The Big Four Increase Their Worldwide Grip on Watches

It has been clear for some time that among the hundreds of brands that make up the luxury watch industry, four — Rolex, Patek Philippe, Audemars Piguet and Richard Mille — are not like the others.

The brands are sought after by both established collectors and dabblers new to the field. Their names are known as sponsors of major sporting events, from the U.S. Open (Rolex) to Les Voiles de St. Barth (Richard Mille), and cultural attractions, from the Montreux Jazz Festival (Audemars Piguet) to the Singapore arts center Esplanade (Patek Philippe). They are name-checked in song lyrics, flashed on red carpets and, on occasion, stolen straight off people’s wrists.

But since 2017, and especially over the past 18 months, all four watchmakers have strengthened their dominance of the market, and the demand for — and value of — their timepieces has continued to rise.

Why 2017? That’s when “the ascent started to happen,” said Yoni Ben-Yehuda, head of watches at Material Good, a New York-based retailer that carries Audemars Piguet. Demand began to outpace supply, as more people entered the market, with social media playing a big role. Secondary prices for the most sought-after models started to increase, at a rate of about 15 percent year over year, Mr. Ben-Yehuda said.

And why in the last 18 months? The answer lies in a combination of supply shortages caused by the pandemic and money poured into the global economy by federal banks, explained Aurel Bacs, the auctioneer whose Bacs and Russo consultancy runs the watch department at Phillips. “Suddenly we find ourselves with more money and less watches to buy. Consequently, prices go up.”

In late July in Monaco, for instance, the watch auctioneer Antiquorum sold a Ref. 5711 Green Dial Nautilus by Patek Philippe, still in its factory-sealed packaging, for 416,000 euros, or $492,000, a price that included the auction house’s 25 percent commission.

What made the result so noteworthy is that the model had been introduced in April with a retail price of $34,890.

“The watches from these brands are universal liquid assets now,” said Geoffrey Hess, an international watch specialist at Phillips, based in New York. “Of course, they’re all well made and recognizable. But there’s comfort for collectors in buying from these brands because buyers and sellers will value their watches as a recognized currency.”

A major distinction about the so-called Big Four: They are privately owned, while most of their competitors belong to publicly held luxury groups (such as Compagnie Financière Richemont, which owns Cartier, and Swatch Group, which owns Omega).

“These four brands don’t answer to shareholders, and none are driven by immediate profits,” said John Simonian, chief executive of Richard Mille in the Americas.

An example of the Big Four’s approach would be Patek Philippe’s decision early this year to stop producing the Nautilus Ref. 5711/1A-010, a stainless-steel timepiece with a black-blue dial — a watch that some prospective buyers were waiting eight or even 10 years to obtain. And therein lies the No. 1 explanation for the brands’ extreme desirability, industry experts say: Demand for their watches far outstrips supply — despite the four companies’ vastly different annual production figures.

Rolex does not disclose its output. But according to Morgan Stanley, which in March published a report on the Swiss watch industry titled “King Rolex,” it makes about a million watches per year — though in 2020, that number is thought to have dipped to 810,000. (Even with that decline, the authors wrote, “We believe that Rolex became the largest player in 2020 for the first time in decades, with an estimated market share of 26.8 percent, versus 24.6 percent in 2019,” when the Swatch Group held the lead spot.)

In 2020, the report said, Patek Philippe made about 53,000 watches; Audemars Piguet, about 60,000; and Richard Mille, about 4,300. The numbers are certainly smaller than in an average year, however, as most Swiss factories closed for about two months in spring 2020 as the coronavirus spread in Europe.

By all accounts, the brands’ retail displays around the world are now barren — particularly those once stocked with the most sought-after sport models, including the Patek Phillipe Nautilus and Aquanaut, the Audemars Piguet Royal Oak and just about anything by Rolex and Richard Mille.

“Just a few months ago, you could walk into a Rolex store and see some watches,” said Dr. Iris Ko, an anesthesiologist in Southern California who has been collecting mechanical timepieces since 2008. “I just walked into a Richard Mille store, and they’re sold out for months to a year. You can’t get any Royal Oaks — not available.”

For buyers willing to pay a hefty premium, the only option is to purchase the models through secondary channels — auctions, pre-owned sites or private sales — where the hottest pieces are selling for, at a minimum, 60 percent more than retail.

“The Rolex Daytona in black ceramic has gone up from $22,000 in January 2020 to trade today at $36,000, about a 66 percent increase,” Justin Reis, co-founder and chief executive of WatchBox, a Philadelphia-based pre-owned watch dealer, said on a phone call in mid-August.

“The Audemars Piguet 15202, the Royal Oak with blue dial — that’s appreciated from $39,000 in the first quarter of 2020 to closer to $70,000 today, a 75 percent increase,” he added. “And the Patek Aquanaut 5167 has appreciated from $34,000 to $55,000, a 60 percent increase.”

Mr. Reis said one reason buyers were perpetually driving prices higher on select models was that, thanks to companies like WatchBox and its numerous competitors, including Watchfinder & Company, Chrono24 and Crown & Caliber, consumers finally had access to organized data. This includes past pricing for specific models, which has taken the guesswork out of the buying process. And interest in high-value collectibles has soared during the pandemic, as people have looked to hard assets to diversify their portfolios.

“Nobody knows where to put their money anymore,” said Maximilian Büsser, owner and creative director of the boutique brand MB&F. “If you manage to get your hands on a steel Nautilus, a Rolex Daytona, an RM 011 or a steel Royal Oak, the day you buy it at retail, you can resell it immediately, multiplying its value by two or even three. A 100 percent to 200 percent upside.

“What investment in the world — unless you’re a drug dealer — actually gives you those returns?” Mr. Büsser added.

The ballooning values of certain models actually has complicated business for authorized dealers, who say competition among buyers is fierce.

“In my 34 years with Wempe, I’ve never seen anything like it,” said Ruediger Albers, the New York-based president of American Wempe Corp., a prominent Rolex dealer.

Mr. Albers said the New York store did not maintain a waiting list for models such as the stainless steel Rolex Daytona with a white dial, its most requested timepiece, because that would imply there was a chronological order to fulfilling requests. Instead, he said, the most sought-after pieces go to longtime clients who can be trusted not to flip them.

“The art is to find the customers who will love the watches, not turn them into financial assets,” Mr. Albers said.

While the Big Four command the lion’s share of attention among today’s investment-minded buyers, a handful of independent brands, led by the contemporary watchmaker François-Paul Journe, have experienced similar spikes in demand since the early days of the pandemic.

“All the people who ask me for Journe in the last 12 months don’t even know his name,” Mr. Büsser said. “But they have heard if you buy a Journe, you can make money.”

Paul Boutros, head of watches for Phillips in the Americas, said interest in F.P. Journe soared in June 2020, when two of the watchmaker’s early models, the Tourbillon Souverain and Résonance, sold at a Phillips Geneva sale for a combined price of more than $2.5 million.

“Since then, it gave people more confidence to pay more than they wanted to pay for early Journe watches,” Mr. Boutros said. “And because the older pieces are so sought after and expensive, it makes the newer pieces at retail look like such great value, and drives demand there.”

Yet the question remains: Is this all a bubble? It depends on whom you ask.

William Rohr, an industry veteran and the New York-based founder of Massena LAB, which collaborates with watchmakers on limited-edition timepieces, thinks it might be.

“It’s bizarre to a guy like me, who’s been around 30 years,” Mr. Rohr said. “To a new guy who was unaware of a Journe or a Patek until recently, maybe it’s the new normal?”

“But I don’t think it’s sustainable,” he said. “Right now, it’s a seller’s market, and the seller is deciding who they want to sell a watch to. For a buyer it can be frustrating. But wait, things are going to change.”

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