Reuge takes over Mermod Frères for its musical watches

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Music box made for the 60th anniversary of Ferrari and inspired by the 599 GTB engine © Reuge

The luxury music-box manufacturer Reuge has taken over Mermod Frères, a three-centuries-old brand that will become the emblem of the group in watchmaking.

Louis Nardin - BIPH

On the one hand Reuge, the world’s foremost manufacturer of luxury music boxes. On the other Mermod Frères, a company based in Sainte-Croix, Switzerland, and once renowned for its music boxes and watches. By taking over Mermod Frères, Reuge plans to add musical watches to its portfolio of products (see box). After a period of turbulence marked by a CHF 2.25 millions (EUR 1.36 millions) recapitalisation in 2004, followed by a CHF 1.9 millions (EUR 1.15 millions) equity increase in October 2006 and the departure of three administrators that same year, Reuge is now returning to profit, says its new CEO Kurt Kupper. This former CEO of Hublot, who took up his new position on September 1st last year, is aiming for a 20% rise in revenues this year, following sales of around CHF 10 millions (EUR 6 millions) in 2006.

The company, which has several projects in the offing, recently launched a programme of investments to evaluate and update its machinery. It has also taken on new staff, going from 62 to 80 between September 2006 and March 2007. "We have brought back retired staff who master the company’s expertise," Kurt Kupper explained. "Their ability to perform immediately, using skills they will also pass on, motivated our decision."

Extending the product range

Reuge divides production between two sites. The first, in Sainte-Croix, is for management, manufacturing the mechanisms, assembling and adjusting the music boxes. The second site, in Treviglio, near Brescia in Italy, is that of Arte Intarsio, a company that was taken over by Reuge in 2001. It manufactures the box exteriors and produces inlay work. Reuge also owns the "Romance" brand-name under which it produced 60,000 entry-level music-box mechanisms last year.

By taking over Mermod Frères, Reuge is looking to move into a new field of grandes complications. After four years’ preparation, the prototype for the first Mermod Frères musical watch was unveiled at BaselWorld. Built on an ETA base, this new calibre comprises over 500 parts. The pre-series are currently at the test stage and the first deliveries are scheduled for this year. Three limited editions of 50 will be sold at a price of around CHF 98’000 (EUR 60’000) each. "By adding Mermod Frères watches to our catalogue, we are extending the Reuge product range, the only company in the world with the capacity to produce finest-quality music boxes," observed Kurt Kupper.

Selective distribution

Over three years, Reuge has reduced from 3,000 to 400 the number of retailers selling its products internationally with the aim of targeting an audience of dedicated collectors. With Japan and China as its main markets, the company is now looking to expand into the United States. "We have set up a company in New Jersey from which to build a network of points of sale in the 11 most important American cities," explained director of sales, Jean-Marc Guillod. Since its takeover in 1988 by a group of Swiss investors, Reuge has focused its activities on the luxury market.

When the company changed hands again in 2004, with the Luxembourg fund Cap Gamma acquiring 75% of its share capital, the brand continued to pursue its modernisation strategy. Today Reuge proposes three collections: the classic "1865", the contemporary "Lounge" and the conceptual "Studio". With 35 orders for orchestrions - the biggest pieces made by Reuge commanding prices of some CHF 70’000 (EUR 42’000) - since the beginning of the year, the company shows it is back on track. Kurt Kupper’s strategy to rekindle the nostalgia surrounding music boxes while attracting younger customers promises an animated year for the brand. ■

See also:
A world-first: the Primo 4

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