WatchPro on Conglomerates and Indies
Armando Zuccali's Veblen 2.0 idea is full of holes. Good macro analysis, dodgy framework, and a case study that contradicts its own thesis... Classic SDC fodder.
Many of you probably haven’t even finished yesterday’s SDC Weekly, so apologies for flooding your inbox with watch fodder. WatchPro published something yesterday that I initially thought better of responding to... but this morning I noticed someone shared it in our WhatsApp group and suggested it was interesting, so here we are.
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Estimated reading time: ~10 minutes
Before we start
Based on the WhatsApp exchanges this morning, I want to preempt a particular genre of commentary. My response to the WatchPro article mentions F.P. Journe quite a lot, because the original article mentions F.P. Journe quite a lot. It’s neither positive nor negative about Journe or his watches. The fact that Journe is mentioned at all is a matter of framing; the article builds an argument around Journe’s auction data, and any discussion around the article kinda needs to engage with how that data is used.
And while we’re at it, I’ll happily admit that on average, the Journe ‘fan club’ has become pretty incorrigible nowadays. I used to count myself as an avid Journe enthusiast back when the crowd was smaller and I guess, less intense. There are still plenty of reasonable Journe fans who can hear the name without reaching for their pitchforks, and I’d like to think I’m one of them.
That said, there’s a difference between ‘getting defensive’ about Journe criticism and having a normal conversation that happens to involve Journe. If someone misuses Rolex data to build a dodgy argument, pointing that out doesn’t make you anti-Rolex or pro-Rolex, does it?
With that out of the way, let us proceed!
WatchPro’s article
Yesterday, WatchPro guest writer Armando Zuccali wrote a long investment thesis for independent watchmaking, and at first glance, it comes across as a well-substantiated analysis underpinned by lots of useful facts. The macro parts are in fact done well, but the investment thesis parts are rather ambitious. In the end, he goes on to use the factual macro data to build a framework which is not really substantiated by the evidence he provides. This is a problem I thought was worth writing about because all the neat wordsmithing is doing a lot to disguise a shaky foundation.
The article has several numbered sections, but in general I think it’s putting forward three arguments. First, the global macro environment (tariffs, China slowdown, strong franc, record gold prices) is squeezing conglomerate watch divisions in permanent ways i.e. not a cyclical downturn which will rebound. Second, the secondary market now functions as a kind of ‘objective referee’, and that referee is awarding points to independent brands. Third, the previous two points have led to some sort of sea change in how luxury value works, which Zuccali then dubs “Veblen 2.0.”
Macro stuff
Might as well start with the easy bit. The macroeconomic analysis is mostly unarguable.
I won’t rehash the numbers here since you can read the article to revisit those; none of it is controversial. SDC has covered this data extensively (Morgan Stanley reports, the FHS figures, the K-shaped bifurcation between blue-chip brands and the struggling middle). If I had to criticise anything, I’d actually say Zuccali undersells the mid-tier crisis.
Remember, 29 of the top 50 Swiss brands declined year-on-year in 2025, with 14 posting double-digit drops. Four privately held brands now control nearly half the entire Swiss watch market by value. In other words, the middle-squeeze is real, and if anything, it’s getting worse over time. So yeah, no arguments so far, but does Zuccali’s proposed treatment make any sense?
Secondary market as the judge
This is where it gets hairy... Zuccali’s central “empirical”1 claim is that the secondary market now functions as an “empirical judge with no budget and no allegiance,” and it delivers verdicts on value that the primary market can’t manufacture. His star witness is F.P. Journe, whose watches achieved 176% of high estimate across the November 2025 Geneva season, up from 146% in 2024.
That’s a verified data point and it seems impressive at face value. Except, using Journe’s auction performance as evidence for a more generalised claim of the superiority of “independent watchmaking” is like pointing to Hermès’ share price as proof that the entire fashion industry is thriving. In this context, Journe is a category of one. He’s a living master approaching retirement, and the watch world is arguably at ‘peak Journe’ right now. Meanwhile, the collector base has expanded a lot but supply has stayed roughly flat given they don’t produce much. And sure, there have been specific lots boosted by celebrity association or excellent provenance (e.g. the Coppola prototype that sold for $10.8 million was a unique piece owned by a Hollywood legend) but this isn’t the same as any regular Journe at auction.
The Unpolished data that Zuccali cites is quite instructive, but definitely in a way he didn’t intend. The table shows 12 Journe lots, 6 Urban Jurgensen lots, and 142 Patek lots. If you wanted to be provocative about it, you could argue that Patek (142 lots averaging CHF 257,654 and still clearing at 101% of high estimate) is actually the more impressive story here. That’s relatively (to Journe) huge volume moving at or above expectations, and some might argue that is harder to sustain than a handful of lots from a maker who produces around 1,000 watches a year.
I appreciate that Zuccali might argue that Journe is just the most visible example and that his thesis is really about indies in general. But that’s the problem - the article doesn’t provide any data for indies in general. It provides data to substantiate Journe, a single data point for the Coppola prototype, a retail-versus-secondary comparison for one Élégante reference, and then asks us to generalise. If the independent category is outperforming as a category, where’s the category data? Don’t show outliers and call it a trend.
As for the broader point about secondary market premiums on Journe pieces… the Élégante 48mm trading at 2.5–3.5x retail is presented as evidence of “creative credibility.” Really? It could equally be evidence of ‘managed scarcity’ plus speculative demand - these are the same forces that drove Nautilus grey market premiums during the bubble.
This might annoy people in both camps, but the secondary market is generally a useful signal and a terrible judge. Judges are supposed to be impartial, consistent, and reasoned. The secondary market is about sentiments… it’s erratic, trend-driven, and susceptible to manipulation. Auction results reflect who was in the room (or on the phone) on a given day, how much champagne had been served, and whether a particular collector was feeling feisty with a rival in the room. These are of course ‘legit’ price discovery events because the price paid is the price paid, and it’s on record for all to see… but treating them more like scientific measurements of “cultural credibility” is surely a stretch.
Veblen 2.0
Zuccali then introduces what he calls “Veblen 2.0” in a way which might even confuse the LLM which wrote it:
The original Veblen framework, developed in The Theory of the Leisure Class (1899), describes conspicuous consumption as the primary mechanism by which luxury goods acquire and sustain value.
The object signals social rank within a legible hierarchy. Brand authority — supported by pricing discipline, controlled distribution and heritage claims — manages the hierarchy and sustains the signal’s credibility.
This model remains operative, particularly in the ultra-high-net-worth segment above CHF 50,000, where Patek Philippe and A. Lange & Söhne function precisely as Veblen described.
What I designate Veblen 2.0 is the distinct mechanism by which luxury value is attributed in the collector community — particularly among the Millennial and Gen Z cohort, and particularly in emerging collector markets where the Veblen 1.0 hierarchy has not yet been internalised as the primary reference frame.
Under Veblen 2.0, value derives from: (i) verifiable creative provenance — the watch was made by this person, in this place, in this number; (ii) demonstrated production integrity — the maker chose the harder material, the more complex solution, the less commercially expedient design; (iii) collector consensus — the secondary market clearing price, not the primary retail price, is the credibility signal; and (iv) community membership — ownership signals participation in a collector community organised around shared aesthetic judgement rather than shared income bracket.
Before I get into his version, let me quickly go back to the original. Thorstein Veblen was a 19th-century economist who noticed that some goods become more desirable as they get more expensive. He called this “conspicuous consumption.” The basic idea is that you buy a Rolex partly because it’s a good watch, but also because other people know it’s expensive. The high price is the point. Rolex controls the hierarchy and distribution, and they also decide who gets to signal what to whom. The article calls this Veblen 1.0.
Zuccali’s argument in this article is that Veblen 1.0 is being replaced. In essence, Veblen 1.0 says: “I bought this watch because it’s expensive and you know it’s expensive. The brand told me it was prestigious, and I believe the brand.” Veblen 2.0 says: “I bought this watch because I know who made it, I understand why it’s good, and the people whose opinions I care about agree. I couldn’t care less if a stranger on the street recognises the logo.”
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Credit where it’s due… this is an interesting idea, and there’s something to it which can be explained without trying to rewrite Veblen’s theory. The way collectors talk about Rexhepi, or early Journe, or someone like Kari Voutilainen, does tend to feel qualitatively different from how people talk about buying a Submariner. The value proposition is more personal, and appears to be more knowledge-dependent i.e. “I’ve done my homework and I know why this matters.” If Veblen 1.0 is “everyone knows this watch is expensive,” then Veblen 2.0 is “if you know, you know.”
Fair enough, but then, when Zuccali tries to provide a “Rigorous Definition,” the empirical test he proposes is essentially a circular argument. Veblen 2.0 “predicts” that ‘creative credibility’ will outperform marketing spend at auction, and then he points to Journe outperforming conglomerate brands at auction as evidence of this in action. Well, you could explain the exact same data with boring old supply-and-demand dynamics, and without needing a new theoretical framework at all. Journe makes very few watches. Lots of wealthy people want them. Price goes up. You don’t need to invoke Thorstein Veblen for that; you just need Econ 101.
Moreover, the Journe results are still Veblen 1.0 in my view. It’s still conspicuous consumption, and it’s still signalling status. You’re just signalling a different kind of status. Instead of ‘I’m rich enough to buy a Rolex,’ you’re signalling ‘I’m knowledgeable enough and connected enough to own a Journe.’ The currency may have changed from money to taste, but the game is no different.
There’s also a demographic problem with his thesis. Zuccali claims Veblen 2.0 is “particularly” operative among Millennials and Gen Z. But the people bidding $3 million on a Résonance Souscription at Phillips are overwhelmingly not 28-year-olds discovering independent watchmaking through Instagram. These are established, seasoned collectors with serious money and often, with deep knowledge. The median bidder at Phillips Geneva probably has more in common with Veblen himself than with the TikTok-native collector Zuccali seems to be imagining. The “emerging collector” narrative is appealing, but the auction data mostly reflects the preferences (and bank balances) of a very established collector group.
On India
The geographic section is where the article’s optimism totally outruns its evidence. India posted 35.2% growth in Swiss watch exports while China contracted 34.8%. Zuccali calls this “mirror symmetry” and suggests it represents the great geographic rebalancing of Swiss watchmaking.
Any data analyst will tell you that percentages without absolute numbers are dangerous friends. India’s Swiss watch import base was historically tiny; 35% growth on a small number gets you to a slightly-less-small number. It emphatically does not replace the volume lost from a 35% drop in China. It’s a bit like celebrating that your side hustle grew 35% last year while your employer cut your salary by 35%. The percentages may appear “symmetrical” but the situation is obviously far from it.
And the suggestion that independent watchmakers have a special opportunity in India because “the incumbent brand hierarchy is not yet calcified” doesn’t make sense either. When a new wealth class starts buying luxury goods for the first time, they overwhelmingly start with the most recognisable names. You buy Rolex first, then maybe Patek, then maybe, after collecting for a while and learning and meeting people, you discover Voutilainen. The idea that budding Indian collectors are going to skip the first three phases and go directly to independents is highly aspirational.
On Louis Erard
Zuccali uses Louis Erard as a case study for accessible independents, and argues that the regulator format constitutes an “open architectural brief” which generates identity through collaboration instead of consuming it through repetition. The article’s shorthand for this is that “Architectural identity scales. Fixed aesthetic identity is consumed by scale.”
At first I was bamboozled… like, what does he mean? Eventually, I came to think of it like this; a brand like Panerai has a fixed ‘aesthetic identity’ - it has a cushion case, a crown guard lever thing, and big sandwich numerals. Every new Panerai has to look like a Panerai, and every new Panerai that looks like a Panerai makes the next one feel slightly less fresh. The 500th variation on the Luminor doesn’t excite anyone. So in the end, this ‘identity’ is a well you keep drawing from, until eventually it runs dry.
Louis Erard’s regulator format, Zuccali argues, is more like a stage than a script. The basic setup is to have hours, minutes, and seconds on separate subdials in an asymmetric layout. This gives each collaborator a structure to work within, but what they do inside that structure is entirely their own choice. Alain Silberstein makes it playful and colourful, Vianney Halter makes it look like it fell out of a Jules Verne novel, and Konstantin Chaykin does something weird with it. In other words, every collaboration makes the format feel more interesting because the identity lives in the architecture (the stage), and not in a single aesthetic (the script).
It’s definitely a clever way to frame everything, but if the thesis is that the secondary market is the ultimate empirical judge, then surely we should see secondary market data for Louis Erard as evidence?
What are the Silberstein, Halter, and Chaykin editions actually trading at? Well, here’s a Chaykin example below retail but of course, Zuccali doesn’t go there… he does however acknowledge that Louis Erard’s “revenue, margin and volume data are not publicly audited.” So essentially we’re being asked to accept a thesis about the superiority of independent watchmaking based on a private company’s unauditable performance. As an exercise in peak irony, this is difficult to beat - the article insists that the secondary market provides empirical, verifiable truth, and then bases its case study on a brand for which no such data is presented. 😂
So what?
Look, I think the question this article raises by accident is much simpler than anything Zuccali intended: why do smart people keep trying to build elaborate theories around what is, in the end, a pretty small market?
In reality, the entire independent watch segment - and I mean all of it, from Journe down to the dude who was hand-engraving LE dials during power cuts in Ukraine - is a mere rounding error in the global luxury economy. Granted, independents are doing interesting things, and some are thriving. The collector community absolutely has matured and developed more sophisticated taste, and that’s great.
But the macro data Zuccali presented so well tells a different story from the one he thinks it tells. All it shows is that four mega-brands are consolidating power, that the middle is hollowed out, and that everyone else is fighting over scraps. That story has little to do with “independents winning” and it’s purely about market concentration. Independents are actually just bystanders to it, and yeah, many are benefiting at the margins, but they are definitely not driving the plot.
And just to be clear about where I stand on this… I obviously think independent watchmaking is exciting, and SDC has championed smaller makers since I started. The point of this response isn’t to say independents are bad or that conglomerates are good. I just think that dressing up legitimate enthusiasm in pseudo-academic frameworks with cherry-picked data doesn’t help the independents at all. In fact, it actually undermines them, because it invites exactly the kind of scrutiny that highlights the argument’s weaknesses. The independent ‘movement’, or whatever you want to call it, deserves far better advocacy than this.
Conglomerates are struggling, some independents are thriving, and Journe is just Journe. I hope you agree we don’t need to update Veblen to explain any of it.
His words not mine