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CEOs HAVE THEIR SAY - ANDRÉ BERNHEIM, CEO MONDAINE

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May 2016


- 1. Mondaine had its best year ever in 2015 on a global basis, about 15% growth compared to 2014. The new Mondaine Helvetica family is certainly contributing to this, and the very high media attention given to our first connected watch, the Mondaine Helvetica Smart, which we were able to launch prior to the majority of others in the industry, helped to promote the entire brand. As for 2016 we do expect a tough year, but still expect a steady growth. The weaker Swiss franc might help a little, but generally, I think the watch sector in USA and Asia will be tough in 2016. US retailers are overstocked because the big brands pushed a lot of their stock onto them, and are offering high incentives to sales people to push sales. For the first time we see many high-end brands on the marketplace with big discounts, which in return takes away business from retailers making it difficult to buy in, even the lower priced brands like ours. The internet certainly became an issue, especially the discounting on marketplaces, but it is here to stay and the industry will have to learn to live with it. Asia, mainly China, is not as strong as it used to be – even though, which other country can show 6.9% growth…? But this is perceived as a catastrophe compared to the growth in previous years. Big brands suffer and are overstocked due to the ‘bad feeling’ there, beside the weak currencies in other countries such as Japan. Apple watch will certainly have some influence, in my view more of a psychological one than by taking away business from the traditional watch industry. Classical watches, luxury brands which stand for prestige and image, but also our Mondaine brand, stand for longevity and classic modernity, which generally seems to be becoming more attractive to consumers again, after a long period where fashion branding created hype. Apple did create some hype too, and is here to stay and will play an important role going forward. However, as consumers today own multiple watches, I think this may be one of them, but certainly not the only one. I’m of the belief that many Apple watch buyers did not wear a watch before and are now getting used to looking at their wrist again.

- 2. We will focus on higher sales per outlet by supporting retailers as much as possible during times of difficulty, as well as trying to limit marketplace discounting by disassociating retailers and other customers, and even in extreme cases distributors who do not respect our distribution policies. We plan to increase our retail network only slightly.

- 3. I am strongly of the belief that watches in future will be connected to a mobile device in some way, but in my view, a watch can do certain things better then a hand held device or smartphone, and a smartphone can do other things better then a watch. Every device should perform where it has advantages over the other, and this is precisely what Mondaine will be doing – having started with our first connected watch a year ago, and with something to show in Basel. However, we will stay true to our heritage of building great watches at affordable prices and of “Swiss Made” quality. But in the longer term, Switzerland might lose its current position in relation to mechanical watches due to its near monopoly and exaggerated prices compared for example to Japan (in my view the new Swissness law will accelerate the tendency for monopoly).

- 4. For Mondaine, Baselworld does not have same importance as it does for the luxury brands who achieve their biggest sales there. We also sell, but on a much smaller scale, since we are very close to our distributors in any case. We are not really looking for new distributors either and if we are seeking to appoint one in a new country, we do our homework on site. However, Baselworld is important in terms of contact with the media, and because it focuses us on being ready with all new products, marketing, materials, etc. for a certain date. It also gives us the opportunity to rally the majority of our distributors at our traditional distributors’ meeting on the Saturday of the fair, besides similar continental events which we conduct throughout the year.

EUROPA STAR’S FOUR QUESTIONS

1. What are your predictions for 2016? Do you think that exports will recover, or will the markets stagnate or continue to decline after the slump we saw in 2015? And what do you think were the reasons for the downturn in 2015?

2. What are your priorities for the coming year: consolidating your existing markets, actively exploring new markets (if so, which), rationalising / consolidating / expanding your distribution network, launching new products, PR initiatives, etc.?

3. Over the longer term, do you believe that mechanical watchmaking will gradually die out, hybridise, or continue to occupy its own exclusive niche? Do you see the advent of smartwatches as a potential threat, or an opportunity for growth and diversification?

4. What exactly do you hope to achieve from your participation in Baselworld 2016? Do you feel your presence at the fair is essential to your business, or are such forums less important now than they were in the past?

LIST OF RESPONDING CEOs