Hublot wants to prove that behind a successful $5 million watch, there’s a woman.
The Swiss brand, which sold a $3 million diamond-laden Big Bang model within a day this year, is upping the ante by creating its most expensive timepiece ever, encrusting it with as many as 300 carats of diamonds to grab the attention of its new target market: ladies’ watches.
“Women are buying more than men, women are buying more often than men and women are very influential over men, so you have three good reasons to work on this population,” Chief Executive Officer Jean-Claude Biver said in an interview. Hublot, bought by LVMH Moet Hennessy Louis Vuitton SA in 2008, aims to present the one-of-a-kind $5 million watch next year.
Wealthy females snapping up bespoke $1 million pieces and $39,000 candy-colored Tutti Frutti watches will help drive revenue growth of about 30 percent this year, Biver said. While luxury stocks including LVMH hit one-year lows this month on concern that purchases from new millionaires in China may slow, Biver sees “no thunderstorm on the sea” for the industry in 2012. Women are bolstering its business, much of which has traditionally come from selling large, sporty watches to men.
Hublot isn’t the only watchmaker catering more to women, a market worth $3.9 billion last year and set to grow 30 percent between 2010 and 2015, excluding inflation, according to researcher Euromonitor. As women increasingly see watches as an investment, Swatch Group AG’s Omega last year introduced its Ladymatic self-winding watches, which sell for as much as $42,700, while Patek Philippe started selling a ladies’ chronograph in rose gold this year for about $478,000.
Lamborghinis to Match
Hublot’s Tutti Frutti collection is produced in yellow gold, red gold, steel or black ceramic and in 11 different colors and shades. They’re 4 centimeters in diameter, double the width of some Cartier Tank watches. One client in Monte Carlo bought four in different colors to match her red, orange, green and black Lamborghinis, according to Biver.
The Nyon, Switzerland-based company founded by Carlo Crocco in 1980 is now selling 10,000 oversized watches with precious stones a year and can’t produce enough to meet demand, he said.
“It’s so astonishing,” Biver said. “Women don’t want to buy what is called a ladies watch; they want to buy a watch with personality. Ten or 20 years ago, we would have sold zero because women didn’t want big watches.”
Traditionally most ladies’ timepieces have used quartz mechanisms, which are thinner, and the value was mostly correlated with the amount of jewels heaped on them. Hublot’s Tutti Frutti, the Ladymatic and Patek’s chronograph use mechanical “movements,” or motors, which are more difficult to make and increase pricing power, analysts said.
“Women are starting to buy mechanical watches, whereas in the past it was mainly a quartz business,” said Rene Weber, an analyst at Bank Vontobel in Zurich. “Two years ago it wasn’t a theme at all, but now it’s a major one.”
Women account for less than 10 percent of Swiss mechanical watches sold, though the proportion is growing, Weber said. Switzerland exported about 15 billion francs worth of watches in 2010, based on wholesale prices.
Women in emerging markets are generating more disposable income and gaining more power at work, helping to drive the trend, said Fflur Roberts, head of luxury-goods research at Euromonitor.
“It’s also becoming more equal between men and women on the luxury watch side,” Roberts said. Women account for about 37 percent of the watch market, she said.
About a third of the 30,000 watches Hublot makes each year are now adorned with precious stones, according to Biver. While male celebrities such as Elton John and Marc Antony have sported Tutti Frutti models, about 80 percent of the timepieces adorned with gems are purchased for women.
Hublot sold eight $1 million diamond watches over the past two years, mostly on demand, according to Biver. The company is currently making a second $3 million watch for a customer.
While China has become the biggest market for Swiss watches, the buyers of Hublot timepieces more frequently are from countries such as Brazil, Mexico and Russia, according to Biver. The Swiss company gets about 1 percent of its revenue from China, compared with about 35 percent for other brands, as Chinese consumers prefer more conservative designs, he said.
“It gives me security because we don’t rely on the market and it gives me hope for the future” as there’s room to grow, Biver said.
The Tutti Frutti line also boosts Hublot’s sales to men, as women help promote the brand.
“They are influencing men and very often say to their husbands what to buy, and if she likes Hublot, very often she will choose a Hublot for her husband,” he said.