LVMH


TAG Heuer, a meeting with Frédéric Arnault

INTERVIEW

Français
June 2022


TAG Heuer, a meeting with Frédéric Arnault

Frédéric Arnault, head of the historic brand from La Chaux-de-Fonds, is trying to find the magic formula for each line in TAG Heuer’s eclectic portfolio, which ranges from high-volume watches to Haute Horlogerie. Today, this formula includes Super Mario, lab-grown diamonds and the automotive world. Interview.

W

ith his keen analytical mind and articulate speech, Frédéric Arnault, 27, a graduate of the prestigious Ecole Polytechnique, is well aware of his entrepreneurial responsibilities. Like other members of his family, he is currently proving himself within a brand of the LVMH group.

The brand – TAG Heuer – is part of the luxury giant’s watchmaking portfolio. Having worked in artificial intelligence R&D at Facebook, Frédéric Arnault started by injecting his professional experience from the tech industry (the La Chaux-de- Fonds-based brand is one of the rare Swiss watchmakers to have fully embraced the smartwatch). He then moved on to revisiting in depth and detail the brand’s great historical references – Carrera, Aquaracer, Monaco – at a time when vintage, particularly vintage sports models, is valued as never before.

Frédéric Arnault, CEO of TAG Heuer
Frédéric Arnault, CEO of TAG Heuer
©Gian Marco Castelberg

The work was all about fine-tuning, balancing retro inspiration, catalogue updates, digital disruptions and daring innovation (e.g. the lab-grown diamonds of the Carrera Plasma), all to find the perfect synthesis between the different avenues the brand has explored in the 21st century, in the search for the right niche. The past few years have also seen several strategic reversals. Volume or value? It’s the eternal dilemma of brands active in what is called, for lack of a better term, “affordable luxury”.

Heuer ad in the Asian edition of Europa Star in 1951
Heuer ad in the Asian edition of Europa Star in 1951
©Europa Star 1951

TAG Heuer’s strategic partnership with Porsche reflects its ambition: to reinforce its desirability as a brand that stands at the crossroads of heritage and innovation. Its scope of action is wide but “traditional watchmaking will always be TAG Heuer’s core business”, emphasises Frédéric Arnault, as if to reassure us of his intentions.

Volume or value? It’s the eternal dilemma of brands active in what is called, for lack of a better term, “affordable luxury”.

Europa Star: How, specifically, has TAG Heuer evolved since your arrival at the brand in 2017?

Frédéric Arnault: When I joined TAG Heuer, I initially focused on the then nascent connected watch business. I entered the watchmaking world from a tech angle. We updated the brand’s vision in this area. There was a focus on production, because it was – and still is – a major issue in the traditional watch industry. But that’s not necessarily the case in the tech world. Market leaders like Apple, one of the most verticalised companies in the world, do not handle their own production. In tech, it is quite possible to control quality without controlling production. On the other hand, you have to go and find the right know-how. What counts above all is finding the right network of suppliers.

The priority for us was not so much production as experience. We therefore had to find the means to invest in both the physical and the software experience. A team was set up in Paris to work on these elements, in close collaboration with Switzerland. That was the first major change I implemented when I arrived at TAG Heuer. Today, connected watches represent 15% of our sales, and that’s a good ratio – traditional watchmaking is doing very well, so this segment has had to really grow to increase its internal market share. Back then, I was directly involved in the transformation process under the supervision of Stéphane Bianchi, before taking over the management of the brand in 2020.

“I entered the watchmaking world from a tech angle. We updated the brand’s vision in this area.”

A limited edition of 2,000 Connected models produced in partnership with Nintendo and featuring the Super Mario character sold out very quickly last year. The connected watch category represents some 15% of TAG Heuer sales.
A limited edition of 2,000 Connected models produced in partnership with Nintendo and featuring the Super Mario character sold out very quickly last year. The connected watch category represents some 15% of TAG Heuer sales.

What are the main axes of this new brand strategy?

The first strategic axis is a gradual repositioning and move upmarket in traditional watchmaking, which will always be TAG Heuer’s core business: the demand is there and we have fantastic heritage and know-how. We have clarified the basics of the Carrera and Aquaracer collections. The next step is to integrate innovative technologies into these lines, like the Plasma or the Solargraph, which we are introducing this year. The move upmarket is about the product, but it’s also about distribution. We are rationalising our network of sales outlets; in three years, we have gone from more than 4,000 points of sale to less than 3,000. At the same time, we are strengthening our partnership with the points of sale that we have kept. The cornerstone of this whole strategy, our permanent obsession, is the desirability of the brand. TAG Heuer must appeal to new generations and strengthen its relevance in the decade to come.

In addition to its key partnership with Porsche, TAG Heuer also strengthened its ties with the Red Bull Racing F1 team as part of its marketing refocus on motorsport. A view of the new Formula 1 Red Bull Racing edition.
In addition to its key partnership with Porsche, TAG Heuer also strengthened its ties with the Red Bull Racing F1 team as part of its marketing refocus on motorsport. A view of the new Formula 1 Red Bull Racing edition.

The brand’s partnerships have been completely overhauled since your arrival; that’s surely no coincidence.

It was necessary. When I arrived, TAG Heuer’s primary marketing investment was in football. We conducted a survey of the brand’s customers. Sport was indeed high on the list of values associated with TAG Heuer, but football was not even in the top 10 sports mentioned by the respondents. In first place were motor sports and Formula 1. As a result, we have reoriented our investments, as illustrated by our partnerships with Porsche and Red Bull Racing. Storytelling today needs authenticity.

Autavia, Camaro, Monte-Carlo: Heuer is known for its link with the automotive world of the 1960s.
Autavia, Camaro, Monte-Carlo: Heuer is known for its link with the automotive world of the 1960s.
©Europa Star 1968

Frédéric Arnault, CEO of TAG Heuer

TAG Heuer’s trajectory in the 21st century has included several different strategies. It has oscillated between the affordable high-volume watch and the temptation of Haute Horlogerie. Where do you stand in what may appear to be a “great divide”?

We are a brand that can be active in several price segments. For example, in a more affordable segment, the Formula 1 line [Editor’s note: starting at CHF 1,400] has an extremely rich heritage and strong potential for desirability and hype. The Red Bull Racing editions work very well, and there are many colour schemes that recall the tones of the historic model. At the same time, we are present in Haute Horlogerie with a tourbillon, and we’re working on development projects – which will take a little more time – in this segment. And of course we are working on our iconic models: the Monaco is one of the greatest icons of watchmaking. We’re doing general work on the brand in the broadest sense.

“When I arrived, TAG Heuer’s primary marketing investment was in football. It wasn’t consistent with the brand’s image. We had to go back to motorsports.”

An exploded view of the new Monaco Gulf in the colours of the brand's historical partner - a model now equipped with the Heuer 02 in-house movement.
An exploded view of the new Monaco Gulf in the colours of the brand’s historical partner - a model now equipped with the Heuer 02 in-house movement.

Horological culture is becoming increasingly prevalent throughout the world. Has this led you to target a more “connoisseur” clientele than before?

Given the profile of our brand, we have to speak to as wide an audience as possible. But connoisseurs are very important to TAG Heuer. They may have been somewhat forgotten in the past, but we want to talk to them, engage them in a dialogue about technology, innovation, history, heritage, etc. Connoisseurs have a very strong impact on the watchmaking world. Gaining the respect of influencers is essential, especially at a certain price level.

The new TAG Heuer Carrera Plasma is embellished with lab-grown diamonds, which offer many possibilities in terms of shape and design.
The new TAG Heuer Carrera Plasma is embellished with lab-grown diamonds, which offer many possibilities in terms of shape and design.

The Plasma pairs a Carrera design with new technology: lab-grown diamonds. How did you come up with the idea of combining these two elements?

TAG stands for “avant-garde technology”, let’s not forget that! This gives us a very strong mission and we must constantly innovate. Lab-grown diamonds are certainly a technology of the future, although I don’t think they will take the place of natural diamonds. There is strong growth to come in this sector, which will be both complementary to and different from the natural diamond offer. Our values make it legitimate for us to experiment with it. It took us some time to find the right approach. But we allow time for creation: our R&D teams do not necessarily work to imposed deadlines. To incorporate this technology, we also had to offer a radically different design, one that was in no way comparable to that of jewellery watches. But there’s also a demand for full-set watches. I’m convinced there is room for both segments to exist in parallel. Given the universality of our brand, we speak to different audiences through different collections, but we always try to touch people’s hearts with this mix of innovation and passion.

“The cornerstone of this whole strategy, our permanent obsession, is the desirability of the brand. TAG Heuer must appeal to new generations and strengthen its relevance in the decade to come.”

What are your ambitions for TAG Heuer this year? Following the pandemic, many brands are focusing on local customers.

Things were already heading in this direction before the pandemic, but they have accelerated enormously due to the global situation. Even today, the number of tourism customers is a long way from historical levels. This has been a good thing, because it has forced us to develop our service to local customers. But I’m also convinced that tourism will recover and that Chinese customers will come back, with a new thirst for consumption of luxury products. We’re not giving up on our tourist clientele in the long term.

In February 2021, TAG Heuer and Porsche formed an ambitious partnership. They are presenting a new joint creation based on the Carrera Sport Chronograph. The yellow tones are inspired by the colour Porsche reserves for its sportiest vehicles.
In February 2021, TAG Heuer and Porsche formed an ambitious partnership. They are presenting a new joint creation based on the Carrera Sport Chronograph. The yellow tones are inspired by the colour Porsche reserves for its sportiest vehicles.

Your partner Porsche is a good example of how to grow on the basis of a strong heritage – an increasingly important factor in the contemporary value of brands. What initiatives are you taking to increase awareness of TAG Heuer’s heritage?

Today, we have a magnificent museum in La Chaux-de-Fonds, and we have preserved many historical pieces. We regularly buy back pieces if they are missing from our collection and are of historical interest, but we don’t resell them because we don’t want to artificially inflate prices. We have also created an online heritage experience. And, very importantly, we always try to put our launches into context. For example, the Autavia “Orange Boy” incorporates a historic Heuer colour. Enthusiasts knew it well and we reappropriated it. It continues to be relevant today. We still have many stories that we can bring back to life for our modern world.

“The world's most modern chronograph assembly line”: a report by Europa Star at Heuer-Leonidas in 1968.
“The world’s most modern chronograph assembly line”: a report by Europa Star at Heuer-Leonidas in 1968.
©Europa Star 1968

The Europa Star Newsletter