A year ago, Philippe Merk, who had just guided the progressive and very remarkable move upmarket by Maurice Lacroix, was asked to take over the reins at Audemars Piguet. We can imagine that for this engineer from the Swiss German part of Switzerland, it would not have been an obvious or simple task to replace Georges-Henri Meylan (a native of the Vallée de Joux; at the head of one of Switzerland’s most prestigious brands that is deeply rooted in its environment and fiercely independent and still majority owned by the founding family). To learn more about the transition and the brand’s current situation and future plans, Europa Star paid a visit to Philippe Merk on the eve of a decisive SIHH.




Philippe Merk


Europa Star: After a year at the head of Audemars Piguet, appointed at the beginning of the economic tempest, what are your first impressions?
Philippe Merk: When I arrived here, Audemars Piguet had enjoyed five years of continuous and exceptional development and growth. The company then, on all levels, was thus in a situation, in a state of mind, quite different from the dense fog that shrouds everything today. As everyone knows, the large markets such as the USA have become clearly more ‘difficult’, I say euphemistically. But in a certain way, this mandatory pause in the watch industry’s frenzied pace has allowed me to step back a bit. In the beginning, I was not caught up in the whirlwind of the business en route, and I was able to take some distance, to gain a deep understanding of the company, to analyze the strengths and weaknesses of our brand, to form a realistic diagnosis and to rethink some of our procedures. I was also able to bring in a new team. At the end of the day, I can assure you that I am as realistic as I am positive.

ES: Has the crisis forced you to rethink your offer in terms of products?
PHM: Without being—fortunately—a single product brand, Audemars Piguet has the chance of having a number of watchmaking icons, for example, the Royal Oak and the Offshore. These icons are doing perfectly well, as are the feminine Millenary models. It is in another area where things are more difficult—the grand complications. One of our present goals is to revitalize our classic collections such as the Jules Audemars line by adding more innovation. The fundamental timekeeping values must remain at the heart of our metier and they are also basic for us as well as for certain markets that want to find these values again. I am thinking notably of emerging markets such as China, Russia and India. But we must give them something extra in terms of design. We must propose very expressive pieces. The marriage between classicism and innovation is key. [Editor’s note: The recent Grand Prix d'Horlogerie in Geneva that was awarded to the bold Jules Audemars watch with an Audemars Piguet escapement supports Merk’s remark.]




ROYAL OAK OFFSHORE CHRONOGRAPH, MILLENARY QUINCY JONES


ES: And, from the point of view of distribution. Have there been some unpleasant changes?
PHM: Distribution is really one of the strong points in the long history of Audemars Piguet. We have mastered our distribution and are able to control it in a very tight manner just about everywhere in the world. In this domain, the brand has acquired a rare savoir-faire. We have 14 direct subsidiaries that manage about 400 retailers in more than 70 countries. But everywhere that we can, we increase our direct control even more, such as we have just done in China where we control 100 per cent of our own distribution and after-sales service. Moreover, we have 19 Audemars Piguet stores and our network of same-name boutiques is a work in progress. Yet, we do not consider ourselves as true retailers and we are very careful not to upset our retail network. On the contrary, we actually help them with our shops. During this year, we have been very attentive to any possible problems with stocks. We have always found solutions in terms of where we need to ‘clean’ out with our retailers. And, we are very strict in terms of controlling our pricing.




MILLENARY CARBON ONE TOURNBILLON CHRONOGRAPH


ES: Has your independence played in your favour during these turbulent times?
PHM: Being independent is the best of all worlds in difficult times. There is an emotional and personal involvement by the owners. It offers a closeness that allows you to count on real support because they do not lose sight of the long term. And retailers also have an interest in keeping strong independent brands in their portfolio. It is a way to shelter themselves from the pressures that can be brought to bear by the large groups.

ES: And, this year, you have just inaugurated a new manufacture...
PHM: Yes, this is a very important and decisive step that allows us to considerably improve our fabrication processes, to rationalize them and to improve our quality control. We also increase efficiency and output without losing the high quality of our production. This investment of some 30 million Swiss francs also permits us to organize our work flow in a coherent manner by grouping specialities by atelier and by strengthening our coordination with Renaud & Papi, our research and development pole. At the same time, we are strengthening and optimizing the production of our base movement, the automatic Calibre 31-20 that is based on our chronograph Calibre 21-20, also an automatic, that is the base for our perpetual calendar timepiece. This new manufacture is a formidable tool that will permit us to respond adequately to the demand. For the moment, this demand is around 25,000 watches per year.




The CALIBRE 3120, the HYDROPTÈRE


ES: In a whole other domain, you have not continued with the Alinghi...
PHM: No, but we have started another fascinating affiliation with the Hydroptère, for which we are one of two main sponsors. This hybrid between an airplane and a boat corresponds exactly to Audemars Piguet. Not only does it let us continue with sailing but it also has a pion-eering spirit, with its involvement in research and in extraordinary innovation. The Hydroptère is now the fastest vessel on the water and the adventure is just beginning. I must also mention that such a high-performance, ingenious, beautiful and yet simple appearing machine brings out the engineer in me. It offers us a remarkable tool to communicate the values of Audemars Piguet. But this is not our only relationship. We are also present in golf, the Formula 1 and in culture with the Bolshoi.

ES: From an economic point of view, how do you see the new year that is unfolding?
PHM: What I can affirm is that the trend downwards is stabilizing. Things are starting up again, a step lower, certainly, but it seems to me that the downward spiral has stopped. During this period of ‘rest’, if I can use the term, we are definitely reinforcing ourselves.


Source: Europa Star December-January 2010 Magazine Issue