Vacheron Constantin occupies the very apex of the pyramid of haute horlogerie. Arguably the oldest watch brand in uninterrupted existence, it has been making exquisite timepieces renowned for their movements and artistic purity since 1755. And since the 18th century, the brand has made watches for customers all over the world, including India. Earlier this year, Indulge spoke to chief executive officer Juan Carlos Torres about his immediate challenges, Vacheron Constantin’s ambitious growth plans, and why he is so bullish on his future prospects. Edited excerpts:
You’re expanding space in your facilities. Where is this growth in sales coming from? When you wake up in the morning and look at your lists of markets to worry about, what comes out on top?
First of all, this is not what I think about first thing in the morning (Laughs). And even when I do, I am more worried about monitoring production than sales. Because as a brand, we are not driven by sales. We are driven by a litmus test: how many pieces can we produce without compromising on our traditional quality?
Therefore, the secret of the brand is to grow at the same pace as our watchmakers grow. That is why we are expanding our watchmaking capabilities step by step.
Then comes the next problem: how do we allocate our production to different markets. Now that is a big problem.
For the moment, we can say that Asia—mainly Hong Kong and China— families. And many of these people Now you and I know that we cannot are the engines that are driving know a lot about the brand. increase production only by adding the Swiss watch industry. How you We now have a plan to develop machines. It is not machinery that balance the rest of the markets is up this market further step by step. In makes watches. Watchmakers to you. You see, China can consume a more intensive way—with better make watches. So we have to add everything. We could sell each and communication, a bigger presence watchmakers. every piece in China if we wanted to. and a better reach to a very specific Now…imagine the brand as a pipe. So you have to analyse. Who do we clientele. For the next five years, India To work properly, a pipe must have give the products to? is going to be a priority for us. I mean balanced inward and outward flow.
How do you decide this?
You need to look at the historical markets for the brand. Italy, France and Germany and, more recently, newer markets such as London. You have to show fidelity to your historical markets. These are the markets that have supported you int the past. We must give them enough merchandise.
What has been a pleasant surprise the brand in the last few years are the sales in America. The brand is growing quickly in the US. We are gaining market share and this trend will continue. Our boutique in New York is very strong. We see a lot people coming there for specific pieces and special editions.
And then comes the question of newer markets such as India. And young people satisfying these markets is a question of expanding our capacity.
How important is India for you?
India is not a new market for us. . We were already in India in the middle of the 19th century. . I think we first sold a watch in India in 1849. But , we never had a major presence. We were very discreet and we catered to a select group of people and families. And many of these people know a lot about the brand.
We now have a plan to develop this market further step by step. In more intensive way — with better communication, a bigger presence and a better reach to a very specific clientele. For the next five years, India is going to be a priority for us. I mean in terms of development, not in terms of allocation. Not yet. Because you can’t simply ship pieces to a market wait and hope that it accepts them. The ground has to be prepared carefully.
Vacheron Constantin has expanded production to 20,000 pieces from10,000 over nearly 20 years. But now you’re planning to expand to 30,000 pieces in just five years. are that’s huge acceleration. How do you plan to maintain quality and the company culture?
We’ve been planning for this growth for many years. In 2005, we drew up a 10-year plan. And year after year, we have revised this plan. Now you and I know that we cannot increase production only by adding machines. It is not machinery that makes watches. Watchmakers make watches. So we have to add watchmakers.
Now…imagine the brand as a pipe. To work properly, a pipe must have balanced inward and outward flow. R&D (research and development) is at one end, production and watchmaking are in the middle, and markets are at the other end. We can’t overproduce if there isn’t enough pull from the market end. And the market can’t overdraw if there isn’t enough material flowing into the pipe.
So, year after year, we’ve been scaling up the size of the pipe by building each section. It is a long process. We have a new manufacturing facility coming up in one-and-a half or two years. We’ve built a big training facility here. Right now, we are training the watchmakers for the next five years. It is a very long and a very expensive process.
Is it a challenge to find people? Does Switzerland have enough young people who want to make watches?
For some brands, this is a problem; they have trouble finding people. But if Vacheron Constantin put out an ad saying we are looking for watchmakers, we are spoilt for choice. The problem is that this choice may not always be very good, which is why we are investing so much in training.
But despite all this, I am not afraid.
We can double our pipeline easily.
For many years, our real headache was to deal with movements. Vacheron did not have complete control over all the movements it used. This is changing. In the future, we will control almost every step of the manufacturing process, and almost all the movements.
This is why I am not afraid of this growth target at all.
The sense I get is that you are trying to grow into a big company while still maintaining your small-company characteristics.
Absolutely. But not a big company in the sense that we become an industrial manufacturer of watches. No. In fact, that is the challenge. I don’t want to make 5,000 pieces of the same model at high quality. That is not hard. What is hard is making 500 pieces of 10 different models at Vacheron’s quality levels.
This is the exact opposite of what other brands are doing. at SIHH and Basel, they said they want to slim down their catalogue and clean up their stock-keeping units.
Because it is cheaper to do that. And they want to make more money from a simpler production set-up.
We don’t want to that. First of all, the watchmakers don’t want to do that. They don’t study for seven years to then spend years after years making thousands of copies of one model. They want variety. This is true for other employees as well. Even the sales guy doesn’t want to sell the same watch every day.
These investments are a huge bet on the Swiss luxury watch industry. You are optimistic about the next 5-10 years.
I don’t know. In fact, no. I don’t think the industry is going to grow like crazy. But I think Vacheron will grow. There is room for us to grow. We know what to make. We know who to sell to. Like I said before, if we expand production right now, we’ll increase sales immediately.
Why are you confident you will grab market share from other brands in your segment?
We are currently making around 20,000 watches. I think we can eventually grow to 35,000 over the next few years without many problems and without being overly aggressive.
And will you cap your production at 35,000, or grow even more?
We will see. There is a plan. My feeling is that we can grow and then stay stable between 35,000 and 55,000 watches in the long term.
Some people might say this sounds crazy. But think about it. What will happen when India and Brazil open up? Who knows? What if in another 20 years, the African markets begin to boom?
Now a broader industry question. How do you think mid-tier brands will cope now that the supply of movements is drying up? How will they be able to call themselves Swiss made if they don’t have any movements?
The Swatch Group told these brands many years ago to start making their own movements. So it was not without a warning.
I don’t think they will run out of movements. There are other small manufacturers now making movements. But it will be expensive. And these brands will be obliged to pay now what they tried to avoid paying for years.
And, in addition, some brands will have to go outside Switzerland to get parts. I am sure buyers in China, Brazil and India will not agree to buy a luxury watch that is not Swiss made.
The other danger is that brands will decide to invest elsewhere instead of investing in Switzerland, which is bad for the industry.