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Mid-range dilemma: quartz or mechanical?

INTERVIEW

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September 2019


Mid-range dilemma: quartz or mechanical?

While volumes for quartz timepieces continue to decrease in the Swiss watch industry, Certina, one of the oldest brands in the mid-range segment, is experiencing higher demand for its mechanical collections. Its latest innovation aims at protecting the mechanical movement from magnetic fields. We met Adrian Bosshard, the CEO of Certina.

O

ver the long term, is there a future for Swiss-made quartz watches? It’s the moment of truth for them, as we wrote in an analysis, as they seem increasingly “stuck” between luxury mechanical timepieces and affordable smartwatches. Swiss watch brands have been recovering from the 2015 downturn, but the volumes produced are getting lower and lower each year. In three years, the branch has “lost” 4.4 million watches, mostly affordable quartz timepieces. The industry is leaning towards mechanical watches.

In three years, the Swiss watch industry has “lost” 4.4 million watches, mostly affordable quartz timepieces.

A dilemma for the mid-range: back to the grand era of the automatic watch?...
A dilemma for the mid-range: back to the grand era of the automatic watch?...
Europa Star, 1954
...or continue to coast along on the volumes represented by quartz production?
...or continue to coast along on the volumes represented by quartz production?
Europa Star, No. 126, 1981

So, quartz or mechanical? It’s a crucial moment for Swiss actors in the mid-range segment. The biggest of them, Tissot, Mido, Hamilton and Certina, are part of the Swatch Group, by far the largest Swiss producer in terms of volume (and value). Certina is an interesting case as it is active in both the quartz and mechanical segments. While it had been emphasising its “Precidrive” calibres in the quartz range, the latest innovation – is it a coincidence? – concerns the so-called “DS concept” for its automatic range of watches.

Certina DS-1 Big Date 60th anniversary
Certina DS-1 Big Date 60th anniversary

We went to Hamburg to attend the presentation of a special DS-1 Big Date timepiece for the 60th anniversary of the DS concept. On the outside, we find a dark green dial with a Milanese mesh bracelet. On the inside, it has a Powermatic 80 movement that sets “new standards” thanks to a Nivachron balance spring. This innovative material was developed in cooperation with the Swatch Group to guarantee improved resistance to magnetic fields. Alongside Swatch (read our account on the Flymagic), Certina is now one of the first brands in the group to make use of this new titanium-based material. We met its CEO Adrian Bosshard.

Adrian Bosshard, CEO of Certina
Adrian Bosshard, CEO of Certina

Europa Star: The “DS concept”, a key element for Certina, was invented in 1959. What is it exactly?

Adrian Bosshard: DS stands for “Double Security”. The concept’s original purpose was to ensure the highest degree of waterproofing, shock resistance and accuracy, thanks to the extremely robust construction of the watch case. Certina as a brand has promoted its reliability since it was founded in 1888, which explains why you’ve always found our watches on the wrists of sports aficionados such as climbers or divers. A growing enemy of mechanical precision is magnetic fields, a problem that was difficult to manage for a long time. A solution that more and more luxury brands use is incorporating a silicon balance spring. But silicon is an expensive material, and we wanted to stick to our affordable price range. Hence the introduction of the Nivachron™, an alternative to the silicon balance spring…

“To counteract magnetic fields, more and more brands are using a silicon balance spring. But silicon is an expensive material and we want to stick to our affordable price range.”

A 1995 advertisement for the shock-resistant Certina DS “Cascadeur”.
A 1995 advertisement for the shock-resistant Certina DS “Cascadeur”.
Europa Star, No. 212, 1995

We reported on the Nivachron earlier this year when we covered the presentation of the Swatch Flymagic. So you’re the first brand within the Swatch Group to adopt the technology on a larger scale?

Yes. We will gradually adapt it to our entire mechanical production. As it is based on titanium, besides being anti-magnetic, the Nivachron balance spring is also highly resistant to fluctuations in temperature and presents excellent shock resistance, in line with the DS concept. Hence, it is the perfect way to celebrate 60 years of establishing a standard of reliability.

The Double Security concept explained in a 1988 issue of Europa Star.
The Double Security concept explained in a 1988 issue of Europa Star.
Europa Star, No. 172, 1988

You operate in the mid-price segment of the Swiss watch industry. For years now, the volumes of the industry have been decreasing (-14.6 %, a drop of 1.6 million timepieces, for the first half of 2019!), while the average export price is increasing. How do you cope with a general orientation that is moving away from affordable offerings such as yours?

What we see, from our own figures, is that we too are experiencing a strong increase in average prices. So we’re moving in the same direction as the rest of the industry. We are selling more mechanical timepieces, in a higher price segment, and fewer quartz watches. It’s a general trend, and it’s not only down to Asian customers. We’re also observing higher demand for mechanical watches on European markets. Overall, this is a good sign in terms of watch culture and education.

“We’re moving in the same direction as the rest of the industry. We are selling more mechanical timepieces, in a higher price segment, and fewer quartz watches.”

In the longer run, do you think there’s a future for quartz timepieces, both for Certina and for the Swiss watch industry as a whole?

I strongly believe so. The mechanical share is increasing, but we remain an important brand in the quartz segment. We are also working on innovation in the quartz segment, with our Precidrive system and COSC-certified timepieces. Of course, it’s quite a challenge to buck the trend and keep up volumes with quartz watches. But at the end of the day, Certina is a brand that is present in both segments. The watch industry evolves in cycles, and the trend might change again in the future. So our strategy is to strengthen both the quartz and the mechanical offering.

“The watch industry evolves in cycles and the trend might change again in the future. So our strategy is to strengthen both the quartz and the mechanical offering.”

However, we see an increasing number of people wearing the Apple Watch, which is close to Certina’s and other Swiss made brands’ price point. It’s also considered a sports watch…

I see the Apple Watch and I also see a lot of people wearing no watch at all, because they can see the time on their smartphone. I remain convinced that a smartwatch and a traditional watch are two very different objects. On the one hand, you have pure functionality. On the other, you have an item that carries an emotional charge. Which one would you rather consider as an important gift? People start wearing a traditional watch when they seek real value.

Retro-futuristic look for the Certina “DS-New Line” from 1982.
Retro-futuristic look for the Certina “DS-New Line” from 1982.
Europa Star, No. 135, 1982

A key market for Certina is Northern Europe, and indeed, we’re meeting in Hamburg. How is business here?

We remain the leading brand in the mid-price segment in Scandinavia – Norway, Finland and Sweden – so it is indeed a very important area for us. As for Germany, we have big ambitions here.

Another key market is Asia, but Hong Kong, the largest export market for Swiss watches, has been shaken by political tensions. What’s the impact on sales?

We are actually still quite small in China and Hong Kong. The demonstrations make the situation difficult. We’re seeing a drop in sales, although not in the 50% range! The decline in Hong Kong is more in the single digit range. In a way, due to our late start on the local market, we are less exposed than other brands. And our focus is more on mainland China than Hong Kong.

What is your distribution strategy in mainland China?

It takes time to build a selective and qualitative distribution network in China. We are still at the start of the process, which will unfold over several years. Today, we have around 130 points of sale in China, but in the long term, a brand like Certina should probably open 400 to 500 points of sale there. E-commerce is also a very important part of distribution in China. Certina is already available on JD.com and Tmall, and we are experiencing good growth on these platforms. 

The Powermatic 80 movement sets “new standards” thanks to a Nivachron balance spring.
The Powermatic 80 movement sets “new standards” thanks to a Nivachron balance spring.

For the first time this year you didn’t exhibit at Baselworld. What have you organised instead? And for a brand that heavily relies on retailers, isn’t Baselworld a must?

As we have group subsidiaries on all our major markets, from Poland to China, we focus on local events, such as product presentations to the media, which are monitored by our local PR managers. We can get closer to our customers this way. For the group, it means more work and organisation than when everybody met at Baselworld. But with this new strategy, the focus on our brand is higher at the local level. 

Magnetic fields are not news: back in 1985, Certina launched DS watches with case and bracelet in solid titanium to resist them.
Magnetic fields are not news: back in 1985, Certina launched DS watches with case and bracelet in solid titanium to resist them.
Europa Star, No. 157, 1986

What future do you see for Certina in a Swiss watch industry that is increasingly concentrated in the high-end segment?

Of course, we see the current trend of the luxury segment performing better than the mid-price segment. But when you count the quantity of available wrists in the luxury segment, it’s actually a rather small pool. In the mid-price segment we have a higher potential for selling volumes of watches. Worldwide, some 1.3 billion watches are sold each year. We can certainly find our sweet spot there!


TECHNICAL SPECIFICATIONS

Certina DS-1 Big Date 60th anniversary

Mid-range dilemma: quartz or mechanical?

Movement: ETA Powermatic 80.651 automatic movement, Swiss Made
Functions: Hours, minutes, seconds, big date
Power reserve: up to 80 hours
Case: Stainless steel 316L, commemorative imprint on the back; 41 mm diameter
Dial: Dark green, domed dégradé dial with sunburst visual; big date at 6 o’clock
Water resistance: Up to a pressure of 10 bar (100 m)
Glass: Convex anti-reflective sapphire crystal
Strap: Stainless steel Milanese strap with butterfly closure
Special features: DS (Double Security), Dégradé dial, Powermatic 80 movement with Nivachron balance spring, commemorative imprint and special packaging
Reference: C029.426.11.091.60
Recommended retail price: CHF 895