeah, well you had Goldman Sachs squint afford it.

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<v Speaker 1>Okay, what is the most popular watch right now?

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<v Speaker 2>It's a NAVI timer. It's obviously it's a Navy timer line,

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<v Speaker 2>which is our iconic product, and we just launched the

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<v Speaker 2>forty one medi meter GMT and automatic and it's been

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<v Speaker 2>doing very well.

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<v Speaker 1>Any plans for a smart watch, no, no, no, no doubt.

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<v Speaker 1>It's Swiss after all, there's no way you're getting smart

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<v Speaker 1>watches out of the Swiss. All right, don't forget to

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<v Speaker 1>take your watch with you. Definitely don't leave it behind.

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<v Speaker 1>That's yours, Karen. He's Brightling's CEO,