An Exclusive Interview with President of Ulysse Nardin: Why Do We Leave Kering?

April 20,2022

This January, Kering announced that it it has completed the sale of its entire stake (100%) in Sowind Group SA, which owns the Swiss watch manufacturers Ulysse Nardin and Girard-Perregaux, to its current management.

As president and CEO of Ulysse Nardin and Girard-Perregaux, Patrick Pruniaux spearheaded the sale behind the curtain. LuxeCO interviewed him online, and he shared more details on the sale, strategic brand management and his insights on watchmaking industry and the Chinese market.

Before Patrick Pruniaux held senior positions at LVMH-owned TAG Heuer in 2005, he had had a career in wines and spirits.

In 2014, he joined APPLE as MD, handling businesses in the U.K. and Ireland. He also was a member of the executive committee in Europe, the Middle East and Africa.

In 2017, Patrick Pruniaux was appointed as CEO of Ulysse Nardin. He was promoted as head of the Watches & Jewelry Activities of Kering, in charge of Ulysse Nardin and Girard-Perregaux, one year later.

 “I believe that independent watch-making brands can have more opportunities to grow.”

The finalization of the deal would signify Ulysse Nardin becoming an independent watchmaker again. In retrospect, the brand has changed hands twice in 176 years of history.

Back in 1846, at only 23 years old, Ulysse Nardin founded the namesake brand in Le Locle, Switzerland. The company was then known as one of the earliest providers of highly precise marine chronometers for merchant ships and navy ships around the world.

In 1983, Swiss businessman Rolf W. Schnyder acquired Ulysse Nardin and developed a host of complication timepieces inspired by astronomy. In 2011, his wife Chai Schnyder took over the businesses after his death. In 2014, Kering announced its acquisition of Ulysse Nardin.

Issued in mid-February 2021, the annual financial report of Kering showed that watch and jewelry took up only 8% in sales of the group total, far lower than leather goods (50%), shoes (21%) and ready-to-wear (15%). After selling the duo, Kering no long owned any timepiece brand, which would be conducive to it focusing on clothing, leather goods and jewelry.

Patrick Pruniaux stated: “Fashion and jewelry business focus more on store and retail channels, whereas in the watch-making industry, we pay more heed to establishing partnerships with wholesaler and retailer.”

According to Mr. Pruniaux, wholesale accounts for over 90% of businesses in Ulysse Nardin. “Though our competitors are developing their own retail networks one by one, we still believe that wholesalers and distributors are two crucial components of the industry. Some top independent watchmaking brands even only sell their products through wholesale channels.”

Kering has never revealed Ulysse Nardin’s performance data separately. However, according to investment bank Morgan Stanley's Top 50 Swiss Watch Company Ranking issued in March 2021. In 2020, Ulysse Nardin generated 40 million Swiss francs in sales, ranking the 45th among all Swiss watchmakers.

LuxeCOWhen did you start the negotiation with Kering on the transaction?

Patrick PruniauxI won't give you any specific date, but it's a process that took a little bit of time.

LuxeCOWhen will the transaction be finalized?

Patrick PruniauxIn a couple of weeks.

LuxeCOWho spearheaded the current management’s acquisition of Ulysse Nardin and Girard-Perregaux?

Patrick Pruniaux:I'm personally leading the purchase.

Kering expressed their intention to sell the two brands I was managing. I firmly believed that we were doing the right thing and the two brands could do well and grow in the future. Then, I proposed to buy them back from the group. I invited part of the management team to join me as well as some investors who shared the same vision and were forward-looking on the brand’s potential in the long run.

It took a little bit of time for Kering to ruminate on different options. We were one of them, and we managed to purchase the two brands.

LuxeCOWhat motivated you to make this decision to buy the two brands?

Patrick Pruniaux: Our passion. There is a lot of passion internally and also from the end consumer and watch collectors. It’s clear that Ulysse Nardin and Girard-Perregaux are going to flourish. Kering has been an amazing stakeholder. However, on the other hand, I also believe that independent brands can grow a lot. The combined history of two brands exceeds 400 years. You know it's very rare to have the opportunity to buy and to help grow brands that are centuries old.

Brand Strategy: Keep Being Focused and Innovative

After taking over from his predecessor, Patrick Pruniaux, the new CEO of Ulysse Nardin, formulated a roadmap for the brand, featuring “Accelerating Development of Globalization Through Innovation and Outstanding Craftsmanship”. In 2019, he took a lead in the R&D of Freak X and introduced aviation-grade carbonium into the manufacture of luxury watch-making. Meanwhile, under his leadership, the brand released a series of more affordable timepieces.

LuxeCO: You were in charge of watch business at Apple. What do you benefit most from your previous experience at Apple?

Patrick Pruniaux: The experience was great, of making Apple watch the outstanding and by far the best smart watch in the market. This also has convinced me that the luxury watch business is very promising; because I believe when consumers wear a product, they're looking for much more than some functionality but also something unique such as liberal expression of emotions. I think you can probably only find such freedom in no other than luxury/fashion industry. In today's world, such kind of expression is probably one of the main tractions for consumer.

If you understand the brand, you would find that liberty and authenticity are actually two of features that define Apple. We all know that Apple strives for excellency, but for sure the same mentality is robust and long-lived in the luxury watch industry and is shared by brands like Ulysse Nardin and Girard-Perregaux. For a long time, you're making sure that you’re delivering excellent experience to end consumers.

LuxeCO: What major developments have you experienced in the industry over last one or two decades?

Patrick Pruniaux: There are a lot of things happening. I mean, first, brands are global, more global than ever. Second, the industry has been really focusing on improving their brand equity and securing good and luxurious experience for young consumers. This probably plays a very crucial role in creating a great experience for end consumers and making sure that the product will be perceived at its full value.

Another trend is an obviously growing appetite for less classical timepieces emerging especially in East Asia, but we appreciate such appetite and understand that it is a very strong trend. However, I must say that, overall, brands are competing with each other to guarantee great distribution, great product and smooth communication with end consumers.

LuxeCO: What do you think is the key to success for an independent watchmaking brand?

Patrick Pruniaux: I think when you have a very long-term view, you could act with a high sense of emergency, which makes the brand successful. And it's true for most of the independent brands.

LuxeCO: What strategies have you implemented in the past several years since you took the helm in 2017?

Patrick Pruniaux: It's really about being extremely focused, creative and innovative.

First, to make sure a sense of exclusivity would be understood by watch collectors, which means sometimes less products but very innovative ones, with great stories. It’s the same way with distribution, which is highly quantitative. Over the last couple of years, we have streamlined almost 40% of our distribution worldwide.

The same also applies internally. It is not as a brand that is feeding itself out of innovation in movements or in materials. With all of these combined, the two brands can grow. And this is clearly our strategy.

And we're in a business of emotions. We create emotions out of something extremely technical and extremely sophisticated. We will continue to innovate, including with some of the product we are launching today.

 “We will not change Ulysse Nardin’s product strategy”

Between 1980’s to 90’s, Ulysse Nardin partnered with watch-making genius Ludwig Oechslin to create the Trilogy of Time series, featuring three signature timepieces known as masterpieces of astronomy-inspired complications to this day, including Astrolabium Galileo Galilei, Planetarium Copernicus and Tellurium Johannes Kepler.

In 2001, Ulysse Nardin unveiled Freak, as the world's first luxury watch in the history of watch-making to feature silicon components. Recently, Ulysse Nardin presented the brand-new Freak S, its first collection equipped with double oscillator with a differential and the flying carrousel, which demonstrated how the brand broke new ground in materials again. The Ulysse Nardin Freak S is released in a limited edition of 75 pieces. Only 40 of these will be produced in 2022.

According to Ulysse Nardin, after its separation from Kering, there is chance for them to collaborate with Ludwig Oechslin again.

LuxeCO: Are there any changes in manufacturing or operation when the brand becomes independent?

Patrick Pruniaux: No, it's the same strategy. It's exactly the same search for excellency, quality and also the human touch. There is just so much we can manufacture. And it's also the reason why people come to us, because they know it's a product that could be recognized on them. On the other hand, you won't find it on everyone, just because we don’t produce so much. We are exclusive.

LuxeCO: What’s Ulysse Nardin’s most prominent advantage in craftsmanship?

Patrick Pruniaux: We are probably one of the most integrated manufacturers, and people tend to ignore that; but we have mastered more than 60 different techniques in movement-making. We even handle the assortment of watch parts. So, this is very unique.

LuxeCO: It seems that the current production capacity of premium watches is unable to meet the demands of consumers, especially since the pandemic. What do you think are the causes? Is there any plan for Ulysse Nardin to increase the capacity?

Patrick Pruniaux

Indeed, we’ve built up part of the production capacity over last year, but there is only so much we can do. It’s not viable in the long run. And again, we are in a very different race, the race of craftsmanship instead of production. Actually, the laser industry adopts the same strategy. In the laser industry, some players are smaller than others, but they want to keep their production limited. It's very natural.

In China, Ulysse Nardin has caught the attention of the younger generation

Ulysse Nardin’s initial contact with China can date back to 1936 when Ulysse Nardin was the only watch brand documented in a Chinese reference book. In 1937, Ulysse Nardin delivered precise astronomical chronometers to Purple Mountain Observatory, CAS in China. The Sheshan Observatory also uses observatory chronometers provided by Ulysse Nardin.

Nowadays, Ulysse Nardin’s customer group is becoming more diverse in China. For instance, it has caught the eye of female customers with its unique diving watch models exclusively designed for women. Currently, around 30% of its Chinese customers are female. Freak and Blast both strongly strike a chord with young timepiece fans, with its youngest consumer at less than 20 years old even.

In 2019, Ulysse Nardin revealed its first flagship store in China at Xintiandi, Shanghai. Currently, the brand owns 8 stores in Greater China, and 7 of them are located in mainland China. Meanwhile, it has made its way into duty-free outlets in Sanya.

LuxeCO: What kind of distribution strategy does Ulysse Nardin use in China?

Patrick Pruniaux: There are a few exceptions. In China, we have a mixture of our own stores, franchise, boutiques and also a couple of multi-brand stores. But in the rest of the world, we operate with the best retailers quite often.

LuxeCO: What's the role or the function of an independent store for Ulysse Nardin?

Patrick Pruniaux: First, it's to share experience and explain even better what we stand for as a brand. That's probably the most important part. It helps to sell, and it's like having a cradle for brand promotion.

 “Watch is probably the most sustainable luxury goods”

Ulysse Nardin has set up its own R&D division dedicated to exploring viable materials for watch-making in the sea.

In October 2020, Ulysse Nardin launched R-STRAP, a type of strap made of recycled fishing nets, marking Ulysse Nardin’s first milestone on the path of circular marine economy. In the end of 2020, Ulysse Nardin teamed up with FIL&FAB, the first French institute committed to the recovery and reuse of decommissioned fishing nets, to design Diver Net together. The strap of Diver Net is made of PET recycled from the sea.

LuxeCO: In your opinion, what does sustainability mean for a Swiss watch brand?

Patrick Pruniaux: Ulysse Nardin has been linked to sustainability since almost 10 years ago. Internally, to limit energy consumption and carbon footprint, we’re pairing with some partners to find the best way to develop recyclable materials.

Sustainability is one of our priorities. The other is quality. It has to be there.

And when you think of it, watch is probably the most sustainable luxury product ever. I mean, Ulysse Nardin’s movement can live forever as long as you do some maintenance from time to time.

LuxeCO: Do you plan to cooperate with new startups in this regard?

Patrick Pruniaux: Yeah, we’ve already done that. Actually, we’ve worked hand in hand with a couple of startups that strive to bring in innovative and sustainable materials because they also need people to test whether the material they're producing or we’re producing collectively meet the quality standards of luxury product.

LuxeCO: What do you think of the secondhand market?

Patrick Pruniaux: It's interesting. I think a growing number of collectors are the cause of it. The market is dynamic. I think it's good.

For us, as we manufacture watches that have a longer life cycle, we absolutely want to guarantee that whoever brings back a watch for us to repair can have a good experience. I think we can take pride in being one of the best providers of after-sales services in the watch industry.

| Photo Credit: Ulysse Nardin

| Writer: Xiaoli Zuo


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