Audemars Piguet will make at least 50,000 watches this year, according to its chief executive François-Henry Bennahmias, and is building the infrastructure to increase this to around 70,000, which would be more than Patek Philippe produces.
AP overtook Patek Philippe last year to become the fourth largest Swiss watchmaker with turnover of CHF 1.58 billion versus Patek’s CHF 1.53 billion, according to investment bank Morgan Stanley.
Both are private companies that do not publicly share financial information, but Morgan Stanley’s annual report on the state of the Swiss watch industry is widely respected.
That report said AP’s turnover was achieved with the sale of 45,000 watches in 2021, so production of 50,000 units this year would be more than 10% up.
If the company made 70,000 watches per year, and maintained its current average sale price, its turnover would increase to around CHF 2.5 billion.
Competitors will not be standing still but, for context, turnover of CHF 2.5 billion would make Audemars Piguet Switzerland’s second biggest watchmaker, leapfrogging Cartier (2021 turnover of CHF 2.4 billion, according to Morgan Stanley) and Omega (2021 turnover estimated at CHF 2.2 billion).
“The industrial structure that we are currently building could bring us to 70,000 watches per year long term. In 2022, we will certainly reach 50,000 watches, and in 2023 we may increase by 5%, but we are not in a rush. We first aim at creating our production capacity,” Mr Bennahmias says in an interview with Switzerland’s Luxury Tribune.
It may be the case that, by the time Audemars Piguet is making 70,000 watches per year, it is also selling them all through its own retail stores.
The business has been on a relentless march to reduce the number of retail partners it works with and to sell as much as possible directly to consumers.
Mr Bennahmias has a stated aim of selling every AP watch from a branded store or one of its off-street AP Houses, although there are retail partners running branded stores.
In 2021, according to Morgan Stanley, wholesale distribution to retail partners accounted for 28% of its sales.
“The biggest strategic change for Audemars Piguet over the last ten years has been the transition from distributor to retailer. Before, we used to sell “400 watches once” to a retailer, whereas today we sell “400 times one watch”. It’s not the same thing,” Mr Bennahmias tells Luxury Tribune.
“Five years ago, no store [in the world] sold 1,000 watches a year. Today, we have ten points of sale at that level,” he reveals.
I tried purchasing a Royal Oak in 2021. It was the worst experience. The Las Vegas boutique told me I’d have to buy an unspecified number of Code 11s, ladies’ pieces, and Offshores before I’d even be considered. Another boutique literally had zero idea what they would have for sale for the year. The Chicago boutique had a 30 year interest list for a piece that it had NEVER received. Every time I called to inquire it was a different story. How do you buy a watch when the brand and is representatives literally don’t know anything about availability. Increasing production isn’t going to fix the underlying poor customer service and communication this brand suffers from.