Some Brands Break Away. Others Break Down – Watch Brand Spin-offs Gone Right and Wrong – Episode 68

If if we're looking at crown jewels like G out like JLC being potentially a discussion topic for sale Mm-hmm, then anything's on the table

This is open work a look inside the watch industry a podcast from collective horology I'm Gabe Riley co-founder of collective and I'm Asher Atkin co-founder of collective collective horology is

Independent watch retailer based in Southern, California We carry a wide range of independent brands including Armin strong Garrick fears and more to learn more about us and check out our available inventory visit collective horology calm

Hey Gabe, we have some new inventory that is coming in this week from our friends at Armin strong. Oh, wow

Oh the good thing I put them in there. We have some stuff coming in from fears, too Which is also cool We do and I'm sure we're gonna have some video content coming up soon on Armin strong if you haven't had the chance to check Some of the content that our dear friend Adrian Barker made a couple years ago when we did our collaboration with Armin Oh, yeah, I highly recommend going and checking that out on his channel he went to the manufacturer on our behalf back in 2022 and

Did a bunch of in-person interviews and shoots of what that that gives you a little bit of a better idea of what's that? Manufacturers all about and also a look at the folks behind it both Serge and Claude are two really great guys and Claude in particular. The master watchmaker is an Exceptional talent and you really can see that at work not only in the most recent creations But in that video in particular that Adrian created. Yeah, I will link that up in the blog post for this show

So go to collective horology comm slash blog in the episode. This is episode 68 So in the blog post the show notes for this episode, I'll put that video right in there Adrian is incredibly talented and he did a fantastic job with with that video Yeah, and Armin too. I mean look it's interesting, you know, they are a predominantly a almost entirely in-house Manufacturer and they don't make many watches make a few hundred watches a year

You know, we ordered these watches that we're receiving shortly months and months ago. Yeah, Geneva watch days exactly

So not only are we excited to get them? We're excited to get them out to you So if you don't know much about Armin if you know a lot about Armin or if you just want to talk about them Give us a call Yeah, it's never a good sign when you like open a brand and then you know in the process They're telling you how desirable their watches are suddenly everything's available You place your order and then the watches are on your doorstep the next day I mean, this is truly an example

Of course Armin wants to deliver as many watches as I can to their their retailers and ultimately their customers But we've been we've been waiting in line for this stuff. I also threw fears in there. They just released an Absolute banger, which is their jump hour celestials. It has a Really cool dial. It's got a venturine and mother-of-pearl and I think just this incredibly beautiful

Lyrical minute track on it. Check this thing out. It really is stunning I can't wait to get the watches here to share in transit to us and they're in transit to us We've sold most of them So I may just be shooting them for the sake of shooting them because they're really really beautiful But I cannot wait to get them and to photograph them and do some video which will which will get up online as well

But enough of all that stuff who cares about watches. Let's talk about the watch business, which is what we're here to do

Our last episode we talked about a number of topics including rumors sales or spin-offs well in one case a confirmed sale and spin-off of Bowman Mercier from The Richemont group and then rumors that have been swirling around LVMH spinning off Zenith again LVMH denies this but it's been reported pretty pretty extensively that they've taken some steps to at least Explore what that would look like Who knows that? episode and the Zenith sale or the topic of Zenith in particular sparked a ton of

Discussion we got a lot of emails. We had tons of comments Instagram on YouTube and elsewhere about this stuff and people have a lot of really interesting theories about like Whether it would be good for LVMH to spin them out Maybe to your point if it ended up in the hands of someone who really you know

Valued it and saw what made it special and could focus on it. Maybe in a way that LVMH can't I don't know if they can or can but that might be interesting then there are other folks are like look This is so integrated into LVMH because they supply movements and it's a really important in-story brand

LVMH would be foolish to give it up. It just sparked all of this discussion So we thought today we would take a look at a couple of things One is a couple of other brands that are out there that are rumored to potentially be shopped as well but more importantly take a look at two case studies of situations where Selling a brand and spinning off a brand has gone really well Yeah, and when it's not gone, well, or at least not according to expectations because I think these are really

Helpful case studies and examples to look at to sort of ground us in the moment we're in now where the industry is going through a Consolidation phase where brands are up for brands are potentially up for sale or being approached for sale and looking at these case studies I think helps put a lot of that stuff into focus and can help us understand what some of the trade-offs of these Yeah I mean decisions are versus being abstract about it

Totally and I think it's also valid to take a look and realize that we are and we've been talking about this for months But we are in a transitional period there are several brands that are rumored to move Some you know handful that are confirmed many that are rumored and it does bring up that question of are we approaching an age of?

deconsolidation I Don't know that we're anywhere near being able to make that kind of a claim But we would be foolish not to notice that these things are shifting It's in it's in the water in a way that it hasn't been for years I mean, there's been frankly in the last 10 years of watch collecting in the industry There's been remarkable stability with a couple of exceptions, but in terms of in terms of grants is staying in place particularly within the major

Holding companies there have been some changes around the edges, but it's been a remarkably stable period now We've got this Bauman Mercier deal confirmed We have rumors about Zenith who knows if they're true or not or what the nature of them is JLC came up

So this was reported by miss tweed apparently Jerome Long Bear someone we've spoken about on this podcast before Yeah is has apparently Approached his colleagues at Richemont about or is in discussions to do a spinoff and have management take the brand separate again This isn't confirmed, but this has been reported debit tune as well has been the subject of speculation You may remember I think it was a couple of years ago

The 1916 company took a pretty significant stake in the brand and there have been rumors that They've been at least approached to sell off their stake in the in the brand by this honorable merchants guild or whatever Whatever. I can't remember the name yield guild of merchants. Yeah, and that was that was reported in Houdini It seems that maybe those talks have stalled out or that's not moving forward or who knows what but like there's there's also been

Some talk around grouple foresee. There are some management changes that happened at grouple recently They've been rumored to be in play apparently one of the reasons again, this is reporting that we've read we can't confirm it This is not our reporting But there's reporting that part of the reason 1916 was maybe interested in selling off debit tune was to make an acquisition of grouple foresee

So interesting. I mean grouple has had like a rotating door of financing for some time including a minority stake

That was held actually by Richemont. Oh interesting. Yeah, I forgot about that Yeah, and and going back to JLC for a moment because I think this is an important distinction years and years and years ago In a former career I was in a meeting with Jerome Lambert not on behalf of collective and I got to I got to see the man in Action and I found him to be an incredibly thoughtful really dialed in Leader some of this when he was leading all of yeah this is when he was leading all of Richmond and

This is me I think some people don't always take for granted like really good leaders in the corporate world I tend to define by being honestly kind of more more quiet Sitting back listening to everything around the table not domineering a meeting or you know a decision But trying to understand every input and perspective and then you know Doing their best to bring to make a decision on behalf of all these other companies

That was the impression that I got from him. He wasn't a boisterous guy. He wasn't really loud He wasn't a domineering presence. He was quiet He listened he paid very close attention. I remember the watch he was wearing too, which was a it was a

Longa site work. Oh, wow. It's pretty cool. And if you're gonna wrap it if you're gonna be the CEO of you know, Richmond like But Bottom line I have in my limited experience with him individually I have a lot of respect for the man and I think that there's with him if this is true if there if this is gonna happen I Think he'd be an incredible leader and I would argue, you know The numbers that are being rumored around there's me like a billion CHF for the brand which is you know

A ton of money some people say like he's self-financing unless I'm unaware of something. I Don't think he has a billion francs Maybe he does that seems really high for jails and we'll talk about what some of the I mean

It's potentially that numbers out there. I mean one of the brands we'll talk about today sold for an LVMH for you know, 40 For a million Yeah So that that is that is reported from watch pro that the deal is said to value JLC at more than 1 billion Frank you got to get outside financing for that you do but it tells you two things One and you really have to believe there you go. That's what I'm getting at, which is that if you have a guy who?

Appears to be a level-headed thoughtful, you know strategic corporate thinker Who's willing to put a billion dollars plus? Well, definitely plus dollars billion francs plus on in play this is in Swiss francs Yeah, or well is reach mod isn't Swiss. Yeah So my point is he must see something there that is so profound That he feels he can only do it if he had total control So I'm really really curious to see where that goes and should that happen based on my own

Passion for that brand. I love JLC, I mean we've talked about how it's been kind of a moribund brand for the last few years, but you know, the potential is Endless the brand is is incredible and he is a thoughtful thoughtful guy

So I'm really curious to see where that goes. Yeah, he absolutely both you and I worked with Richemont and capacities outside of collective in the past and and he had an incredible reputation throughout that organization and Years ago or just recently when that big management shakeup at Richemont happened and he moved from CEO of the group

Back over to to JLC. I think a lot of people were scratching their head Oh, yeah, I get it and this maybe this was setting up or telegraphing their move I believe their past the CEO before him at the group wasn't there very long and I don't think she had I could be wrong

I'm not sure. She had watchmaking experience prior to to running that to that Maison So this to your point like clearly this is a guy who believes in JLC clearly This is a guy who an executive who knows watches and we'll see very interesting space to watch a billion

Franks. Oh My so But yes Look something something is in the water and it's a natural I think Evolution of what's happening in the industry when it goes through a period of turmoil and downturn the way it has over the last few Years these things start to happen movement starts to happen, but this is not the first time this stuff has happened we're gonna take a look at two case studies today of

Situations where brands have been spun off from major luxury holding companies and where it goes Well where it maybe doesn't go so well and the first one we're gonna look at is The spin-off of is it ebell or a bell or a bull? I've always said ebell

All right, ebell will go with ebell if you know the proper pronunciation correct us and in the comments We know you won't hold back and We appreciate that. But okay, so ebell They were this is an it fascinating story But what we're really gonna focus on is on the spin-off of ebell from LVMH and in 2004 to the Movado group where it still sits to this day 20 years later now

And and the you know, the analog here is quite interesting, right? We're talking about a spin-off from LVMH We're talking about a spin-off of a major and historic brand and we're talking about a spin-off of a brand that they acquired Couldn't quite figure out what to do with and wasn't performing at the level of their other brands and they spun off But I think for a lot of folks in in the u.s In particular ebell is not a brand that has been top of mind certainly for the last 20 years. This is a

Major global brand. It's particularly strong in Europe and Germany in particular and in the Middle East to this day I'm kind of where the core of its sales are. This was a brand that was widely popular in the United States It goes back to 1911 In fact, they have a collection of watches called the 1911 which are which are really cool kind of their signature sports watch line But this was a brand that was really popular in in culture in the 1970s and 80s Don Johnson

Famously wore an ebell 1911 in Miami Vice. So yeah. Yeah, this was a brand that was part of part of that culture I remember I had a friend in college my friend James who had an orange dial ebell 1911 chronograph, which I just thought was so cool he was like the one kid in college who had like a Legit watch and those watches because they were owned by LVMH at the time were powered by Zenith El Primero Oh really and I actually messaged him about this today

I was like, I'm doing doing a podcast segment on kind of the decline of ebell You remember that watch you had in college? Was it this one and I sent him an eBay listing. He's like

Oh, yeah, that's it. And I still have it to this cool. It's a really really cool watch Well, it'll be on video and then I'll link it up in the show notes as well But that was like one of the first like luxury watches I remember encountering on on someone's wrist and that was you know, obviously you'd only ever encounter them in a giant ziploc bag

Yeah, exactly. That's a story for another time. That's a story for another time but this was I mean, this is a brand like in the late 90s, he bought the watch in 1999 and This was a brand that in the late 90s if you were thinking about like buying your like a nice luxury watch this was a brand that was Competing and in the mix among other mainstream brands whether it was Omega Tag Heuer or whomever

This was right in that wheelhouse and and today certainly at least in the u.s. It's kind of an after thought Yeah, so what what happened there was really really interesting so the brand was actually family-owned for most of its most of its Existence and in 1994 it was taken over by private equity not because the brand so much was failing but because the family who owned the brand had

Encountered some separate financial hardship and needed needed money. They needed to sell the brand So they sold it to a private equity group in 1994 LVMH acquired it from them in 1999 so LVMH this wasn't like a brand sometimes you have these acquisitions were like one brand is kind of bundled in with another We'll talk about one of those actually in a second or later in this episode But this isn't a case where like they were buying a bunch of brands and ebill was like thrown in with them No

LVMH made a calculated decision like we're going to buy this one brand and add it to our portfolio It didn't last long. They spun it back out in in 2004. In fact, they spun it out reportedly at a loss

So they made a decision like they needed to get out of it, which we'll talk about in a second What's interesting is during this period of ownership LVMH really kind of upped the quality of the brand not just in terms of the product But also the way the brand was positioned and perceived and also their retail network and how they managed the brand Which I think is a really important takeaway here So, you know famously we spoke about there were El Primero movements went into the 1911

Chronograph there had been El Primero movements used in ebill watches in the past But again under LVMH the synergies here made some sense. They upgraded ebill's factory and their capabilities They upgraded the product they massively trimmed down the number of skews from the literally the thousands to the hundreds and they positioned the brand more kind of Clearly up market the way you would position a brand, you know, like a Zenith or Omega for sure today they also obviously gutted and

Reconfigured their whole distribution network. So, you know the company had been separate and independent before now It's managed by LVMH it goes through LVMH is wholesale network So it's being you know offered and moved into into doors and to dealers where LVMH has Relationships where they're selling other products like Tag Heuer Zenith and and so on so they did a lot to improve the the perception and the prestige of the brand to the point where You're looking for a really nice chronograph in

1999 Ebell makes sense. It's it's hanging in there with everyone else in a way that it isn't today Ultimately, it sounds like the issue for LVMH was was twofold one and that this makes sense over time They've made a calculated decision that they wanted to move up and up and up

Market from some sort of mass luxury to to high luxury. And so the brand was challenged in there It was also in this weird spot where it wasn't quite as Differentiated or at the volume of like Tag Heuer as far as volume and differentiation is a Zenith and it's sort of it was Kind of like the Bound and Mercier in some ways of LVMH is watch portfolio at that time And so they made the decision just kind of like they had

Streamlines the the product catalog for for for ebell. They made the decision like we're gonna streamline our product catalog We're gonna make sure our brand catalog and portfolio. We're gonna have brands that own a clear lane That are differentiated by price point and have a you know clear identity and all that So in 2004, they sold the brand to Movado group, which is interesting now Movado is historically a Swiss brand, but it's actually an American company

Now the brand was bought I think in the 80s by American owners. It's headquartered in Queens in New Jersey Oh, we're thinking of Bolivar. Ah, that's right. You're bad. Yeah. Yeah Bolivar I believe was an American brand but historically Movado is a Swiss brand Now owned by it's now publicly traded stock on the New York Stock Exchange

It's an American company. They own a number of brands Movado is certainly the one that comes to mind with the museum watch You know, it's probably what you see the most often But do you know they bought the that that kind of internet quartz brand movement MVMT did?

Yeah, so they own them. They also have a huge business in private label So they do like watches for like Calvin Klein Tommy Hilfiger and others So this is a this is a big business Sort of hidden hidden in plain sight and not one that gets a lot of discussion among watch collectors again They're probably not targeted at collectors. No, they're they're not I think that's part of the challenge here. So

Movado takes the brand over and understanding what else is in their portfolio. This makes sense Ebay was gonna kind of be this upmarket crown jewel of the Movado Business, right? So you have a lot of what are essentially mall brands in there Private label brands then you've got Movado itself, which I would essentially say and I don't mean this in a disparaging way

I would guess it's kind of a mall brand. It's distributed in. Yeah in that way. It's an upscale Macy's watch Yes, there you go and so ebell was going to be this opportunity for them to move up into a new price segment and they've To say that the acquisition didn't go according to plan or didn't meet expectations I think is fair to say and look if I Think that most people listening to this are probably like I have never heard of ebell or I have not thought of ebell

And in 20 years or something like that, it's just not a brand that hangs among the mainstream Mid-tier watch brands that we think of today with some except. Well, you know what the parallel is to me here I think a little bit about this one in the same way. They think about fossil group buying zodiac

Because it happened around the same time. I'll say bought Zodiac in 2001 and They had this really big push if you remember in the early 2020s late 2010s where they really and I mean they tried when I ordered Yeah Yeah To really build that brand up and and it kind of swelled over a wave and then kind of crashed into the shore You know and so yeah, you can find zodiac watches literally at Kohl's right now

Yeah, but I think I think there's sort of two parallels here about this which is around distribution channels Exactly also tied to just general consumer brand perception. So Interestingly and one thing I really appreciate and respect about zodiac is like they tried real hard on both of those fronts

And they got zodiac into some better doors. Yeah, they got zodiac better distribution You know, they hired some some really well-known folks in in the industry Mike Pearson was there for you What a mensch what a dude, you know, they had you know They even started notch pricing up a little bit suddenly, you know, you're looking at zodiacs in the 3000s

You know, like they got in-house movements of fossil also STP. So group movement. Yes But my point is and then it kind of fizzled but one thing that Mike did that was really smart He talked to me. I hope I'm not betraying confidence here

But you know, he worked at zodiac years ago. He's at Christopher Ward now bless his heart but one of the things he told me about zodiac is he was intentionally looking to overhaul their distribution and to your point the doors they were and he was like one of my biggest focus is getting it out of the Wrong doors and into the right door. So an example of a great door. He I think he but worn and wound hopper They had zodiac for a while, I mean credit to Rob Kaplan

He's he was ahead of the curve on zodiac. But one of the things well, you know that wave Yeah, one of the things that Mike did was like retool their distribution network

Yeah, and this is one of the challenges with Movado owning evil. This is this is my point LVMH did a great job in retooling the distribution network so that you get the ebell brand in stores in You know the display next to Tag Heuer and you know Maybe long gene is on the other side or something that when it goes to Movado Well, they've built up an infrastructure around distribution, but it's an infrastructure around distribution to malls

Yes, and to a lower tier of jeweler or watch retailer then where ebell had been positioned. They just didn't have the institutional Knowledge and so it's like the brand is the same But the the skeletal and organ system that powers the the brand You know the the inner workings of the company that then needs to put it in the right doors Yeah, just isn't there in the same way same thing with branding and advertising and sponsorships, you know

LVMH can do advertising branding and sponsorships at an elite level 100% Movado does advertising branding and sponsorships at a different level. And so the different organizations

Aren't necessarily able to take care of the brand and steward the brand in the same ways. Yeah, totally so I think you know that that this is a good sort of warning sign slash opportunity for Bowman Mercier as They start thinking about their you know, some of the challenges that we see in the past around very analogous yeah around doors and distribution and that I think opens up sort of the The next the next topic here, which is like well, what happens when it works, you know?

and I think we have a really good example of when it works, which is the Departure of Gerard Perego and Elissina Ardan from the caring group and this is still a relatively recent thing You know, it's within the last decade this happened in what 2022 a couple years ago Yeah, we have the notes here in the in the end. Yeah, and I think yeah 2022 management buyout

Yeah, it's it's interesting. I Remember hearing some of this news as well Because the the dude who is now the co-founder and the CEO of the so in group So the folks essentially that are the independent group that may that now owns UN and GP The gentleman behind it is a guy named Patrick Prune. Oh The reason I know who he was is because I worked at Apple

Around the same time that he was there. Oh, he was at Apple was he was based in he started in he started in California He was he worked believe it or not on the Apple watch and then he moved to become the managing director of Apple UK and Ireland where some of my former colleagues worked for him and That was and then he was recruited in 2017 To go become the CEO of Elissina Arden And so at that point you listen our Dan and GP were sitting as the watchmaking group within caring

And so just for context caring it's a luxury holding company We don't talk much about on this podcast because they to your point now They don't really have any focus in watches, but they have a stable of some really impressive brands Gucci Saint Laurent Bottega Veneta Balenciaga, I mean the the list goes the list goes on with Bottega what? Both Bottega Veneta, you know, you don't buy a lot of purses. I don't know

What what do you I'm seeing the brand how do you pronounce it? I'm just being funny. Okay. Yeah But it's called the Bottega brand. It's a Bottega brand. I can't have a Bottega purse

There has been creative both creative watchmaking from Gucci whether you like it or not. There's oh, yeah, absolutely And if you remember st Laurent which is a brand that I've always kind of dug the style of had some crossover and some collaborations with the Gerard Perregaux With Gerard Perregaux just only a couple of only a couple of years ago

So there is there's been some overlap in there. What I think is really interesting the Balenciaga watch But I think I think what I find really interesting is you have a Guy who's coming over because remember before he worked at Apple. He also worked at LVMH

So that makes sense why they'd want him at Apple. Yeah You know, you've got a guy whose career started at Moen in Hennessey He became the VP of global sales and retail for Tag Heuer He goes to Apple he works on the Apple watch and then he becomes honest and CEO of Ellison Arden And you see this really interesting trajectory there But the one thing that's really clear is that here is a person who understands how mass market

Distribution and sales works in the luxury watch world. Don't forget the first Apple watch that came out in 2014 Do you remember the gold Apple watch? Yeah. Yeah, so there was like so there was they still make those Hermes straps They still make the Hermes Apple watch. It's a very popular very popular execution. It's four-figure watch the gold Man why you know don't bag on a gold dock so

Watches too, but there was a lot that happened. Whatever point is and then he goes over into Ellison Arden So you've got some of the you've got some of the avant-garde design elements in there You've got some of the mass market distribution elements in there You've got the biggest mass market have anything which is Apple and then you come and then you get narrowed into Well, it's an interesting zag It's like I can see the Apple thing may sound like an aberration

But when you think about like the career path of Moet and you know, LV not an aberration at all Exactly, you know, you you move into into Apple you're in these very well established highly regarded prestigious big brand corporate Apple is a luxury and

It's mass market, but then the move to UN is it is like a right is a right-hand turn. Well interesting it's like kind of jumping off of that off of that treadmill to some extent into something that's more niche and And less mainstream less prestige like the average person on the street has heard of Tag Heuer You know generally speaking has heard obviously of Apple has heard of Moet Have they heard of Ulysses Ulysses Arden not in the United States perhaps in Europe, maybe well

I'm saying like the average puncher on the street, you know, maybe maybe I stand by but it's more niche Anyway all this to say So you have you do have you have senior leadership that does have their head-on straight and it's had a pretty exceptional amount of experience leading into this transition that he organizes a management buyout from the caring group only a few years ago in 2022 and We see some really really really good signs coming out of the brands

So if we look for example at UN it's a brand I really love Not only have we seen continued innovation in the UN diver line, we're also seeing oh, yeah, you love those watch I do like those watches. We've seen a also a very significant resurgence in

Excitement around the Freak. Yes, as well as great product development in the Freak Which has brought the average price point down and increased demand for that line such that the Freak is the dominant watch That people now associate with UN whereas if I'm being frank I think if you roll the clock back a decade, it's probably like the marine chronometers 100% and now like they've really and those I used to think of UN is synonymous with synonymous with those like a nam

Beautiful, but an work conventional enamel dial marine torpedo. Yes, exactly. And those are cool watches Don't get me wrong and there's also it's got an indie vibe to it Well in a certain they've kind of always done I mean the thing that people don't realize too about UN is like there's a lot of actually really interesting a Lot of really interesting engineering that goes into their watches like those movements that you find the in-house movements that you do find in those

You know the $8,000 and up marine torque chronometers, etc I mean the more expensive divers, for example demonstrate some really impressive in-house watchmaking now UN and GP share a watchmaking facility and GP if we pivot over there I mean not only have they been focused on hotel ology for decades upon decades and on decades Lord knows They've really been delivering on that of late. Well, it's sort of it's sort of slipped late in the caring group era so one of the the

Criticisms about let's just take the loriato. This is a GP watch that most people are familiar with one of the challenges with the loriato is people found that they were basically like reusing old movements and they're not reusing but like putting old movements into the loriato and part of the reason why the Loriato for so long shipped with a closed gate closed case back was because the movement didn't fit the watch the movement was like Microscopic within this 42 millimeter stainless steel

so if I'm being Feeling that it was kind of just like biting off the you know, the GP the AP Royal Oak and sure Let's say that let's put that to the side because I think everyone has a right to make an integrated bracelet sports watch Say with an octagonal bezel Well, let's also say like look GP has some additional legitimacy because the loriato is based on a watch first came out in the 1970s It preceded the Royal Oak. I

Believe it didn't precede the Royal Oak, but it did precede. I think the overseas or it came out in the late 70s We'll have to double check. We should double check the timeline. But the point is like they had they all were divides in this segment Bonafides, I don't know They have bona fide

Bodega brand bodega boat the bodega bona fides. They have bona fides in this category Let's just give them that and so I think one of the criticisms is you know When you're comparing the watch to a Royal Oak or to a Nautilus or whatever it might be

You know, those watches have beautiful movements extremely well finished. Well done. You'd look through the case back They're joy to look at look at the Czapek Antarctic You look at the case back of a Czapek Antarctic and it's like holy smokes you look at the case back of a Loriato in the past and you either couldn't look at it or in the watches where they did show you the the case back It was you know, the movement the movement was tiny

It was well finished well made but the point here is they weren't able to invest under carrying They just weren't investing in in product development and in research and pushing their products fundamentally forward They were take it was like Taco Bell They're taking the components they kind of already had and repurposing them into different products versus doing things that were new Now we went to the GP boutique in Geneva over the summer and we looked at the new one of the new Loriato products

I think they're in this transition phase where they're phasing in newer product and they still have some of the older product

But we saw Loriato with an updated movement. Mm-hmm That was beautifully a size new case size refined proportions And it was the most promising thing to me about that wasn't just like oh this watch looks great and it's well made It's like here we go GP is investing in product development again in a way that they sort of weren't it's not the Taco Bell Let's take the same five ingredients and remix them

It was no we're gonna do this the do this the right way and we're gonna develop if I'm being honest That's been happening well before the acquisition I'm sure the acquisition is supercharged it through necessity as well as access near direct access and more streamlined decision-making But it's not just that I mean They're also really trying to take what they're known for on the super high ends like the three bridges for example

And they're actually putting that into different formats. Now. We have the Gerard Perreault Loriato three gold bridges. I look cool Oh, it's amazing now and that is a one hundred and seventy five thousand dollar steel watch Wow now, there's obviously some white gold in there But what you're paying for is the watchmaking and we actually had a really beautiful Hotorology piece come through on a trade. Oh, we just a couple

Incredibly impressive. Yeah, so my point is like look GP. It's got the right distribution largely speaking They've done a ton of work to overhaul the brand and the product and they've done a ton of work on the product I think GP is on a five to ten year trajectory to really reclaim and build on its former Credibility to build themselves back up to something great now UN

Runs a little bit more avant-garde. Mm-hmm and I think that's gonna be a I think the I think you can find product market fit for GP faster in The United States and you can find product market fit for UN in the United States because GP has a broader appeal You know, like a lot of those are more straightforward

Understand you and it's a little bit more gonzo. Mm-hmm and Even when you you know, even when you look at the Freak The Freak is still kind of like a why I mean by definition a wild watch and they're leaning into that They're not under percent, you know going back to the marine chronometer style stuff Which begs the question when you think distribution if the distribution channels for for GP are X Hmm You know today you really tend to see GP and UN go hand-in-hand

Well, and it makes me wonder if like really splitting that off makes more sense And I think we see some of that right like we saw like a UN shop and shop open and Steven silver

Oh, really? Yeah, you know I'm so we're starting so and I would argue like to me that makes a lot of sense like that in the Bay Area is A great target like that's a that seems like the right like like yes channel for that He's built a palace for independent watchmaking in this fits But it's also where it's what it's surrounded by right like if you're exactly I mean, and this is exemplified by their partnerships, right?

We just had the earth reek launch. Thank you You least our Dan and an MBNF and in her work in an afternoon Yeah, but all three of those I think overlap over a certain narrow band of which GP doesn't correct Yeah, even though GP could touch there like maybe someone would be interested but GP probably will do better In a more mainstream, yeah, so let me ask you this question then about about all this We were talking about watches and wonders and the the seating chart for watches and wonders

You least our Dan is at watches and wonders GP isn't what's with that? I've never understood why they didn't show up with both brands or this year It's because it's an anniversary year for but the last few years GP hasn't been there. It's just been UN. No, that's interesting Yeah I always so to your point about like GP being a more mainstream brand easier to understand maybe more commercial in some sense Yeah, I always I always wondered like why is it that UN is here?

But GP isn't now again, this could be our bias as Americans, you know These brands have different strengths and different parts of the world and maybe UN is simply a much bigger more commercial brand But that always like puzzled me why it's like where's your art pair ago? Cuz I would love to check out your you know, we're gonna we're gonna meet with some of these brands just you know around the

When we're walking around and we'll bump into some folks from there. We just ask Yeah, I mean, I'm really curious to see what UN has that watches and wonders and maybe I missed something Maybe GP is there but I'm pretty sure they're not they haven't been the last few years I was just thought that was that was puzzling but I Think let's take a step back here

The way we looked at the the e-bill spinoff. Yeah Versus the way we're talking now about this GP UN spinoff is a little bit different We're focusing a lot on Product and saying how great the product is and how great the change in ownership has been for the direction of the product Do we know how the the dis change in direction is working for these brands commercially now?

We mean it's a private company. They're not reporting numbers or anything like that. But are there I get a sense of Okay Is driving a ton of success for UN It certainly has a level of attention among collectors in the last year two years that it hadn't had before Yeah in and I think GP, you know GP had this like this intense moment in like 2021 to 2022 where the Laureate Oh became like Unobtainium and it just it kind of exploded but what when the tide came back on that

Thanks the timepiece gentlemen, but I love how that guy like took credit for popularizing the Laureate it's like Allen movie like Broadway Danny Rose where some character claimed to have popularized shrimp The piano key necktie, but I think I Think when you look at GP when the tide came back out a couple of pieces were left standing like the like the Laureate Skeleton for example, which I still know and I think it's a lot of liner watch than what is available from AP in the similar format

And I do think that that that really reminded people Rose gold. Oh, I'm sorry auto skeleton. Oh, it's amazing anyway, but before we go off on like what references to be like my point is I Think that I think that what they gained from that like minor explosion there Even though there was a pullback after it was a boost in awareness and credibility Which is to say prior to that period he entered the conversation in a way they hadn't for yeah 10 20 years almost

Yeah, so I think people are open to GP in a way has entered the chat Yeah in a way that I don't know that they were before so I'm but no matter how you cut it

Whatever time frame or horizon you want to put on it. It is clear that under Patrick Pernault That brand is gonna work it it's gonna Avis it right it's they're gonna try harder and they're gonna do everything they can to not just attract the attention of Collectors But also earn their continued respect and ultimately their cash and and it's being built on a strong foundation of good distribution good product and good brand development and

When we go back to the things that didn't work and we look at like an email or we look to a degree at Zodiac

Etc. It's like those things weren't there. Yeah, exactly So going all the way back to what we chatted about last week There were so many opinions and I'd encourage you guys check out the post we did about Zenith on on Instagram There's just the thing is taken on a life of its own It's like, you know You know something you've made like it, you know First social media is on fire and has taken on a life of its own when people start arguing with each other in the comments

You know, usually we post something of the Internet and and people just you know They comment about what's in the post and move on but it's like this thing They're like full-on debates in this post about it, which look hey, I'll take it That's I'm glad that that that conversation clearly struck a nerve But you know a lot of people are saying things like, you know, good work, you know good riddance

I hope LVMH, you know gets rid of Zenith and ships them over to someone who will do a better job managing the brand and some People said I think swatch group would be a much better fit. They do a much better Job or others have said, you know, Richemont would do a much better job than LVMH

Or go buy stuff there's another fat. Yeah, exactly. There's another fascinating one like what if a group of collectors, you know spun it off themselves and You know there's that old saying in the in the watch industry the fastest way to become a millionaire in the watch business is to start as a billionaire So woe to the person who buys any watch brand but there are a lot of interesting theories about how and where it might be a better fit, but all of this goes back to saying like

You can't just take on the brand like the brand has the value it has Not because it exists in a vacuum like ebell had some of the value it had When movato acquired it because of what lvmh had done to to make it more premium and to clean it up and When that infrastructure went away A lot of value in the brand was destroyed, you know, because movato just didn't and this isn't a knock on them like People run businesses in different segments and that's totally okay

There should be a movato and a movato group and they should make watches that are sold in places that are different where other products Are sold but they didn't have the ability to take on the the brand from an infrastructure standpoint Now they certainly had the ability from an infrastructure standpoint to take on things like watch service Yeah, and and distribution like of course they could do all of the things that a watch group should be able to do

But not at the level of what lvmh was able to do and so when zenith Goes somewhere if zenith goes somewhere else When bauman mercier moves into the daimyani group These groups it's not just enough to take the brand and then it sets you on a new course you also have to retool your own organization or be able to and I think that's the that's the silver lining of this gpun story is they

Took on the brand because they believed in it and they believed they could do better with it than the group was doing But they also had the ability to operate and run the business at the level that Befit the brands and so that to me that that's the the open question here and and and the caveat For anyone who wants to buy a watch brand Yeah, 100. I think it's a big way bigger risk with jlc if they are spun off. I mean think about this

J if jlc is is spun off to an investor group. This is a little bit different than The spin-off of a more niche player like gp and un to a management takeover the stakes now God bless anyone who's willing to buy To buy a watch brand at any at any level particularly from a luxury holding company because you're stepping into the big leagues here But like the stakes at a billion dollars For jlc will be a lot higher and

Jlc has benefited massively from the scale of richemont and integration into richemont And so spinning it off I think creates a way bigger

Way bigger risk because that business just runs at a at a huge scale. Yeah, it's a much higher volume business I mean, there's no public numbers, but the general estimate is somewhere between 60 to 100 000 units per year Some massive massive business and it depends on volume it depends on distribution so we could say hey look for jlc They management could take it over and absolutely do a better job with the watchmaking and the product

Maybe even the brand of course that seems reasonable if that were to happen Can they but this is a brand that needs volume to survive? Can can a management take over achieve the kind of distribution and volume and scale? That richemont is able to do for the brand. I don't know. Yeah, I don't know either It's a good question to me. That's the but they must have an answer to that question if they are willing to bet a billion

Franks. Yeah, particularly if the guy who's the former ceo I mean, he knows where all the bodies are buried and how the sausage is made and whatever other Analogy you want to throw in there? yeah, I would have to imagine that someone like jerome limbear is able to go to the ceo of buker and the ceo of watches of Switzerland and have a conversation with them that has some oomph behind it In a way that you know, if you and I decided to go out and buy a brand we would not

Well, here's a question for you. What if there was a movie studio model? in watches where Jlc was a separate company, but its distribution was done through richemont I I think anything is that a model that could work in in the business presumably. I mean, I think it's a low margin business For richemont though. I don't know why they'd want that the brand is where the value and the juice is

I mean, it depends how easy it is how profitable it is. It's difficult to make that analysis like on the fly but what I think I think the bigger takeaway from that that thought is If if we're looking at crown jewels like g like jlc being potentially a discussion topic for sale Than anything's on the table Yeah I'm serious that that is that's a good good way to put it and those are the times we are in so we will Stay tuned and we will see what happens

You want to leave it there? Let's leave it there. All right Well, thanks for listening open work is of course a production of collective horology You can find us online at collective horology.com and please Keep getting in touch send us your thoughts your questions your feedback suggestions all that stuff We love it and to do that just email podcast at collective horology dot com

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