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“TAG Heuer has always been profitable”
Economy

“TAG Heuer has always been profitable”

Wednesday, 24 June 2015
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Christophe Roulet
Editor-in-chief, HH Journal

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3 min read

In an interview with Swiss business daily L’Agefi, Jean-Claude Biver explains the strategy in place at TAG Heuer for over a year now, since his arrival at the head of LVMH’s watch division, which takes in TAG Heuer alongside Hublot and Zenith.

TAG Heuer has had just over a year to adjust to the tsunami that is Jean-Claude Biver. Since his appointment as President of the LVMH watch division, the man who put Hublot into orbit has devoted his considerable energy to TAG Heuer, which has headquarters in La Chaux-de-Fonds and three manufacturing centres, also in the Jura region, specialising in movements, cases and dials. Biver’s arrival has coincided with departures, including that of former CEO Stéphane Linder, now at Gucci, and redundancies after the brand shut down the production line for its CH80 in-house chronograph calibre.

This is my response to how I see us in 2020.
Jean-Claude Biver

Even so, Jean-Claude Biver refuses to talk of restructuring, as he explains to Swiss daily L’Agefi. “For one thing, the slowdown we’ve observed, which is partly linked to the economic context, is recent. Furthermore, TAG Heuer has always been profitable with margins above the industry average. Which is why I’ve always insisted that this isn’t a restructuring. The reason I’m refocusing the brand is because that is what the future imposes. This is my response to how I see us in 2020.”

New price sensitivity

So what has changed? “We’re seeing a price sensitivity to which the industry hadn’t been accustomed. In fact these past years the entire industry has taken the opposite tack by upping its ranges and increasing prices. We’re now seeing a reversal in the situation with price becoming a sensitive issue at every level. In this context, our decision to refocus has been very well received.” As Jean-Claude Biver points out, this isn’t about a reduction in prices but a highlighting of TAG Heuer’s main segment of watches under CHF 5,000, where the brand intends to confirm its position. “We’ve taken care to focus new models within this price range, which has always been the brand’s strong point in terms of sales. In previous years, management concentrated efforts at price points above CHF 5,000. All we are doing is to refocus on our natural segment. The message has been clearly understood.” Why would the brand want to leave its segment anyway, asks Biver: “This is something a virgin brand could do but not TAG Heuer, with its 5,000 points of sale and 600,000 units. It would take years and what would be the point anyway?”

Boosted by this new strategy, the brand’s production units are again operating at full capacity with, Jean-Claude Biver assures us, productivity and profitability at unprecedented levels. His optimism knows no bounds: “There is no equivalent in terms of value for money in our range. No international brand is integrated to the level that we are, nothing but off-the-peg [industrial movements as opposed to in-house calibres]. This segment has clearly been neglected. No-one has anything to offer. We’re opening a niche where we can develop with no neighbours.”

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