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Earlier this month, in a verdant green space at the heart of Tokyo Midtown, Audemars Piguet officially opened ‘Beyond Watchmaking’ — on until 4 November and free to all members of the public. The space, designed by long-time collaborator Mathieu Lehanneur, chronicles Audemars Piguet’s 200+ year history in the Vallée de Joux. Over 150 exceptional pieces were flown in for the exhibition, complemented by original works (commissioned expressly for Lehanneur’s space) from artists Ryoji Ikeda, Alexandre Joly and Dan Holdsworth.

Along with other members of the international press, I was lucky enough to be on the ground for a sneak peek, and over the course of our hectic 2-day itinerary had the opportunity to speak with AP’s Global CEO — the inimitable Mr. François-Henry Bennahmias. (I use the word ‘inimitable’ because any interaction with Bennahmias, whether it be your first or fiftieth, is so utterly outré to what you’d expect from the traditional Swiss CEO.)

François-Henry Bennahmias

A golfer by profession — who ranked 25th on the French Golf Tour — Bennahmias is one of the best known exemplars of the new breed, CEOs preoccupied with bringing Swiss watchmaking firmly into the 21st century. On the day of our interview, hours before the opening night festivities, I’m received cordially yet casually — something that’s unusual for a Swiss executive of Bennahmias’s standing. There’s no coterie of PAs, no omnipresent waitstaff, and the man himself — dressed head-to-toe in sportswear probably more expensive than my whole wardrobe — is completely relaxed. None of this is by accident.

After leaving the professional golf scene, Bennahmias began working for fashion mainstays such as Armani, Les Copains, and Vilebrequin — brands that would go on to hone his ‘big picture’ view of distribution and branding. In 1994 he joined AP’s French office, and within three years was re-tasked with leading operations in Singapore. That appointment led to an opportunity to develop the U.S. market, which at the time was turning over a measly US$6 million — across 95 points of sale with a team of 8 people. Today, the U.S. is AP’s number one market, accounting for a substantial chunk of revenue that, under Bennahmias, has grown to US$1.1 billion (HK$8.6 billion). In this edition of ‘How to Succeed’, Audemars Piguet’s commander-in-chief talks market share, the importance of encouragement, and of course CODE 11.59. Check out the full interview below.

Let’s start with an easy one - how did you make the transition from golfing professionally to helming one of the watch industry’s most eminent brands?

By meeting people. To be honest, it was completely unplanned. I met somebody in St. Barts while on holiday who I became friends with. At the time, he was looking after Audemars Piguet as a French distributor. He asked me if I’d come and run the company in France. I said “But, I don’t know anything about watches”, yet he was convinced. He said “No, I think you’ll do good”. So that’s how I started: I didn’t even know the brand when I got the offer to work for [Audemars Piguet]. It was a kind of crossroads: I was working in the fashion business before, and when this opportunity came I said “let’s do this”.

What’s the chief difference between managing a fashion house (say, Vilebrequin) and a family-owned watchmaker such as AP?

First of all, the fashion world and watch world are entirely not the same. Fashion has to reinvent itself every year, every six months. (Actually, nowadays it’s something like four times annually at least.) There’s summer collections, resortwear, pre-season — it’s not unusual to see more than four collections a year. So [the fashion industry] goes at a completely different speed. By the end of a season the product is dead: it’s on sale, it’s destroyed, but essentially it’s gone.

François-Henry Bennahmias
In a year where we’ve already seen a salmon ‘Jumbo’ and the world’s thinnest QP, the Royal Oak Perpetual Calendar Openworked (in black ceramic) is still shaping up to be a massive deal for Audemars Piguet.

In the watch world, we have to think much more long term. So there always has to be much more consistency in terms of the way we act, and we look ahead three to five years minimum. In this respect, we could be described as conservative. That said, it’s a case where we’ve taken a lot of ideas from the outside world — precisely because our industry is so conservative. Personally, I don’t think of the competition as always being other watch companies. ‘Competition’ could mean so many things: it could be car companies; travel; luxury yachting; art; you name it. Because we’re at a certain price average — let’s say US$40,000 — you have to offer experiences which are pretty serious. That’s not something you have to think about if you’re selling a scarf or a handbag.

You’ve been vocal about the need for watch brands to market directly with consumers. Where do journalists - the traditional custodians of news and product launches - fit into this new end customer-centric dynamic?

If I were to think out loud about the challenges facing [journalists in the watch world], it’s much the same as in every other industry — because people can get their information from various places online, rather than you guys. But I don’t think that’s the end of the conversation at all. I think a strong community of watch journalists is needed more than ever. I’ll go the other way round: providing that you’re good at what you do, you’re curious, and you’re sharp enough to challenge the usual bulls**t, there’s absolutely a role for that sort of voice in today’s industry.

In 2018, AP posted revenues in excess of HK$7.8 billion - an unprecedented achievement for the brand. What proportion of this figure can be attributed to the market in Hong Kong/Greater China? Moreover, what steps are being taken to sustain that kind of double-digit growth?

Our sales are well-spread across the globe. Asia and Europe share pretty much the same ratio/percentage of sales. We never made the decision to put all of our emphasis on Asia — especially China. This is because we believe the brand has legitimacy everywhere (we’re present in 74 countries) and, though it’s fair to say that there’s a huge demand for our product in Asia — especially because of the population’s size — that’s not enough of a justification to increase production.

François-Henry Bennahmias
The Royal Oak RD#2 (pictured) highlights just some of the technically cutting-edge work that Audemars Piguet are doing.

True luxury is and comes from Europe: whether it’s from Italy, the UK or France. As a major leisure destination, we know that international tourists will always go through the region — so that allows us to always keep [production] very small. At the same time, we also can’t deny the importance of North America: which has big collectors, big money, and a market which is still very much untapped when compared to other places.

Could you expand on how exactly North America is an ‘untapped’ market?

Very simple: when I went to the U.S. for the first time (to open an Audemars Piguet subsidiary) in 1999, if you were to stop 1,000 people on Madison Avenue and ask them what price they’d be willing to pay for an ‘expensive’ watch the answer, best case scenario, would have been US$5,000. Ask the same question today, and the figure would be $25,000-$30,000. Easily. So the market has evolved and the customers are getting more educated, but we’re still so far from its true potential.

François-Henry Bennahmias
Bennahmias at SIHH, pictured alongside Jasmine Audemars, Chairwoman of the AP Board of Directors.

The way we look at the picture right now is to make a very conscious strategic choice not to focus only on the Far East, only on the U.S. or only on Europe. A balanced strategy requires us to evenly distribute our attention across the globe, to make sure that if anything goes wrong anywhere, the integrity of the brand is not affected.

Obviously, the grey market can (and does) disrupt the pricing strategy of watch brands. There’s been talk for over a year now that one of the ways in which AP will combat this is through an internal second-hand programme. What’s the word on this?

We’re certainly looking at it. Today everybody is talking about pre-owned — certainly, some brands have even started — but our goal was never to be the first, it was to do things right. Because we’re independent (and in charge of our own destiny), we have the advantage of being able to take our time. [Pre-owned] will never be something that we look at as money making — it’s not about that. It’s about circling around the client.

“Providing that you’re good at what you do, you’re curious, and you’re sharp enough to challenge the usual bulls**t, there’s absolutely a role for that sort of voice in today’s [watch] industry”
François-Henry Bennahmias (Global CEO, Audemars Piguet)
So if you buy a watch tomorrow, and two years later want to move to something else, why shouldn’t we be your point of contact? The first place you come back and say “I’ve worn this for a few years, why don’t you guys take it back and I’ll buy something else?”. From my perspective, of course it makes more sense for you to come back to us, instead of going to an outsider. But not because it gives us an opportunity to make more money, but because we want to give you the best possible experience. 

Even on a superficial level, it certainly seems much more convenient.

There is a trust factor. When you interact with a brand, the trust factor is important. So who are you going to trust? In theory, I think most people would pick us. But, the day we start [to offer a pre-owned/exchange program] we must be ready far in advance, because we need more watchmakers, more benches, and more capacity in our service centres. The trade-ins we’re going to take are on top of the existing work of our watchmakers. And if we’re not able to balance everything, we won’t be able to deliver our repairs on time anymore. We don’t hire or train personnel in 24 hours, so the day we press ‘START’ on this initiative we’d better have the watchmakers ready to go.

François-Henry Bennahmias

What’s one aspect of AP’s business strategy - whether it be logistics, product development or customer experience-related - that you think doesn’t get enough credit?

I would have to say — if we’re talking about an area where there’s a lack of understanding as to what’s at stake — then servicing. Not marketing, not branding, not retailing. [Servicing is] very complicated. Don’t forget: in theory, you can bring in any model of watch by Audemars Piguet and we have to be able to service it. So for instance, if you find a pocket watch (manufactured in 1891) and send it in for repairs, we have to ensure it works the way it did back then — which requires us to have the right experts with the right skills. Our customers benefit from an extended warranty, and sometimes that causes issues. For example, movements in quartz that were used in the 70s or 80s might not exist anymore, so then we have to offer other choices.

What are some of the alternatives in a situation like that?

We either find a replacement movement — provided that it works — or offer a brand new watch (though that’s a very tiny percentage of cases). But going back to the service itself, you have to think about it this way: a basic automatic has 200-and-something parts in it. Now imagine a puzzle that’s finished. ‘Repair’ means you take every single piece out one by one — effectively disassembling the puzzle — wash them, clean them, replace whatever has to be replaced and then reassemble. No matter what, even for a basic automatic movement, that takes 10 hours — if everything goes right. By the way, there’s not a single watch company on the planet that makes money through its service centres — it’s a money losing business. But that’s okay. It’s all a part of providing the right experience for our customers.

It’s fair to say CODE 11.59 is AP’s biggest launch since 1972 - it’s also been the most divisive and controversial topic amongst collectors since January. Subjective criticisms aside, at this stage how has CODE 11.59 been performing in the market? Of the 2,000 allocated for production in 2019, how many have already been spoken for?

[Jokingly] We haven’t sold a single one. It’s a complete failure. Actually, this is my last day at Audemars Piguet — which is why I was drinking so much sake last night!

But seriously.

We are on the right track. First of all, [the collection] is selling and it’s important to note that the people who came after us [on social media] are not the ones buying. So the clients have answered. We always take the ‘feel’ of the market, and at the moment we’re seeing that more than 50 percent of the clients buying [CODE 11.59] are individuals who have never bought Audemars Piguet before. We see that the average age is between 25-35 years old, so the demographic is energetic, fresh and young.

François-Henry Bennahmias
The three in-house calibres that AP developed (pictured) for the CODE 11.59 launch include an integrated chronograph (4401), flying tourbillon (2950) and time & date (4302). Even the calibre 4302, by far the simplest movement, is made up of over 250 parts.

With this particular collection, the goal was always to attract clients who hadn’t purchased from us yet, and the fact that we’ve doubled our production for next year — based on present performance — is good news. Does that mean that nobody is ever going to come after us again on social media? No. But we’ve never been more clear on what’s coming next for a collection: in terms of material, movements, everything. You mention the movements by the way: if there’s something we can unequivocally say, it’s that people criticised us much more on the look than the movements. Nobody bashed us on the movements, as I recall. 

AP has always been an early adopter of technology that could give it a leg up on the competition. The most notable example was a recent collaboration with Chinese e-comm platform JD.com - they provided the technical support which enabled AP to sell its watches on WeChat. Did the initiative prove successful? Is direct e-commerce something AP will be pursuing at scale in the future?

It was a very good experience. We learned a lot. But was the goal to say “oh if this works, we’re going to expand and tomorrow we’ll sell 10,000 watches online”? Absolutely not. Because right now we’re still assessing what the full potential of the digital market is and what our endgame there will be. Let me be clear: the endgame is not to sell watches online, it’s to add a new tool (called the internet) to potentially facilitate clients who don’t have a store nearby. The goal for us has never been “go to the Audemars Piguet website, put your watch in the basket and checkout”. Never.

At the risk of sounding controversial...

Careful, I can slap people pretty hard.

Is it the case that you would prefer for the brand to interact with customers via the traditional retail experience?

I don’t mind if our clients use digital channels to check availability and pay in the manner that’s most convenient for them, so long as during that process we’re given the opportunity to speak with them a little bit, and offer something like personalised delivery to their house. That could be something. This is of course, unless the client says “I don’t want to know anybody from Audemars Piguet. You’ve got my money, send me my watch”. But, at that level, I doubt that this would be the norm.

Being in the position that you are now - the global CEO of one of the most prestigious Swiss watch brands in history - what piece of advice would you like to give to your younger self?

“Learn how to say congratulations to people who work hard yet sometimes make mistakes.” It took me a long time to understand the way this wisdom works. Actually, it wasn’t until I moved to the U.S. that I finally understood. From a pure educational standpoint, we [gestures to the AP team members in the room] were raised — whether in France, Italy or Spain — in a very Latin system. If you had bad grades, you were nothing. And one of the reasons I always hated school and I wasn’t productive, was because I was constantly hearing that I wasn’t good at anything.

“In 1999, if you were to stop 1,000 people on Madison Avenue and ask them what price they’d be willing to pay for an ‘expensive’ watch the answer, best case scenario, would have been US$5,000. [Today that figure is] $25,000-$30,000.”
François-Henry Bennahmias (Global CEO, Audemars Piguet)
So when I was in late 20s/early 30s I could never say to someone, “great job”, I would only make comments when things were bad. Then I moved to the U.S. and I saw my own children going to school, and every time they improved their grades — even as little as going from a C to a B- — the teachers would say “you’re getting there. Keep going. You just need to work slightly harder”. And when you start to talk to someone this way, you choose hope. So because of that, and indeed my own experiences, I started to look at managing people from a completely different standpoint, and I’ve learned the value of saying ‘congratulations’, ‘good job’, and so forth.

Finally, let’s do a quick wrist check - tell us a little bit about the watch you’re wearing today and where it fits within your collection.

So the piece I’m wearing [shows CODE 11.59] I’ve dubbed my ‘Francois the rebel’ watch. At SIHH 2019 I was wearing the Supersonnerie — the most expensive watch of this collection — and some of the CEOs and managers from various markets were complaining that they couldn’t sell our more expensive pieces because they weren’t wearing the same thing (they wanted tourbillons, perpetual calendars, et cetera).

François-Henry Bennahmias
(Image source: Monochrome Watches)

Of course, we don’t make that many of the high complications, so it was out of the question they’d all get to wear them. So I said “since you’re weak enough to b**tch like this, I’m going to wear the simplest piece and I bet I can still sell our clients a Supersonnerie”. So, it’s a sort of metaphorical lesson: if you’re great at what you do, you’ll be able to sell the product, regardless of what you’re wearing.

If you’re visiting Tokyo, you can catch ‘Beyond Watchmaking’ until 4 November 2019 in Roppongi, from 11am-7.30pm daily, at . To register, visit Audemars Piguet online.

Randy Lai
Editor
Having worked in the Australian digital media landscape for over 5 years, Randy has extensive experience in men's specialist categories such as classic clothing, watches and spirits. He is partial to mid-century chronographs and a nice chianti.