When the Whispers Refuse to Quiet...

I have driven through Grenchen more than a few times in transit back and forth to Biel/Bienne or Basel. And, I have gotten off the train in Grenchen exactly twice. Once to tour a mostly abandoned Eterna factory back in 2014 or so. The other time to visit the Fortis HQ.

Perhaps the biggest dog still lounging around Grenchen is Breitling. The HQ building is very, very visible from the train. And if you had any doubts as to how interwoven Breitling is to the local landscape, there was a fighter plane mounted in a roundabout until fairly recently -

Grenchen has seen some interesting brands come and go. While not a huge city, it is big enough to boast two railway stations. This was a constant frustration for yours truly, as it was often reminiscent of the old Maine expression-

"Ya cahn't get theah from heah..."

But back to the matter at hand. The whispers in Watch Town about Breitling have grown to open conversations. Breitling's actual performance can't really be ascertained for a number of reasons - it's privately held, and the sales volumes of standard retailers vs Breitling boutiques vs grey market will not necessarily align. Moreover, it is important to understand that the success of a particular Breitling retailer or boutique is more likely down to the quality and professionalism of the team operating them than just the product. A watch can't stand up and tell a customer about itself, no matter how much magic PR pixie dust we sprinkle on it. That is not a knock on Breitling's products - I personally am on the hunt for a Montbrillant Eclipse...

Breitling is perhaps in a weird place for reasons that existed even before Kern partially acquired it from the Schneider family in 2017. It was popular, but the price perception for new product vs pre-owned has always, at least in my 23 years in the game, been skewed. That goes all the way back in my origin story working at Tourneau back in 2002. The San Francisco store where I worked had gotten the exclusive San Francisco rights for Breitling and inevitably the pre-curser to tech bros (finance guys) would come in with their bonus wanting to buy something snazzy. I remember one time in particular, we had just gotten in - you guessed it, a Montbrilant Eclipse! A well-heeled finance guy came in, tried it on and wanted it. When he asked how much, I didn't blink. I quoted him the full retail price. And this is where negotiation met desire. At first he looked as if I had somehow betrayed a sacred trust. Tourneau San Francisco, back then, was referred to by some in the know as: "Deep South". Meaning that some of the assistant managers never met a discount they didn't like. But my point is that Breitling, even then, did not have the most solid identity in terms of "what it's worth". Needless to say, however, I made the sale without budging on the price. And that is where I come back to my earlier point - the hard work and professionalism of the retailer will validate the value of a purchase.

But with the age of Kern came a perceptible ratcheting of prices along with A LOT of product (both in terms of SKUs and the number of said SKUs being produced), and a communication program based more upon celebrity partners than what was going into the watches themselves. And now with the addition of Gallet watches into Breitling boutiques, the message gets a little more convoluted, with some folks referring to Gallet as "Breitling light". 

And finally, we get to the wooly mammoth in the room - the amount of debt that will need to be refinanced. For a deeper dive into the heroes and zeroes, I refer you to Rob Corder's piece in Watch Pro -

https://www.watchpro.com/breitlings-private-equity-owner-faces-e6-billion-debt-refinancing-deadline/

In fairness, 2028 is still on the horizon, but the thing about tomorrow is that it always comes. The trick is to be ready for it ; )

Confirmation - Gallet Is With Breitling

In their latest round of purchases, Breitling have now confirmed the rumors - they are the new owners of Gallet. You can read the Fratello interview with Georges Kern here -

https://www.fratellowatches.com/breaking-news-breitling-acquires-another-historic-watch-brand-its-gallet/

 

This was a move that was foretold by Miss Tweed -

https://misstweed.com/articles/breitling-to-unveil-gallet-revival-next-month

In truth, it is pretty hard to say how this will all play out for the brain trust in Grenchen. Breitling, in and of itself is doing well if the reports are to be believed. But trying to resuscitate two essentially defunct brands is a very different thing than reinvigorating an existing one.

As the quartz crisis, the downturn of '08, and countless other shifts have taught us, brands go dark for a reason. Some come back, others? Not so much.

We shall wait, and we shall see.

Dear Breitling - Shop Your Closet!

There are a GAZILLION "Sleeping Beauty" brands out there. And seeing as Breitling just "whipped it out" to buy an (let's be honest) essentially dormant brand, let's take a moment and consider what US $69 million could have been directed towards given the presence of an  already existing red-headed step-child living somewhat ignominiously under Breitling's roof. I speak, gentle reader. of Kelek. 

Formerly located just around the corner from Eberhard in La Chaux-de-Fonds, it merged / was purchased by Breitling in 1997. Prior to this time there had been a few iterations, but the short-form is that Kelek focused on mechanical movements and had worked with Dubois-Dépraz. It is also worth noting that in the 90s, Kelek was one of the largest manufacturers of automatic, mechanical chronographs. It is also curious to note that Kelek developed a working relationship with one Seiko (Hattori at the time), thus perhaps foreshadowing the great Tag Heuer 1887 movement fiasco of 2009 ; )

In short? For the price of, well, ZERO, the brain trust in Grenchen could have directed time, effort and a much smaller amount of cash towards rebuilding and relaunching something that would only be on life-support for a short period of time, and out of the "recovery room" even faster. But is also, admittedly, not the stuff of nocturnal emissions (that's wet dream to you) from watch nerds swearing up and down that they would buy a Universal Geneve if it were ever revived. These folks are, by and large, the horological equivalent of the now infamous (and largely fictitious) 400 pound guy "hacking a political party" from his bed. Hypothetically they exist, but it begs the question as to why the supply of vintage Universal Geneve watches are not exactly thin on the ground. 

Okay, that's not fair. I am sure that there are some folks out there, but the majority of watch buyers with ready cash listening to Beyonce name drop AP and SPENDING said cash are not borderline or current AARP members with purchasing decision-making impulses driven by nostalgic erections.

Just saying.

So back to the earlier question - when you have a viable brand already in your house, why go out shopping for something that costs you a WHOLE LOT more money than you really need (or likely should want) to spend? A lot of it is sex appeal - be it real or (I suspect in this case) presumed. But a lot of it comes back to what that other great commentator on the watch business opined in Moneyball, fear of looking bad and an inability to objectively and rationally asses value (both perceived and real) -

“There was but one question he left unasked, and it vibrated between his lines: if gross miscalculations of a person's value could occur on a baseball field, before a live audience of thirty thousand, and a television audience of millions more, what did that say about the measurement of performance in other lines of work? If professional baseball players could be over- or under valued, who couldn't?”
― Michael Lewis, Moneyball: The Art of Winning an Unfair Game

What is known is that Kelek would have likely made for a fantastic Oakland A. It was, and continues to be a potentially wildly successful brand if the owner / operator would spend one one-hundredth of the time, energy, and money that Mr. Kerns and Breitling are ready to hurl at UG. But then again, when you consider floating an idea like Kelek, you are flying in the face of the marketing logic of a brand that has been worshiping at the altar of stardom (and its reflective glow) for many years. So we'll let Moneyball summarize why activating Kelek would have made a HELL of a lot more sense than spending the kind of money that usually isn't exchanged without the aid of a getaway car.

“The inability to envision a certain kind of person doing a certain kind of thing because you've never seen someone who looks like him do it before is not just a vice. It's a luxury. What begins as a failure of the imagination ends as a market inefficiency: when you rule out an entire class of people from doing a job simply by their appearance, you are less likely to find the best person for the job.”
― Michael Lewis, Moneyball: The Art of Winning an Unfair Game

And yes, it is a metaphor. The "certain kind of person" is a certain kind of brand - in this instance Kelek ; )

What's In A Name?

Or why you should never make +$69 million dollar decisions based on romantic inclinations.

"Trouble 

(oh, we got trouble)
Right here in Grenchen City 

(right here in Grenchen City)
With a capital 'T' and that rhymes with '(U)G' and that stands for Sleeping Beauty... "

The Music Man

By now you've heard the news from virtually every other outlet on the face of the earth lauding Breitling's (and by Breitling, let's be honest, we mean Partners Group) purchase. The theory being that a "Tiger Team" of super-sexy watch town true believers will be charged with running both brands on a parallel basis. 

While it has been a minute, I was immediately returned to those "thrilling days of yesteryear" when the team in Grenchen brought us the "Breitling Select" and "Squad Points" system which enabled you to attempt to buy (or maybe just lease) a used Breitling "Renta-Center" style!

So what does a squibbed rent to own program have to do with this new "magic beans" / white elephant purchase? 

I'm glad you asked!

Apart from the fact that it has day-dreaming watch enthusiasts becoming emotionally engorged, it also opens up a whole slew of other questions about just what +$69 million dollars has bought. Let's be very, very honest - the big innovations that shaped UG are more than a few BaselWorlds past us now. And to the best of this intrepid journalist's knowledge, the purchase price did not include any facilities, significant product stock, or anything else beyond historical documentation, plans (now somewhat dated), and a name and the right to use it. This is obviously a supposition, but one that is based in the reality of shuttered (or semi-shuttered) brands trying to relaunch. 

So we will need to see what shakes out, but given enough time and money (yikes!), perhaps these magic beans will sprout a beanstalk...