SDC Weekly 122; LVMH buys minority stake in La Joux-Perret; Social status games over time
Quick word on GPHG 2025, Angry customer dumps rare Lange watches with Sotheby's, Ariel Adams's recent take on price reductions, Kurzgesagt on stress relief, and more!
đ¨ Welcome back to SDC Weekly! Yes, two editions in one week⌠Iâm heading to Dubai on Monday for Dubai Watch Week, which means youâre getting this edition early. I will skip next weekâs regular issue, though I might share some ad hoc posts while Iâm there.
If you fancy seeing photo journal-style updates from Dubai Watch Week, let me know; might just do this on Instagram - but feedback on your preferences is welcome in the comments.
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⥠Quick word on GPHG 2025
The GPHG awarded the âAiguille dâOrâ trophy for what is supposed to be âBest of Showâ to Breguet. As someone in a group chat put it: âthe Aiguille dâOr is the best in show, not the nice comeback award.â Heâs absolutely right! As much as I love Breguet, and celebrate the brand finding some light at the end of a long tunnel, there were a few objectively superior watches like the Greubel Nano, or the UJ-2, competing as well. I suppose the other exceptional watches won different awards, so awarding this to Breguet felt more like an equitable way to distribute awards to as many participating friends brands as possible, while honouring Breguet with the big prize. Itâs not egregious per se, it just feels misplaced. I think the most deserving of an award was Chinese superstar brand Fam Al Hut for their 26k tourbillon, and the least deserving was Dennison.
Take a look at the original submissions in the âChallengeâ category; on what basis can a quartz watch with a $5 stone dial1 possibly win this award? This is not to denigrate Dennison, and I truly wish them well; but just look at the full list of competitors and youâll see this award is illogical.
Hereâs the full prize list if you care.
đ¤ LVMH buys minority stake in La Joux-Perret
By now youâve already heard the news that LVMHâs watch division bought a minority stake in La Joux-Perret or âLJPâ (the Swiss movement maker owned by Citizen Group). The announcement dropped last Wednesday, and the usual suspects have dutifully reported the basics⌠LVMH secures solar quartz movements for TAG Heuer, everyone remains friends, and business continues as usual.
Rather than belabour what you already know, let me share some thoughts on what this deal might signal about LVMHâs strategy, the movement supply landscape, and what happens when youâre building a watch empire during one of the worst industry downturns in recent memory.
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LVMHâs watch division includes TAG Heuer, Hublot and Zenith (Bulgari and Tiffany donât appear to be part of the âwatch divisionâ proper); the watch division appears to be the entity which bought the minority stake in LJP (but remember, the Solargraph movement can be used in TAG Heuer and Tiffanyâs watches). Indeed, these companies have been collaborating since 2022 on solar quartz movements. Jean-Christophe Babin (CEO LVMH Watches & Bulgari) says this investment lets them âleverage our unmatched expertise in solar energy.â Citizenâs CEO talks about âstrategic allianceâ and âlong-term development prospects.â Everyoneâs thrilled, clearly.
LJP produces roughly 150,000 movements annually â everything from their workhorse G100 automatic to column-wheel chronographs, tourbillons, and those solar quartz calibres LVMH is so excited about. The factory will stay independent, Citizen retains majority ownership, and LJP will continue supplying other brands. All sounds very civilised.
Solar quartz
Iâll start with the obvious part, which is that solar quartz makes perfect sense for TAG Heuerâs positioning. The brand has been trying to straddle this awkward space between aspirational sports watches and accessible luxury, so naturally, solar quartz gives them a compelling story at entry-level prices. Two minutes of sunlight powers a full day, and less than 20 hours gives you six months without battery changes, itâs Swiss made, they have a Formula 1 partnership... it all stacks up nicely.
LVMH doesnât have this expertise in-house, and we know theyâve already poured resources into mechanical watchmaking via LFdT, but quartz innovation is just not their thing. Securing a strategic stake in LJP makes sense if you want to expand these solar-powered collections without investing millions in developing your own technology.
In reality, solar quartz is a small fraction of what LJP actually does. The Solargraph is clever, sure, but LJPâs bread and butter is mechanical movements. That G100 automatic calibre, for instance, is a direct competitor to ETAâs 2824 and Sellitaâs SW200. Same dimensions, same specs, but with better power reserve. Plus, LVMH brands, particularly TAG and Hublot, currently rely heavily on 3rd parties for their base automatic movements.
In other words, it is possible that LVMH is playing a longer game, and they have just positioned themselves with options that extend beyond solar panels on watch dials. After this deal, LVMH will now have a voice in LJPâs strategy and operations as a minority shareholder. Thatâs the sort of leverage you donât get when youâre just a customer placing orders.
Iâm not saying LVMH companies are planning to ditch Sellita tomorrow, but in this industry, supply chain resilience matters, especially during downturns and tariff wars when every basis point of margin counts. If nothing else, having a second source for mechanical movements makes strategic sense. It also gives LVMH negotiating power with both suppliers since, frankly, competition among movement makers usually benefits the customer (unless LVMH just hoovers up the savings as profits!).
Brice from Monochrome also mentioned that the press release phrasing is deliberately broad, and that LJP also has noteworthy expertise in more complex movements. Given that Angelus and Arnold & Son (both Citizen-owned brands) use these movements, we might even see LVMH tapping into that capability for Zenith or even Louis Vuittonâs high-end pieces.
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But letâs zoom out a little more; LVMHâs watch division has been, to put it charitably, in a state of flux. Jean Arnault is rushing to make his mark at Louis Vuitton watches while his brother FrĂŠdĂŠric presides over a watch group that has underperformed against every other LVMH division for three decades. TAG Heuer canât figure out if itâs sporty or sophisticated, Hublot sales have dropped 30% in two years, and Zenith keeps trying to be a mainstream brand when it should probably lean harder into its movement manufacturing expertise.
Morgan Stanleyâs latest report shows LVMHâs watch division reporting âonlyâ 1% organic growth in the first nine months of 2025 â during a period when Richemontâs specialist watchmakers dropped 13% and even mighty Rolex is feeling the pinch. So actually, compared to the carnage elsewhere, maybe LVMH is doing alright? Low bar, I know.
But the strategic problem is not going away; LVMH lacks the vertical integration of Richemont or Swatch Group, and theyâre nowhere near Rolexâs scale or brand power. Plus, it kinda feels like theyâve been trying to figure out consolidation versus brand autonomy for years; should TAG and Zenith share resources, or should Hublot get folded into something else? Nobody seems to know.
A stake in LJP feels like classic LVMH; just make an opportunistic move to solve an immediate problem (solar quartz supply) and hopefully create options for future strategic decisions (mechanical movements, complex calibres). Itâs a sensible bet during uncertain times, all things considered.
Industry consolidation
Naturally, this deal doesnât exist in a vacuum. The Swiss watch industry is continuing to consolidate around a handful of players who control critical choke points in the supply chain. Swatch Group owns ETA and Nivarox; Richemont has Valfleurier and a lot of other movement manufacturing capability across their specialist watchmakers; Rolex not only makes everything in-house but also controls Kenissi (which supplies Tudor, Chanel, and potentially others). In the same spirit as this deal, Hermès took a stake in Vaucher (which LVMH reportedly tried to acquire but I canât be sure).
My point is that movement supply is a strategic consideration which seems to be growing in importance. The ĂŠtablissage system still works for independent watchmakers, but the big groups prefer control and predictability. They want security of supply, pricing leverage, and the ability to innovate without depending on external partners who might also be supplying their competitors (and who might even run out of capacity when they most need it).
To that end, you will recall that Chanel bought into Kenissi, Breitling is building a three-tier portfolio with Universal Genève and Gallet, presumably with shared movement development, and even smaller players are trying to figure out vertical integration (though I concede brands like Bremont show that doing it badly is worse than not doing it at all).
In that sense, LVMH is a little late to this game, but I see no reason why theyâll not be able to catch up. This minority stake in LJP wonât suddenly make them the next Richemont, but itâs a step toward reducing their dependence on external suppliers, and I think given the current state of the market, having control over your supply chain matters now more than ever.
Citizen Group
Citizenâs position is fascinating, because theyâre one of the largest watchmakers globally (they sell more watches than Longines, Breitling, Tissot, or TAG). While Swiss brands spent the last decade convincing everyone that artificial scarcity is genius business strategy, the Japanese just kept making watches people actually want, and selling them at reasonable prices. Radical concept, I know. đ
Citizen does own several Swiss brands as well - Frederique Constant, Angelus, Arnold & Son and of course, LJP for movement manufacturing. Theyâre vertically integrated, they understand both mechanical and quartz technology, and unlike many Swiss players, they seem to have weathered the current downturn relatively well.
So why would they take on a minority partner in LJP? Money is obviously part of it, and no doubt LVMH brings capital alongside some long-term volume commitments. But I actually suspect Citizen also sees strategic value in tying themselves more closely to a major western luxury group. If the industry continues consolidating, having LVMH as a partner makes Citizenâs Swiss operations more defensible. It also signals to other potential partners that LJP is serious, well-capitalised, and âintegratedâ with major luxury groups.
The press release says LVMH joins Citizen on LJPâs board, and thatâs meaningful because LVMH will get visibility into LJPâs strategy and operations. If Citizen ever decides to sell their Swiss watch assets (which is always possible, given how Japanese conglomerates think about portfolio management), LVMH will now have an information advantage and possibly even a right of first refusal.
Smart move by both parties, really.
La Joux-Perret
For LJP itself, this is validation of sorts. Theyâre competing against ETA, Sellita, Kenissi, and various movement makers in a market where scale makes a big difference. Having LVMH as both customer and shareholder means better visibility on future orders, more capital for expansion, and presumably, some input on R&D priorities.
The solar quartz technology was purportedly developed in partnership with TAG Heuer, so we know that LJP already knows how to collaborate with luxury brands on bespoke calibres. After this deal, theyâve got financial backing and strategic alignment to do more of the same. This could be further solar innovations, mechanical movement development, or even super complications⌠LJP is likely going to be better positioned with LVMH on board than they were as purely a Citizen subsidiary.
The risk, of course, is that LVMH might eventually want full control. Minority stakes have a habit of turning into majority ownership when it suits the larger party, but Citizen Group is no small fry, to be sure. For now, LJP will maintain independence, continue supplying other brands, and now enjoy the benefit of LVMHâs long-term commitment.
What about Sellita?
Frankly, if I were Sellita, Iâd be watching how this unfolds really closely. Theyâve built a solid business supplying Swiss-made movements to brands who canât or wonât develop in-house capability. The SW200 is ubiquitous, their chronograph calibres are everywhere, and theyâve got the volume and pricing that independent brands need.
Except, LVMH is a massive customer; if TAG and Hublot start shifting volume from away from Sellita to LJP, thatâs a big loss for Sellita. Iâm sure it will be more gradual than immediate, and perhaps they have already placed future orders for the next financial year⌠But perhaps all the newer models (probably still under development) will get G100s and existing pieces will continue with SW200s - whatever it ends up being, it is still quite clearly a threat to Sellita.
The flip side is that Sellita has plenty of other customers, since they supply brands across the Swiss industry from small independents to larger players. Losing some LVMH volume might hurt, but it wouldnât be catastrophic. And for all we know Sellita might have already been preparing for this; anyone who follows Swiss watch manufacturing knows that vertical integration has been the trend for years.
Competition is good, though. If LJP now puts pressure on Sellita to improve their own offerings or competitive pricing, everyone benefits. Well, except maybe the movement makersâ profit margins, but you get the idea.
Market context
Swiss watch exports are awaiting good news from the Trump administration, but for now, theyâre not having their best moment. Luxury spending is under pressure globally, and brands are desperately trying to preserve margins as they watch volumes collapse. China remains unlikely to rebound to previous highs, and the UK seems to be holding on by a thread.
Making this sort of strategic investment during a downturn is either inspired or insane; hindsight will reveal all. If LVMH is buying into LJP at a good valuation because Citizen needs capital or wants to de-risk, thatâs smart. If theyâre overcommitting to supply chain integration just as demand collapses and they end up with excess capacity, thatâs obviously less smart.
It feels more likely that LVMH is playing the long game; solar quartz makes sense for their entry-level strategy, and some possible mechanical movement diversification gives them resilience in their supply chain. Having a seat at the table with LJP is icing on the cake, as it creates future optionality. Whether this optionality actually materialises or creates value will depend on execution, market recovery, and I suppose, whether LVMHâs watch division can figure out what it wants to be when it grows up.
Final thoughts
The watch industry loves to focus on tradition, heritage, craftsmanship all that good stuff, but at its core, this is still a business driven by supply chains, manufacturing capacity, and strategic positioning. LVMHâs taking a stake in LJP is strategic manoeuvring dressed up as an innovation partnership.
That doesnât make it uninteresting, though. In fact, itâll be fun to see how this plays out over the next few years. Will LVMH start shifting mechanical movement orders from Sellita to LJP? Will we see more complicated calibres developed specifically for LVMH brands by LJP? Might this minority stake eventually turn into something larger?
And more generally, does this signal that the movement supply pool is about to get even more consolidated? If every major group needs to own or control their movement sources, what happens to the independent suppliers? Does Sellita get acquired by someone, or do they acquire a smaller entity? Or do smaller movement makers get squeezed out entirely because they canât compete?
I donât have answers to these questions, and I donât have enough industry contacts to find out the answers anyway. To be fair, I donât think anyone can answer this right now anyway⌠weâre all just watching the chess pieces move around the board and trying to figure out what the endgame looks like.
For now, this is just another data point in the ongoing consolidation of Swiss watchmaking. Whether that consolidation ultimately benefits the industry, collectors, or just the accountants... well, we will probably only know for sure by around 2028, so perhaps before the next edition of Dubai Watch Week đ
âł Social status games over time
Back in 2009, Eugene Wei wrote a piece in which he discussed the next decade and a half of social media madness - this was the time before most people had even figured out how to use Twitter properly. His essay, âStatus as a Serviceâ, laid out a framework for understanding social networks that, to be honest, still holds up well today (granted, the landscape has been altered in ways that also show just how prescient - but also how limited - any analysis will be)!
Weiâs framework
Wei started with two simple premises; humans are âstatus-seeking monkeysâ, and we look for the most efficient path to accumulate social capital (or status). Nothing revolutionary there, but what Wei also did was map how social networks function as âICOsâ for status.
Each network issues its own form of âsocial capitalâ which in his example, is a unique token earned through âspecific proof of work.â On early Instagram, you posted interesting square photos, on Vine you crafted 6-second videos, and Twitter required witty 140-character hot-takes. The early adopters who mastered these âproofs of workâ accumulated massive followings at a time when the barriers to entry remained low. Later arrivals faced stiffer competition for the same social capital rewards. This is precisely how Bitcoin âmining workâ has evolved too!
The reason I like Weiâs take is because it recognised that this wasnât about communication technology at all. He writes about âMusical.lyâ succeeding with teenage girls because lip-syncing to pop songs was a type of âproof of workâ which that demographic could actually dominate. The constraint unlocked creativity and simultaneously created scarcity; you canât give everyone a participation trophy in a status game, because the whole point is that not everyone wins.
Two-axis model
Wei mapped social networks along two dimensions: utility and social capital. Pure utility plays like WhatsApp or Zoom help people accomplish tasks. Social capital machines like early Instagram or more recently, TikTok, let people accumulate status. The most durable networks (WeChat was a prime example) manage to deliver both.
But there was always a tension here, in that social capital is inherently fragile. It depends on coordinated consensus about what exactly is scarce, and what is valuable; and letâs not forget, this consensus can evaporate overnight. Remember when IRC (internet relay chat) was cool? People used to sent messages to random strangers saying âHi, ASL?âPerhaps this is gibberish to you, but trust me; there was a brief window when being logged into mIRC actually meant something beyond âyou exist and have internet access.â
Groucho Marx
Wei identified what we could describe as the main fragility of status networks; they are subject to âevaporative cooling.â In simple terms, the most desirable users (i.e. the ones who build any network worth joining) are also the first to leave when it gets too crowded. As Groucho Marx put it: âI donât want to belong to any club that will have me as a member.â
This plays out repeatedly in history as I am sure most of you can recall MySpace, or how young people fled Facebook when their parents arrived! This was not because the utility of Facebook diminished, but because the status had declined. You surely canât expect to signal your coolness on a platform where your granny is posting knitting photos. The social capital people had accumulated became worthless, almost overnight.
Fashion brands have understood this cycle and the proof is in the way they deliberately kill last seasonâs designs to maintain scarcity. Tech companies, drunk on growth metrics and network effects theory, kept pushing for more users even when diluting the status value was obvious. They confused engagement with network health, and follower counts with network strength.
Present day
Weiâs framework predicted much of what came next, but the landscape has evolved in ways that expose both the durability and limits of his model. The biggest shift I see is the fracturing of the monolithic social network era.
In 2009, the game was about building the next Facebook i.e. one network to rule them all. Today, we see more of what seems like a portfolio approach. You might collect social capital on Instagram, argue on Twitter, share memes on Discord, maintain your professional persona on LinkedIn, and actually talk to friends on WhatsApp, Signal or iMessage. Weiâs model works perfectly for analysing any single network, but the meta-game seems to have become âmanaging your social capital across multiple platforms.â
TikTok really shines as an example of Weiâs accuracy back then; algorithmic feeds on Tiktok reward âproof of workâ (i.e. creative short videos) regardless of follower count. Brand-new creators can blow up overnight if the algorithm deems their content engaging or interesting, but even TikTok faces the same status deflation problem. What happens when everyoneâs a content creator? If every teen has editing skills that wouldâve seemed professional five years ago, the proof of work becomes much harder, and therefore, the returns diminish. Eventually, the whole thing starts feeling like âhard workâ but without any âstatus accumulation.â
The other shift Wei didnât fully anticipate was the rise of what Rob Henderson later termed âluxury beliefsâ as status markers. In 2025, social capital increasingly derives from what you believe (or at least, what you publicly profess to believe), rather than from what you own or create. An example in the watch community would be when you see the wealthiest collectors defending AD allocation systems which favour them because their ability to maintain minimum-spend thresholds is virtually unlimited. Thus, we saw a shift to status signalling through ideology instead of only through work or content.
Linking status games to watch collecting
Right, hereâs where this gets more relevant to us watch people. Iâd say watch collecting operates on similar status dynamics to what Wei described, but with some interesting differences.
The proof of work in watch collecting is, I think, knowledge acquisition - this is about movements, brands, history, complications and so on. You canât fake deep horological knowledge the way you can fake an Instagram lifestyle. The barrier to entry isnât exactly trivial, and this therefore creates actual scarcity. When someone posts an obscure watch which is somehow relevant or important to horology or history, theyâre showing much more than wealth⌠they are demonstrating theyâve âdone the workâ to know that this thing matters. IYKYK, as the kids say.
But then, watch collecting also suffers from every other pathology which Wei identified in his essay. We have, for instance, got the same status inflation problems; when a grey market dealer can supply anyone with a Daytona, the social capital value of this watch deflates. Or when every middle-manager can finance a Royal Oak, the status signal of such a watch will weaken. Because of this dynamic, all the high-status collectors migrate to increasingly obscure territory; this could be independent watchmakers, vintage pieces that require specialist knowledge or skills to locate, or even just to obscure/unknown brands that arenât yet accessible to newcomers.
The Instagram watch community in particular, embodies so many of Weiâs observations about feedback loops. When you post a NWA (new watch acquisition) online, youâre literally gambling with your status. Will you get the likes and comments that validate your taste, or will you get deafening radio silence? Or even worse, might you receive gentle mockery for overpaying, or for buying the âwrongâ reference? My previous social comparison series is essentially Weiâs status-seeking view, but a tad more academic (obvs!).
What I find interesting is that watch collecting has always been a status game, even before social media existed. There are decades of established hierarchies; I mean, Patek didnât need Instagram to be considered prestigious, did it? The social media wave just made the status competition more explicit, faster-moving, and available to a wider audience; having a wider audience, in turn, makes the status-ranking more sticky or, resistant to change. Incidentally, social media also amplifies catastrophic errors, because the speed at which negative beliefs spread, is accelerated.
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Having said that, watch collecting also diverges from Weiâs social media framework, and thatâs because watches offer actual utility too. Watches tell time, but they also provide aesthetic pleasure, intriguing mechanics, and a physical presence that doesnât depend on any network effects. You can enjoy a watch in the privacy of your own home, completely independent of its status implications. Obviously, you canât do that with an Instagram follower-count.
This speaks to the utility axis in Weiâs diagram, but it matters much more in watch collecting than in social networks. A Lange 1 doesnât stop being beautiful if many people publicly declare Lange isnât cool anymore. Craftsmanship in a piece doesnât evaporate when the social capital does; so essentially, these traits in a luxury watch tend to provide a âfloorâ for the value that âpure status playsâ will always lack.
The physical nature of any watch also creates some friction in the status game. You canât photograph someone elseâs collection and claim it as your own (well, people try, but they eventually get busted!). The âproof of workâ is more verifiable in ways that social media proof of work is not. This makes watch collecting a little more meritocratic than the usual online status games - but of course, it simultaneously also makes it more dependent on access to pure financial capital.
Wei observed that young people dominate social capital accumulation on new platforms because theyâve got time, are good with new technology, and have less existing status to defend. Watch collecting flips the script completely; usually, older collectors dominate because watches require financial capital that younger people lack, and they have had more years on earth to accumulate knowledge which younger people have not. Of course, this isnât some âuniversal truthâ and SDC readership is a testament to this, as it comprises many younger collectors who are both knowledgeable and wealthy. So yeah, no offense intended; all I am saying is in general, the status game in watches, favours those whoâve already won at other status games (career success, wealth accumulation, learning efforts, etc).
Is this a paradox?
What Weiâs essay obviously never set out to discuss, is physical collecting, and that beings me to the crux of this section⌠Watches create a strange feedback loop that social media canât seem to replicate. Let me explain.
On Instagram, your status exists entirely in othersâ perception. Your follower count is your net worth on the platform, visible to everyone, and updated in real-time. This is basically social capital with no underlying asset. Watches, on the other hand, are all-in-one: social capital and personal utility and financial capital. This creates weird incentives that canât map cleanly onto Weiâs framework.
You might buy a watch because you actually do love it, immediately share it on Instagram just because youâre excited, and then also feel gutted when it gets fewer likes than you expected - in other words, the amount of excitement you felt, does not align with the feedback loop from Instagram. But really, the watch itself hasnât changed at all! It still sits perfectly on your wrist, it still fascinates you when you look at the movement, and most importantly, it still makes you smile. The utility really does persist, even when the status play fails.
This is actually quite liberating once you notice it. People who figure this out begin to treat Instagram like a nice-to-have, and not a scoreboard. Theyâll post a new RRCC2 not specifically to flex, but because they reckon a handful of other people might find it interesting and be happy for them. If those few people engage, thatâs great. If nobody cares, the watch is still cool to them... but hang on, is this even possible? Why post it at all?
What happens when everyoneâs playing the game?
Status games are not necessarily more prevalent today than they were in the past. I think the main change today is that everyoneâs conscious of these games! 15 years ago, most people played status games instinctively without examining the underlying mechanics. Now, after more than a decade of thought has been dedicated to Instagram anxiety and social comparison, everyoneâs an amateur sociologist! đ
What this does, is create a new game, where demonstrating youâre âabove the status gameâ becomes the status play. âI donât care about likesâ is itself a status claim. âI collect what I loveâ is a phrase which aims to position you as more sophisticated than those who appear to be âchasing trends.â Itâs status, no matter which way you cut this.
Watch collecting has so many ways to manifest this; someone who posts an inexpensive but very rare old Seiko and says âthis brings me more joy than any other piece I ownâ is essentially making a status announcement; they are signalling taste, confidence, and freedom from conventional hierarchies. Maybe what they are saying is genuine and heartfelt, or maybe itâs a performance. My guess at any time, would be that itâs probably a bit of both.
The only honest position to take, is to admit youâre playing multiple games simultaneously. You collect watches that truly move you; and you notice when others validate your choices; and you feel a tiny ego boost from owning something rare; and you intellectually recognise all of this as it is happening. Being aware of the status mechanics will never exempt you from them⌠the awareness just makes you a more conscious participant.
Does this even matter?
Well, yes! Weiâs 15-year-old essay may be old, but I think itâs really useful because it speaks to what might happen next in the market.
If you have been in the watch game for at least 5 years, you will agree the independents have shifted to being more present in the consciousness of enthusiasts. Before 2020, mentioning Voutilainen or Akrivia in mixed company basically got blank stares. Today, theyâre on many enthusiastsâ wish lists. The âproof of workâ has changed from âI know about these brandsâ to âI own these brandsâ to âIâve been collecting these brands since before youâd heard of them.â
This raises the obvious question: where does status migrate next? I reckon it goes in three different directions (is trifurcate a word?2):
Hyper-specialisation. This means people will not merely say âI collect independentsâ but instead become even more niche about it, for example - âI collect only watches with traditional German silver three-quarter platesâ or âI focus exclusively on 1970-1980s designs by Gerald Genta.â I was trying to be obscure with the examples, but the point in this status game is that the knowledge barrier is the âstatus moat.â
Cultural arbitrage. I reckon western collectors are starting to notice how Japanese and/or Chinese horology possesses depth thatâs been criminally overlooked so far. Being early to appreciating these traditions (and I mean truly appreciating them, not just collecting them as âexotic curiositiesâ or something) will be a new âstatus frontierâ for lack of a better term. There is just too much good stuff being slept on for this not to eventually âpopâ.
Anti-status, status. I guess this isnât exactly ânewâ but I feel this is a growing segement; these are collectors who vehemently reject the whole game and focus on vastly uncool watches. The big difference is that these arenât your average peasant; these are people known to be experienced, knowledgeable, and tasteful as collectors, and them making this pivot, becomes its own form of elevated connoisseurship. (I see you, and your Hublots,
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Look, the key thing here is that all these paths require proof of work that money alone cannot buy. You need time, curiosity, and willingness to be interested in watches to a much greater degree than just putting up the cash to buy and hoard them.
Can you escape?
Of course not; the status game is unwinnable by design. Thereâs always someone with a rarer watch, greater knowledge, more Instagram followers, or just net worth. Wei understood this, which is why his conclusion was essentially âdonât play games you canât win.â But in watch collecting, thereâs an alternative, which is to redefine what winning means in the first place.
What if winning is building relationships with other collectors who really appreciate what youâre doing, or how youâre doing it? What if itâs developing expertise that helps others learn, or makes it easier for newcomers to appreciate the hobby?
Weiâs framework laid out some interesting mechanics; what you do with this knowledge is up to you.
đ Links of Interest
đ Britain Is Preparing Tens of Billions in New TaxesâAgain. Labour government is readying its second major tax increase in two years as it tries to avoid spooking markets. Will this hamper the UKâs emergence as the leading market for Swiss watch exports?
â Watches from movies and TV shows â my âon-screen timepieceâ project. How cool is that?!
đ Introducing The C by Romain Gauthier Carbonium Edition. The brandâs sports watch now in a bold, texture case made in Carbonium.
đ¨ Sothebyâs Is Putting Some Of A. Lange & SĂśhneâs Rarest New Creations On The Auction Block. This article concludes with â⌠it raises an intriguing question: who is parting with such heavyweight pieces so soon after acquiring them?â Well, a little birdie told me this is an irate customer who had some personal issue with ALS staff mistreating them, and this is his approach to getting âpayback.â I appreciate this sounds like a wild unsubstantiated rumour, but itâs not. I am being deliberately vague as I am simply not allowed to say more.
â Highlights: Pocket Watches at Phillips Hong Kong. Observatory triumphs and decorative masterpieces.
đ SJX Podcast: An Offer You Canât Refuse. Coppolaâs FFC and the legacy of F.P. Journe.
đš Richemont shares rise 8% on positive Q2 financials but watchmakers continue to drag on results. Group reports green shoots of recovery at IWC, Panerai, Vacheron Constantin Baume & Mercier, Piaget, A. Lange & SĂśhne and Roger Dubuis.
đ° Confirmed: President Trumpâs Mystery Desk Clock Came From Rolex. Rolex presented the clock to the U.S. people as part of a visit by business leaders last week aimed at strengthening relations, according to a letter.
đŁ Fratello Talks: With Claude Greisler Of Armin Strom. How a drive for innovation has shaped the brand into what it is today. (49 mins; audio or video available)
đ First-ever recording of a dying human brain shows waves similar to memory flashbacks. âIt opens an interesting question to me on when you define death. That plays a big role for questions such as, when do you go ahead with organ donation? When are we dead? Should we record EEG activity in addition to EKG to declare death?â
⤠A Nurse Recorded 300 Final Breaths And Found Only 7 Things That Truly Matter in Life. After listening to the confessions of 300 dying people, I decided to completely change my life.
đŹ While vaping is not risk-free, it is less harmful than tobacco. Answers to some of the most frequently asked questions about vaping and its effects.
đľ Thanksgiving Message from Warren Buffett.
đ The Perplexing Appeal of The Telepathy Tapes. The Telepathy Tapes claims that autistic children have the ability to read minds. Itâs also one of the most popular podcasts in America, with a surprisingly robust audience in tech. Where do their claims come from â and why do so many people believe them?
đ¨âđŤ OpenAI walks a tricky tightrope with GPT-5.1âs eight new personalities. New controls attempt to please critics on both sides with a balance between bland and habit-forming.
â The Skinny Font Taking Over Tech Companies and the White House. After decades of obscurity, a bookish style of lettering is everywhere. Some typeface connoisseurs say itâs gone too far.
đ˘ How a Chinese AI Company Worked Around U.S. Rules to Access Nvidiaâs Top Chips. In Indonesia, semiconductors covered by U.S. export controls are ready to help a Shanghai-based group.
đ¨ How The Worldâs Most Expensive Colors Are Made (1h 37m video)
đ End note
In case you missed this last week:
And hereâs an older post you might enjoy:
On Ariel Adams Essay
Ariel Adams recently published what some have described in WhatsApp groups as âhis strongest piece everâ (btw, nice work Ariel!). Adams argues that the luxury watch industryâs pricing has become unsustainably high and the solution lies in lowering prices to drive volume. The article resonated with collectors who feel priced out of brands they once considered accessible, and Adams deserves credit for articulating a real frustration which many in our community share.
Having read the piece carefully, I find myself agreeing with several of his observations but disagreeing with some of his proposed solutions. So Iâd like to walk through where heâs right, where we donât align, and what the data tells us about this whole situation.
Agreed - the stuff weâre aligned on
Price increases have been aggressive and frequent
Adams is correct that watch prices have increased dramatically over recent years, often with minimal product changes. This is easily observable across the industry. Omega, for instance, now trades at over 30% discounts in the secondary market, and Patek Perpetual Calendars are selling at 70% below retail at auctions! Roger Dubuis just did a Hommage reissue which got people excited, until they discovered it costs âŹ115,000 (ex. taxes)! Urwerk and Ulysses Nardin will release a collab watch which I think could be an epic release, but sadly, has a rather unfortunate 6-figure price tag.
All this lends credence to the argument that primary market pricing has lost touch with what consumers will pay. The so-called mid-range luxury segment is experiencing the most severe pressure yet, and from recent export figures, it accounts for a huge chunk of total Swiss watch export declines.
The investment narrative has collapsed
Adams also rightly identifies how parts of the industry promoted watches as investments during the post-pandemic bubble. This was always questionable, and the subsequent correction has left many buyers holding depreciating assets they purchased at inflated prices. The grey market data confirms this, because brands that relied on hype-driven demand are now struggling, and yet, the ones with a little more substance, and a better supply/demand balance, continue to perform.
Many consumers face affordability barriers
Adams makes a valid point about todayâs collectors facing higher barriers to entry than previous generations. A watch that cost ÂŁ3,000 a decade ago might now retail for ÂŁ10,000, while real wages have actually barely moved. This âpricing driftâ has created outright âaccessâ problems for aspirational buyers.
The mid-market is super vulnerable
His observation that brands caught between âentry luxuryâ and "haute horlogerie are having an identity crisis is in fact, spot on. These brands raised prices during the bubble without necessarily improving their value proposition, and now they find themselves competing with better-positioned players at both ends of the spectrum. Whatâs that saying⌠âTrying to be everything to everybody will lead to being nothing to nobody!â
Disagree - where our views diverge
Manufacturing costs and economics
Adams claims âthe cost of making watches has actually gone downâ through automation and efficiency gains - Iâm not sure this is true. A high-end Swiss movement manufacturer like Vaucher (which supplies brands including Hermès, Parmigiani, and Richard Mille) operates with these approximate economics (which I shared previously):
Raw materials: 36.9% of sales (FY23)
Direct personnel costs: 5.9% of sales
Indirect personnel costs: 11.9% of sales
Marketing: 14.5% of sales
EBITDA margin: 11.2%
For case manufacturers serving the high-end market, gross margins run around 35-45%, and this accounts for Swiss labour costs, limited production volumes, and the realities of working with difficult materials etc. Swiss watchmaking at the luxury tier hasnât really become more automated at all; if anything, it has become more artisanal as brands try to âcreate valueâ. The brands Adams references have largely moved upmarket and invested in hand-finishing, complicated movements, and vertical integration. These choices, if true, would increase costs not reduce them.
Labour costs in Switzerland have also risen substantially; Swiss manufacturing wages are among the highest globally, and the skilled watchmakers required for complex assembly command higher wages. When Adams suggests the industry should simply lower prices because automation has made production cheaper, heâs perhaps accurately describing, for example, the Swatch Groupâs volume segments, but the point is that they operate on completely different economics to haute horlogerie.
Volume versus prestige strategy
Adamsâ central prescription for this ailment is to lower prices and boost volume; this sounds intuitive but ignores luxury brand economics and decades of case studies about what actually works in this sector. Luxury brands that pursued volume strategies through price-accessible products often damaged their brand equity catastrophically.
Gucci in the 1980s-90s licensed everything imaginable, and became ubiquitous and, therefore, nearly worthless. It took years of painful rehabilitation, reducing distribution, and raising prices to restore the brand. Folks in London will remember that Burberry faced similar challenges in the 2000s when their check pattern became associated with ârudeboisâ and not âluxury consumers.â
More relevant to watches, think carefully about what has happened to brands in different market segments over the past few years. Brands with strong names have successfully moved upmarket and are, for now, doing fine. Rolex even overtook Patek in value retention according to recent Morgan Stanley / Watchcharts data despite having raised prices (only slightly) and kept supply fairly tight. Many high-end independents still maintain year-long waiting lists despite having six-figure prices. Their entire business model depends on scarcity and quality, which requires low volume and high prices. It is mostly with mid-tier and entry-level brands that we see the biggest problems; mid-tiers that raised prices during the bubble without improving their offer are really struggling.
So what is the solution? I think this comes back to the whole 'bifurcation narrativeâ and âk-shaped economyâ discussions weâve had on SDC before. The two options are:
Prestige positioning - make watches of exceptional quality, limit production, maintain exclusivity, and charge accordingly. This works for strong brands with the craftsmanship and heritage to justify it.
Value positioning - offer quality at prices that feel rational relative to alternatives. To take a low-end example, Citizen, Seiko, and Casio never stopped thriving because all they do is make watches people want, at prices they can afford. Their combined watch sales exceed every Swiss brand except Rolex. This is certainly more than just dumb luck!
What will not work is being stuck in the middle; too expensive to be a value purchase, but not prestigious enough to justify the premium. If we applied Arielâs proposal across the board, this would push more brands into this death zone.
â100% consumer fundedâ
Adams devoted many words towards explaining that watch consumers fund 100% of the industry through emotional purchases; implying this creates an obligation for brands to lower prices. This is true of every luxury goods industry including fashion, jewellery, fine art, and even supercars. All of these are funded by discretionary emotional purchases⌠isnât that how luxury positioning works?
Veblen goods exist because their price is a signal of exclusivity and social status. When Hermès raised prices 6-7% specifically to offset US tariffs, their stock briefly surpassed LVMHâs entire market capitalisation. Their clientele are ultra-wealthy and so, they didnât care about a 6-7% increase.
This obviously doesnât mean brands can raise prices infinitely; clearly many pushed too far during the bubble, and Arielâ point stands, but his assertion that consumers are simply âloyal to price, not brandâ contradicts both luxury goods research and observable market behaviour.
The industrial base
Adams goes on to argue that high prices are causing Swiss factories to operate at reduced capacity, which then threatens the industrial ecosystem. Heâs correct that many Swiss manufacturers currently face capacity underutilisation, but diagnosis is incomplete.
Looking what little manufacturing data I have, companies like Vaucher forecast continued growth in the high-end segments they serve. Their sales grew between 2021-2023, and they project even more growth leading up to 2026. The high-end segment grew 14% between â22-â23, and the very high-end grew ~15%.
So in reality, watches are not too expensive overall; itâs more like certain segments are struggling and others are thriving. Again, the mid-market is the major problem-area because consumer preferences have polarised. The takeaway is, once again, that universally lower prices will not solve this.
Hire your competitors
Adams then suggested that major brands should hire people who would otherwise start competing independent brands - in doing so, they would reduce market fragmentation and consolidate the industry. Iâm not so sure about this; why do people choose to start independent brands, and what drives innovation in watchmaking?
To my knowledge, and based on all the independents I know, they exist because working at traditional brands proved to be stifling! The suggestion that major brands should simply âhireâ this talent feels like it misses the structural and cultural issues that make legacy brands stifling in the first place.
Moreover, the explosion of independent watchmaking over the past two decades has, in my opinion, enriched the industry enormously. How often do we see independents pushing boundaries that conservative brands wonât explore? Consolidating this creativity into major brands would make the industry worse, not better!
What next?
The industry overall needs to stop pretending that artificial scarcity creates value; it doesnât do so automatically! What they should do is focus on making excellent watches and building quality relationships with customers who appreciate what they do.
Adams is right that many brands raised prices opportunistically during the bubble without improving their offer. Heâs right that this created affordability barriers for aspirational collectors. Heâs also right that the mid-market faces an existential threat if they donât fix their pricing.
I still think his suggestion that the industry as a whole should lower prices universally to drive volume, oversimplifies the market dynamics and ignores how luxury brand economics work in practice. Some brands would probably do better by raising prices, increasing quality (value) and tightening supply. Others (many) absolutely should lower prices and pursue volume. Most still need to do the initial step of figuring out which strategy matches their actual strengths and capabilities before they can execute it with conviction.
I have no doubt the market will sort this out eventually; brands that misjudged their positioning during the bubble will either correct course or fade away. Brands that deliver value to customers, be it at 3k or 300k, will still thrive. The industry doesnât need universal price cuts; I think it just needs a lot more honesty, some strategic clarity, and above all else, watches that justify what they cost.
â
Until next time â
F
đ§ Bonus Link: Youâre More Stressed Than Ever - Letâs Change That
Favourite quote: âIf you feel stressed, you are stressed.â
Excellent, as usual, from Kurzgesagt.
Extra bonus - hereâs a Doomberg essay on the dire straits Britain finds herself in⌠it isnât paywalled so you can use the link or read the attached pdf.
Believe it or not, that ââ¤ď¸ Likeâ button is a big deal â it serves as a proxy to new visitors of this publicationâs value. If you enjoyed this post, please let others know. Thanks for reading!
I found a source who located their dial supplier in China, so this price is not something I made up.
Yes it is! đ
