Consolidation of Luxury Brands Continues

The ongoing consolidation of Europe’s upscale watch industry continued in the year 2000, with the Swatch Group-the world’s largest watchmaker-adding another luxury watch firm to its collection, and other brands tightening control over sources of key watch parts.

Acquisition of the 155-year-old German watchmaker Glashütter Uhrenbetrieb by the Swatch conglomerate was approved in October by its shareholders and management. However, financial details were not released.

The German firm’s prestigious Glashütte Original brand of luxury-priced mechanical watches joins Swatch’s 16 other watch brands and strengthens its already solid upmarket segment. That includes Breguet (purchased in late 1999), Blancpain, the new jewelry watch brand Léon Hatot, Jaquet-Droz, Omega, Longines, and Rado.

The decision to sell, said a statement by both firms, was due to “the considerable development potential of the Swatch Group, with its 155 factories and universal distribution network, and the motivation of Glashütter Uhrenbetrieb to face the challenges of the 21st century within a strong and internationally active group.” The firm, which employs 150 people, will stay in Glashütte, near Dresden in Saxony. Former president and chief shareholder Heinz Pfeifer continues as general manager.

Glashütter Uhrenbetrieb traces its origin to the first watchmaking company in Glashütte, started in 1845 by German master watchmaker Ferdinand A. Länge (whose son Adolf founded the luxury brand Länge & Söhne in Glashütte in 1868). Its success attracted other watchmakers, and by the late 1800s, Glashütte was a renowned watchmaking center. It remained so until the end of World War II, when Allied bombing destroyed most of its watch factories. Those remaining were merged by the former East Germany into the VEB Glashütter Uhrenbetrieb. After Germany’s reunification in 1990, that became Glashütter Uhrenbetrieb GmbH, a company whose luxury-priced mechanical timepieces are considered masterpieces of precision and sophistication.

Other moves in 2000 that continued to consolidate the luxury brand segment include:

  • In June, the Swatch Group acquired 91-year-old Universo of La Chaux-de-Fonds, the biggest Swiss producer of watch hands (about 100 million a year). The Swiss conglomerate already was Universo’s major customer, buying more than 50% of its production annually.

  • Also in June, the Gucci Group of Italy bought Paris-based Boucheron, whose luxury watches and jewelry earned it the name “The Jeweler of Time.” Boucheron was sold by Schweizerhall, a Swiss pharmacology and chemical group headquartered in Basel, Switzerland.

  • The Swiss luxury goods group Richemont bought the Stern Group of Switzerland in June. The purchase included Stern Creations SA, Stern Manufacture and Stern Appliques. The Stern Group is a leading manufacturer of luxury watch dials for some of the world’s most prestigious timepieces.

  • The Bvlgari Group, an Italian luxury jeweler and watchmaker, acquired the luxury brands Gerald Genta and Daniel Roth of Geneva in June for a reported $28.9 million, as well as the manufacturing arm Manufacture de Haute Horlogerie SA in Sentier.

  • In July, Richemont paid $1.8 billion for three of the world’s top luxury watch brands: IWC and Jaeger-LeCoultre of Switzerland, and A. Länge & Söhne of Germany (which make up Les Manufactures Horlogeres, or LMH). That strengthened Richemont’s position as a leading manufacturer of top-quality watches. The company also owns Cartier, Vacheron Constantin, Piaget, Baume & Mercier, and Officine Panerai. In addition, LMH owns a 12.5% share in La Pierette SA, a manufacturer of jewels for high-value mechanical watch movements.

  • In late August, luxury watchmaker Franck Muller Watchland of Geneva bought Mahara Montres (MHR), also in Geneva, a contemporary brand with a larger production and wider distribution than Franck Muller.

  • Parmigiani, based in Fleurier, bought Bruno Affolter, in La Chaux-de-Fonds. The newly purchased company makes watch parts from precious metals for luxury watches.