WIND OF CHANGE. After the recent acquisition of Frederique Constant by the Citizen Group, Peter Stas reveals how things are now moving at the Swiss Watch Brand
Given the hiccup in retail in recent years, it’s no big surprise that a few Swiss watch brands finally succumbed to acquisition. Things, however, aren’t that simple for Frederique Constant. Run by husband-wife duo Peter and Aletta Stas, the 29-year-old Swiss company has been recognized as a strong proponent of affordable luxury. It even offers some of the most affordable timepieces with in-house movements in the market.
That is also the reason why the recent acquisition of the brand by Japanese behemoth Citizen piqued everyone’s interest. The Frederique Constant group alone already comprises three distinct brands, namely Alpina (for Swiss sport watches), Frederique Constant (for affordable luxury timepieces) and Ateliers deMonaco (top-end watchmaker). Combining these forces with the variety of names under the Citizen group, including Arnold & Son and Bulova, appears to be a very impressive strategy to expand their portfolio.
Frederique Constant has, in the last couple of years, beefed up its offering of in-house movements, including this year’s launch of a flyback chronograph following a perpetual calendar the year before. There are also the connected timepieces. Unlike other brands that daringly put the labels of their Silicon Valley partners, this aggressive Swiss watchmaker features nothing but their own trademark on their timepieces. That and other sharp strategic plays are what made Frederique Constant one of the hottest brands to watch at Baselworld.
Frederique Constant Flyback Chronograph Manufacture FC-760
DA MAN: Let’s start with the most obvious question. How did the acquisition play out?
Peter Stas: The Citizen group lets myself and the management team carry out our initial plans for five years. Of course, the obvious change is that every month we, the Frederique Constant group, have to report to Citizen. In addition to that, we started working with Citizen North America on the distribution of Frederique Constant watches in the U.S. We used to have a subsidiary with 17 people in the U.S., but they have a distribution and organization infrastructure of more than 500 people. So, you can imagine the power that the two of us have, and that’s the reason why we’re together.
DA MAN: What’s the biggest lesson to learn from the Citizen Group?
Peter Stas: For sure, the distribution. For example, we [Frederique Constant] switched to the Citizen group’s organization for Japan and the U.S. starting last summer. Also, in certain technologies like solar energy, especially for the connected watches. Citizen is really good at very thin movements. What they produced last year is quite incredible. Their quartz technology is fantastic. But, on the other hand, we brought to the table a lot of Swiss mechanical know-how. Yes, Citizen already has La Joux- Perret for Swiss movements, including for Arnold & Son, and we have already collaborated with them. The important point of this acquisition, however, is that the group has a multi-brand strategy, so every brand has a different price segment.
Inside the Manufacture Perpetual Calendar
DA MAN: How’s the market’s response toward all of these changes?
Peter Stas: We were quite concerned to see how the market would react. We have, from the beginning, clearly explained why we did it: Our two children, one is in Standford [University] in the U.S. and the other one who wants to go into the medical field, clearly told us they don’t want to go into the watch business. Then, when you’re approached to be acquired—we’re approached by two groups, later even another group also came along— if we say we want to keep it in the family, what’ll happen with the company?
Also, the company has already gone big with Hong Kong, German, Dutch, French subsidiaries and a Swiss company. You can’t simply hand over this company to someone who’s new anymore. It’s too dangerous. So, Citizen came, and they said that we want to have you do what you have done for five years. Other groups wanted to be hands-on from the start. We felt very comfortable, and then we decided to go with them. Frankly speaking, I’m still very happy with the acquisition.
The Brand’s Mobile App
DA MAN: What about your market shares in Japan? How does Japan respond to mechanical watches considering Citizen is big on quartz timepieces?
Peter Stas: The Japanese also like mechanical watches. We’re selling more mechanical watches than quartz in Japan. I think at least 70 percent is mechanical. So, for Swiss watches, it’s mainly mechanical; but, of course, for Citizen, it’s quartz watches.
“We’re working on a new caliber for next year, and we’ll continue, if possible, to come up with a new mechanical innovation every year or two”
DA MAN: In the long run, will you produce more in-house movements despite the acquisition, considering it has been one of the highlights for Frederique Constant?
Peter Stas: No change. Now, we have the flyback chronograph. We’re working on a new caliber for next year, and we’ll continue, if possible, to come up with a new mechanical innovation every year or two—if it’s not too complicated.
The Innovative E-Strap
DA MAN: How do you balance the creations of the traditional and the connected timepieces?
Peter Stas: Both are products of innovation. So, the in-house perpetual calendar we did last year for under €4,000— it’s never done before. Also, what we do represents a new way in creating new mechanical calibers. We tried to make the components so accurate that, when the watchmaker actually assembles the movement, it works perfectly from the very first time. They don’t need to do any manual adjustments. Then we come with the complication like the flyback chronograph. Innovation is clearly there with the connected watches, too. We did the first one in 2015, and that was a men’s watch. Now, we’ve introduced the ladies’ watch and the e-strap. So, we have three digital platforms that elevate our offerings.
DA MAN: Does this mean you will be more aggressive in the connected segment?
Peter Stas: Yes. It already represents 10 percent of the business turnover after only two years’ time. We used to have 30 percent in quartz, but now it’s only 25 percent in quartz and 10 percent in connected watches. So, it has really eaten up some part of the quartz segment.
The Manufacture Perpetual Calendar
DA MAN: How is Ateliers deMonaco doing now?
Peter Stas: It’s still very small. They work with very few retailers. In Singapore, there’s one point of sales. It’s a watch for someone who wants what nobody else has. So, it uses a one-on-one sales strategy for very expensive pieces, up to €200,000. And the brand is growing gradually. We work with a few retailers, but then it’s typically with these retailers that organize private dinners. It’s more personal. It’s also bespoke, as well. Like very special dials, combination of materials, special diamond colors and so on.
“We’re not changing our DNA, to be ‘younger,’ so to speak. We’re Swiss a watchmaker for businessmen and businesswomen”
DA MAN: These days, there are more and more brands offering entry-level prices. How does this impact Frederique Constant’s bottom line?
Peter Stas: We have seen all these changes from others, with so many adjustments. We have had the strategyof accessible luxury for over 20 years. All that time, we slowly grew. Last year, the growth halted a little, now we’re back on course again. I don’t see that such change affects us; we just continue what we do best. Everybody knows Frederique Constant is value for money. All the retailers know, and even the clients know about it. Meanwhile, other brands need to explain why last year they’re too expensive.
The Flyback Chronograph with rose gold case
DA MAN: Last but definitely not least, what is Frederique Constant doing to reach potential buyers from the younger generations? The millennials, if you will?
Peter Stas: In the digital space, we do more and more to reach the younger people. We’ve had one million fans on Facebook and we clearly see that we reach mostly 20-somethings versus the older market. Product-wise, we have the entry-level watches and, of course, the connected watches. So, we definitely have products for younger customers. I’m not really so sure that we really have a lot of young customers, though. It’s something we should investigate. But typically, our customers are around 30 years old.
So, we’re not changing our DNA, to be “younger,” so to speak. We’re first and foremost a Swiss watchmaker for businessmen and businesswomen. That’s typically our first market. As a matter of fact, our strongest market shares are in Europe at 38 percent. Asia is about 26 percent. Everybody wants to go to China, but the market changes quite rapidly.
Stainless steel variant with Côtes de Genève decoration