Italy holds its breath

April 2004

Italy holds the fourth place in world markets for Swiss Made watch exports, after the USA, Hong Kong, and Japan, but before France, Great Britain and Germany. While this is a positive classification in itself, it must be seen in the context of the continuing difficult economic situation for luxury products, which includes watches.
The latest available official numbers are those for the last quarter of 2003, which indicate an increase of 4.3% in exports from Switzerland to Italy in relation to the previous year. However, this encouraging result is not enough to dispel industry worries. In comparison to the same period of the preceding year, the global turnover of 49.3 million francs suffered a sharp decline of 13%. Despite these negative numbers, Italy still remains the most important European market for Swiss watches.
Yet, the planet is large and the Old World is not alone. The Latin peoples, with Italy at the head, are not the only ones to introduce new trends. An optimistic wind is blowing, bringing with it the emergence of markets where exports of Swiss watches have increased over this same period. Russia and China are up 19.4% and 158.3%, respectively, as is the USA (+1.8%), Taiwan (+3.7%), Thailand (+8.9%).
Traditional Swiss brands can breathe a little easier now but so can the Italian watch companies that manufacture in Switzerland (and also in the Far East) but have their headquarters in Italy. For these Italian companies, irres-pective of their positioning, which ranges from low-priced fashion watches to the most aristocratic models, they are expecting good results during the large spring watch fairs. With the exception of Panerai, which belongs to the Richemont group and therefore will be exhibiting at the SIHH in Geneva, all the other Italian brands will be present at BaselWorld.

Binda Group
With brands Wyler Vetta, Breil, Tribe by Breil, D&G Dolce & Gabbana Time, Nike Timing, Seiko and Lorus, the Binda Group continues its growth. For 2003, its turnover was 190 million euros, an increase of 35% in relation to 2002. In terms of volume (3 million pieces), it enjoyed an increase of 44% over 2002. Its turnover for Italy registered an increase of 26%, while its export numbers doubled, up 208%, from the previous year. For 2004, the Group is also expecting double-digit growth, with results in the neighbourhood of 215 million euros or an increase of 14.3% over the previous fiscal year.
In the realm of traditional distribution, a special role is being played by Wyler Vetta, historically a Swiss brand, owned by Binda. In its current repositioning phase, production volume is expected to grow by 70% in 2004, thanks to the brand’s development on an international level. (see article in this issue)
The development of Breil is equally important, both in its watch division as well as in its jewellery sector (for which a volume increase of 114% is expected in 2004). This is due in large part to the increase in the number of the brand’s sales points, as well as to the opening of 14 single-brand stores in Italy (two are already open in Milan) and two imminent openings in Barcelona and Amman.

Innovation, modernization, augmentation and diversification of products… these are the key words in the anti-crisis formula for Bulgari, according to Francesco Trapani, CEO of the Bulgari group. He does not try to hide the general difficulties that the luxury watch market has been experiencing recently. “One of the reasons the sector is suffering is because of the fall of the ‘New Economy’ and the euphoric atmosphere in which watches were purchased in the last decade. In any case, Bulgari still is one of the most important luxury brands in the world.”
In the realm of watchmaking, the Roman jeweller finds itself on the heels of such brands as Rolex and Cartier, with a production of around 220,000 pieces per year, which are distributed selectively through 180 single-brand stores and 700 retailers. Of Bulgari’s global turnover of about 770 million euros, watches accounted for 31%. (For the rest, 41% was in jewellery, 18% in accessories and 2% in royalties.)
“Our strong points,” continues Trapani, “are our design originality and our savoir-faire obtained during the last few years thanks to the development of our production unit in Neuchâtel as well as the integration of the Gérald Genta and Daniel Roth watch brands.” Concerning the latter, Trapani announced a three-year plan of development for them. The first anticipated result is an important mechanical model, equipped with a Tourbillon, produced in a limited series of 25 pieces. It will be made in white and yellow gold, and carry a price tag of around 60,000 euros.

Improving the brand’s sales network is one of the priorities of Maurizio Mazzocchi, recently named as Commercial Director of Locman. With headquarters on Elba, and strategic offices located in the capitals of its major world markets, Locman is a relative newcomer to the watch world, having been created only in 1986. A decade later, in 1997, it greatly improved its quality and today it registers a turnover of about 40 million euros. Of this, 30% comes from Italy, with the rest coming from global markets sold through about a thousand sales points. Its fashionable and trendy products are among the most identifiable in the marketplace today.
Initially playing on the visibility of its large cases and coloured dials, Locman watches have progressively placed the accent on design with new forms and innovative materials. In this context, Mazzocchi has been entrusted with reorganizing and developing the brand’s sales network, both on a national and international level. Following his degree in Economics from Rutgers University in New Jersey, Mazzocchi gained experience with Swatch Group Italy, as director of Omega and Blancpain, followed by Gucci Group Watches, where he was Managing Director for Italy and Switzerland. Locman is now counting on him to help promote the ‘Made in Italy’ label in the global watch marketplace.

One of the best-known Italian watch brands is celebrating its 70th anniversary this year. Its story began in 1934, when Tullio Bolletta, founder of the Lorenz agency, opened a small workshop in the centre of Milan. In 1938, he moved it to the Via Monte Napoleone, where the Lorenz boutique still stands today. In 1951, Lorenz developed, in Switzerland, mechanical movements with Incabloc balances exclusively for its own timepieces. Its first official recognition came in 1960, with the Compas d’Or prize, which the brand won for its Static table watch, designed by Richard Sapper. Beginning in the 1990s, the company moved into the international marketplace.
Today, Lorenz enjoys a turnover of more than 40 million euros, and its products are distributed in Australia, Korea, Croatia, Greece, Malta, the Middle East, Poland, Russia, Slovenia, Spain and Germany, where it has a direct subsidiary. In September 2003, the Chamber of Commerce, Industry, Artisanat and Agriculture in Milan conferred the prestigious title of ‘Historical Enterprise’ upon Lorenz.
To celebrate its 70th anniversary, Lorenz is cre-ating a new watch in a limited series of 700 pieces. It is a chronograph in steel equipped with a power reserve indicator and is engraved on the case back with the words “Limited Edition 1934-2004” as well as the number of the series.

Sector Group
With its brand name sports watches and a market share in Italy of about 14%, Sector Group has a network of 15 production partners around the world, six commercial offices, and 50 distributors. It controls the brands Sector, Philip Watch, Invicta, MoDe, Chronostar and has acquired the licenses for Roberto Cavalli, Just Cavalli, Pzero Tempo (Pirelli), Moschino, Valentino, Sisley, United Colors of Benetton, Mariella Burani and Xenia (for jewellery). Sector Group manages, in-house, the styling and design of its watches that are produced by an outside contractor, either in Italy (gold watches with wide bracelets), or abroad (mainly in Switzerland, but also in Japan and China).
The group’s activity began with the Sector brand, which in the 1980s conquered a large share of the Italian watch market. During the same period, the Group revitalized the Philip Watch brand. At the beginning of the 1990s, Sector Group began a strategy of diversification, by creating the brands Chronostar, MoDe and Invicta. In March 2000, the group acquired the license to make Roberto Cavalli timepieces. Following the purchase of the enterprise Opera, it obtained the licenses for Just Cavalli (January 2002), Pzero Tempo (January 2002), Moschino (July 2002), Valentino (October 2002), and Xenia (October 2002). In 2003, it concluded agreements with the Benetton Group for the brands Sisley and United Colors of Benetton, and in June 2003 for Mariella Burani.
During the first half of 2003, Sector Group registered a turnover of 37 million euros, an increase of 29% over the same period the previous year. By division, Sector Group also increased its turnover due to fashion licensing compared to the previous year, moving from 14% to 33% of turnover. On the other hand, its own brands saw their share decline from 77% to 52% of global turnover during this same six-month period.