The actor Daniel Craig made one of the most shamelessproduct plugs in the history of cinema when he flashed andthen further name-checked his Omega Seamaster mid-waythrough his debut as the new James Bond in Casino Royale.The Omega has been the standard issue timepiece for thelatter-day Bonds (though in the early films, and in the IanFleming novels on which the 007 film franchise is based,Bond never wore an Omega but rather a Rolex Oyster Perpetualor a Rolex Submariner). Still, whatever the watch, themessage remains the same—nothing bespeaks style and statuslike a wrist thrust from beneath a cuff to flash a majorpiece of high-end Swiss precision.
Watches dominate luxury goods sales
The wannabe Bonds of the world—and in the current globaleconomic climate there are many, both aspirers and oldmoney—are likely to start with the tailored suit and endwith the Aston Martin. But in between they will have toshell out for the watch. Perhaps as a result, within thegreater luxury goods market, the watches and jewelrycategory is surging, particularly in emerging markets suchas Russia, China, India and the Middle East.
“We have witnessed huge growth in the market for luxurytimepieces in the last three years, and it is clearlyshowing in Swiss exports to the region,” says George Becharaof Zenith, the high-end and venerable watchmaker now ownedby LVMH (Louis Vuitton Moet Hennessy) and which arrived inthe Middle East market early in 2004.
Regionally, says Bechara, who is based in the booming UAE,“Dubai is our … biggest market in terms of presence. Thegrowth in Dubai in units between 2005 and 2006 was up 78%,and in terms of turnover it was up 33%.”
Zenith’s parent company, LVMH, is widely considered theindustry leader in the global market for luxury goods. Withscores of brands under its name, LVMH holds a diverseportfolio that ranges from wines and spirits (Moet Chandon,Veuve Clicquot) to high-end fashion (Louis Vuitton, MarcJacobs) to fragrances and cosmetics (Christian Dior,Guerlain) to watches and jewelry (Zenith, Tag Heuer,Chaumet).
In 2000, watches and jewelry contributed only 5% of LVMH’soverall sales. By 2006, however, the category trumped allothers in terms of growth as sales increased 26% on theprevious year. A joint venture between LVMH and De Beers,the largest diamond supplier in the world, has no doubtcontributed to the category’s newfound muscle. Notcoincidentally, De Beers opened its first boutique in Dubailast year.
The market for luxury watches—defined as timepieces thatretail for upwards of $2,000—moved into the Gulf en massearound 2002. That year, Dubai imported some 700,000premium-quality Swiss watches, which at the time was roughlyequivalent to the size of the city’s population.
All major players make it to Dubai ontime
All the major players in the luxury watch market are nowpresent in Dubai—Rolex, Cartier, Chopard, Omega, Cartier,Patek Philippe and the Richemont Group—another global luxurygoods powerhouse, with its regional headquarters in theHazel W. S. Wong-designed Emirates Towers. Richemontincludes IWC, Piaget, Jaeger-LeCoultre, A. Lange & Sohne,Vacheron Constantin, Officine Panerai, and Baume & Mercier.
Dubai’s phenomenal growth is certainly fueling the market.According to a recent—and notably critical—article on Dubaiin the German newspaper Der Spiegel, there were just fourcompanies operating in Dubai 20 years ago. Now there are6,300 from more than 100 countries. The ruling Maktoumfamily expects the local population to grow from two millionto 10 million, and wants 20 million tourists to pass throughDubai every year. Given the potential for triggeringconspicuous consumption, it’s no wonder watchmakers havebeen flooding money into establishing headquarters andboutiques for themselves in Dubai, and then embarking uponan aggressive ad campaign.
“The growth of Dubai [has been] tremendous and crucial inbenefiting Zenith’s business,” says Bechara. “The hugeinvestments that are taking place here, the most importantcompanies setting [up] their regional offices here, the fuelprices, the attraction of tourists throughout the year—allthis brought us good business.”
Regionally speaking, the market for luxury timepiecesremains strongest in Saudi Arabia and the United ArabEmirates, though Kuwait, Qatar, Bahrain and the Levant offersizable room to grow. Rolex still leads the pack in terms ofmarket share (with 15% of the Saudi market alone). But whenit comes to the highest of high-end watches, market successisn’t always a matter of volume. Often it is a matter ofvalue.
Ziad Annan of Rolex in Lebanon says sales figures have beenimpacted by the political situation in the country, whetherthe war with Israel in the summer of 2006 or the oppositiondemonstrations that have, for four months and counting, madea ghost town of Beirut’s central district, where the upscaleRolex boutique is located.
Despite such extenuating circumstances, Annan notes that twonew Rolex timepieces have been particularly successful oflate—a Rolex Rolesor that was fashionable in the 1970s andre-launched last year and a new Rolex GMT Master II. Bothproducts have proven remarkably popular in the Lebanesemarket.
So where will the sector for exquisite watches—and bejeweledmobile phones—go from here? After five years of surginggrowth and breakneck expansion fueled by the outrageous paceof development in Dubai, it seems likely that the majorplayers in the region will turn their attention toconsolidating brand loyalties.
In 2006, says Zenith’s George Bechara, “we had a huge yearin terms of launching new products. This year we are morefocused on strengthening the existing collections, with somenovelties that will give a push to the brand.”
One factor that may contribute favorably to a period ofmarket consolidation is the arrival in the UAE of theauction houses Christie’s and Sotheby’s. Certainly much inkhas been spilled over the sales of international modern andcontemporary art staged by Christie’s in May 2006 andFebruary 2007. But it is worth noting that on Jan. 31,Christie’s held a major auction of jewels and watches in theEmirates Towers Hotel, a sale that trounced the totals ofboth art auctions by raking in $11.8 million. They were nomillion-dollar paintings on the bloc, but a marquise-cutdiamond ring by Van Cleef & Arpels went under the hammer for$1.2 million. The sale also featured watches by PatekPhilippe, Rolex, Cartier, Piaget, Chopard, and a limitededition Corum in 18-carat white gold, 20 jewels, and a whitedial with verses from “The Thousand and One Nights” in blackenameled Arabic script.
According to Michael Jeha, managing director of Christie’sDubai, there are 45 to 50 people working on the Dubai marketfor Christie’s. All the watches and jewels to be sold attwice yearly auctions will, for the time being, be sourcedfrom Europe to keep the material fresh. As a result, theauction houses could either edify Dubai-based enthusiasts ofluxury timepieces—or snag competition away from thetraditional watchmakers themselves.
