Rolex makes a flying start to the year (I)

It’s a touchy subject. For Rolex at least. That its name should be linked to the rioters who spilled onto the streets of Milan on the opening day of Expo Milano 2015 – and by prime minister Matteo Renzi no less – didn’t go down well. According to the head of the Italian government, the destruction wreaked on the city centre was the work of “the usual thugs in hoodies and spoiled brats with Rolexes.” Rolex was quick to riposte, in the person of Gianpaolo Marini, CEO of Rolex Italy, who published an open letter in several national newspapers: “As a Milanese myself, I can only admire the sacrifice and devotion of the police. I must, however, express my profound regret and disappointment at your words, which associate smashing shop windows with wearing a Rolex watch. […] The enormous impact of your words has unacceptable consequences on the image of Rolex which finds itself associated with the devastation in Milan and subversive violence.”

Gianpaolo Marini went on to ask Matteo Renzi to retract his comments. While not wishing to add fuel to the fire, the photo which allegedly supports Renzi’s claim is hardly convincing. It shows a black-clad rioter in a hood. She is holding spray cans and wearing a watch. It would, however, take a brave man or woman to categorically affirm that the watch in question is a Rolex, and more to the point a genuine Rolex.

A sixth CEO

Apart from this little blip on the horizon, the sun continues to shine on Rolex in 2015, which is also the year Jean-Frédéric Dufour, ex-Zenith, takes up his functions as the new chief executive. News of Dufour’s appointment dates back to April 2014, but given the brand’s habit of vetting the finer points of every process, things naturally take time. In particular when the “thing” in question is the investiture of a new and hopefully long-term CEO.

Dufour is the third incumbent since the surprise resignation in 2008 of Patrick Heiniger, now deceased. He follows on from Bruno Meier (2008-2010) and Gian Riccardo Marini (2011-2015). All their predecessors, in contrast, enjoyed much longer tenures, beginning with Rolex founder Hans Wilsdorf (1905-1960) and his two successors, André Heiniger (1963-1992) and son Patrick (1992-2008). After fourteen months adjusting to his new role, Jean-Frédéric Dufour will officially take up office on June 17th, at the Rolex general assembly.

20% of the high-end market

Dufour will take the reins of a company which appears to be doing better than ever before, bearing in mind that financial information isn’t made public: Rolex belongs to a foundation whose accounts are one of the most closely guarded secrets in the entire canton of Geneva. The best indications of its business are financial analyses by the likes of Vontobel, a private bank in Zurich whose forecasts are taken seriously by industry observers. It states that in 2014, Rolex confirmed its leadership position in the segment for watches with an export price above CHF 3,000 (retail price ± CHF 8,000). With sales of 780,000 watches last year generating turnover in the region of CHF 4.5 billion, Rolex is thought to have cornered 20% of this market, ahead of Omega (17% – 720,000 watches) and Cartier (13% – 620,000 watches). Again according to Vontobel, they are followed by Patek Philippe (4%), Audemars Piguet and Breguet (2% each), then Vacheron Constantin (1%), all brands with smaller production but significantly higher average prices.

Better still, Rolex is believed to have progressed more than Cartier and Omega (which gained around 5% on last year), thanks in particular to a strong presence in the US market which grew 6.2% in 2014 at a time when Asia was struggling.