How investing in luxury watches can be a diversification opportunity

During a splendid event on 13 March 2024 at the famous Tiffany & Co shop in central Geneva, Nicolas Beau, Tiffany Horlogerie Vice-President, and Rémi Guillemin, Christie's Head of Watches, Europe, shared their expertise with Geneva graduates and the Club Luxe on this buoyant market, which can be seen as part of a diversified investment portfolio.

Emeric Delporte (SKEMA 1997), co-founder and partner of Authentic Capital, a specialist in wealth management and advisory services in Monaco and Switzerland, and Fabienne Buon, SKEMA Alumni France and International Network and Events Coordinator, welcomed two well-known speakers.

A market under the microscope

The watch is an object that has travelled imperturbably through the centuries and  generations. It is a speaking part of history that bears witness to the changes in the world, and attracts ever-more interest in terms of collecting and investment. So it is crucial to understand the history of each watchmaking company and every luxury item to appreciate its contemporary value.

During the event, Rémi Guillemin of Christie's unveiled some key concepts to be taken on board.

Founded in London in 1766, Christie's auction house now boasts a watch department with 13 staff, present on every continent. An international department that regularly provides assistance to discerning collectors and clients from all over the world.

Every year, eight sales are staged in New York, Geneva, Dubai and Hong Kong.

"On these occasions, we tend to see the Patek Phillipe, Rolex and Audemars Piguet brands time and time again," says Remi Guillemin, who tells they all have one important thing in common: "the rarity, condition and provenance of the pieces."

With each model, these parameters have to be meticulously studied to determine the price. "We consider aspects such as whether they been restored, if they are in their original condition, was their production limited, in what context they were produced, and so on."

Tiffany & Patek: the story of a handshake

In the world of luxury, meetings often play a key role. The one between Tiffany and Patek is an "outstanding example," to quote Rémi Guilllemin.

"In 1851, Charles Lewis Tiffany shook hands with Mr. Patek and they began working together," says Nicolas Beau, Horlogerie Vice-President at Tiffany & Co. "He was an inventor, a lover of Europe and a gifted businessman who sensed the emergence of a luxury market in the United States."

Tiffany then sold the Geneva factory, Switzerland's largest at the time, to Philippe Patek and withdrew to the USA to become the exclusive retailer of the Swiss watch brand.

"There were then sizable orders for the American market, with the particularity of the double signature on Patek Philippe and Tiffany watches when they were sold in America," adds Rémi Guillemin. "Tiffany saw that there were wealthy families living in the United States, but, paradoxically, no luxury products yet, so it decided to offer the very finest jewellery, silverware and watches in the world for sale. The Blue Book was born," says Nicolas Beau.

So, because they are rare or have an outstanding provenance or history, these watches enjoy constantly rising price indexes on the market. They are highly sought-after by collectors, who see them as exceptional objects, witnesses to and players in the history of world watchmaking.

The watch: a universal source of pleasure

"In 2021, LVMH's takeover of Tiffany enabled the brand to regain its historical momentum from Geneva, the cradle of the brand," says Nicolas Beau, who has unshakable faith in the women's watch market. "For many - especially in the US -, the watch  is a men's or at best a mixed market. But I'm passionate about women's watches."

What drives women to buy, according to Nicolas Beau :

1. The brand: "This is no different from men, and comes in at number 1".
2. The style: "This is clearly in second place for women, whereas men are more attracted by  the movement."
3. Movement: "The movement comes third because it's about making the ultimate decision, and at this stage, women generally turn to their fathers, husbands or brothers."

We should remember that the movement for a woman's watch is closely linked to the item's style. The style determines the movement. Quartz is often used for practical reasons. "For me, a feminine watch is one that cannot be worn by a man: I'm thinking of Cartier's Panthère, Chanel's Première and a great many Tiffany models too."

While the women's watch market is estimated at "between 18 and 20 billion Swiss francs", it is "not given enough credence," according to Nicolas Beau. "Some people think that a small watch with diamonds is largely enough," he says regretfully. But Tiffany's expertise in this area is far more extensive. "To me, it's more interesting because they have the chance to wear everything. It's a wonderful market," says Beau.

Q&A with Nicolas Beau

• Who are your competitors?

The big jewellers like Bulgari and Chopard, and of course we must mention Rolex, which accounts for 20%-30% of the market. Everyone has Rolex as a competitor.

• What's the waiting period for a Tiffany & Co. watch?

For a Jean Schlumberger Bird on a Rock by Tiffany there is a 6-month waiting period. But today we can't say we're short of supplies or out of stock on any of our models. Many people want limited editions. All our high-end jewellery watches are one-of-a-kind or limited to 5 pieces as soon as they exceed $500,000.

• What do you think of sustainable raw materials and synthetic stones?

We're very much at the forefront of the sustainable approach to stones. There are some stones we don't buy, because they come from territories that don't sufficiently respect human rights. Where synthetic diamonds are concerned, I personally don't see the point. A dream diamond means a stone that comes out of the earth, near a volcano, created over time by nature and nothing else. So to start making them industrially I think kills the dream. As for the investment side, their value will continue to fall over the years.