The Business of Watches [005] Frederique Constant CEO Niels Eggerding On Why He's Fighting To Keep FC's Perpetual Calendar Under $10,000¶
Published on Wed, 29 Oct 2025 15:00:00 +0000
The Dutch-born CEO of Swiss brand Frederique Constant talks value, pricing, volumes, success with women's watches, and the challenging U.S. market.
Synopsis¶
In this episode of The Business of Watches, host Andy Hoffman speaks with Niels Eggerding, CEO of Frédéric Constant and Managing Director since 2018. The conversation explores the unique history of this Swiss watchmaker, founded 37 years ago by Dutch couple Peter and Aletta Stas while living in Hong Kong. Today owned by Japan's Citizen Group, Frédéric Constant occupies a distinctive position in the watch industry, balancing accessible luxury with genuine manufacture complications.
Eggerding reveals that while manufacture watches represent only 7% of the brand's volume, they account for 20-25% of value and drive 50-60% of brand storytelling. The company's perpetual calendar, priced below €10,000, represents a significant achievement in accessible high horology. With approximately 60,000 watches produced annually and revenues exceeding $100 million, Frédéric Constant operates in the crucial €750-€3,000 price range, where it maintains strong margins through volume while investing in complications that elevate brand prestige.
The discussion addresses current industry challenges, particularly U.S. tariffs and market volatility. Eggerding emphasizes the importance of strategic restraint in pricing—while competitors increased prices by up to 40% post-COVID, Frédéric Constant implemented only modest 4-6% increases. The brand is focusing heavily on U.S. market expansion through Citizen's strong distribution network and has discovered unexpected success with women customers, who now represent nearly 50% of U.S. sales. Looking forward, Eggerding highlights the integration of solar quartz movements from sister company Le Jouperet and continued innovation in manufacture calibers, maintaining the brand's mission to "let more people enjoy luxury" while staying true to its accessible price positioning.
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Transcript¶
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| Andy Hoffman | Welcome to the Business of Watches, where Horology meets high finance and each tip tells a story of markets, margins, mishaps, and mechanical mastery. I'm your host, Andy Hoffman, Senior Business Editor at Hodinky. In this series, we dive deep into the global watch industry, a place where centuries-old craftsmanship intersects with billion-dollar valuations, executive brand strategy, and investor speculation. From Swiss Valleys to Silicon Valley, we trace the movements shaping this uniquely resilient sector. Just how big is the business of timekeeping? Well, some estimates place the entire watch industry from ultra-luxury maisons to smart watches and microbrands at north of $100 billion globally. But behind that figure is a complex web of legacy, innovation, and ever-shifting consumer taste and demand. This is the podcast for collectors, analysts, watch buyers, and sellers, and anyone who's fascinated by the intersection of wristware and wealth. Because if time is money, then money is most certainly time. So let's get down to business. It's hard to think of a watch brand more international in its origins and ownership history than Frederic Constant. The value and volume focused Swiss basemark was started by a couple from the Netherlands while they lived in Hong Kong, and today it's owned by Japan Citizen Group. A stalwart among European watch consumers looking for a balance of price, quality, and classic design, Frederic Constant is ranked among the 50 largest Swiss brands by Morgan Stanley and Lux Consult. And now it's looking to boost its presence in North America, especially the US. Running the show is Niels Eggerting, a Dutchman who has been with the brand since 2012 and in the managing director or CEO chair since 2018. There are a lot of moving parts with this brand at the moment, from the challenge of keeping the price of its perpetual calendar below 10,000 euros to sustaining demand and production of its low price models that account for more than 90% of its volumes, and they allow the brand to keep pushing the envelope with high horology at approachable prices. And finally, growing the U.S. business at a time when tariffs are making the country hostile to Swiss watchmakers. Here's our conversation with Frederick Constant's CEO, Neil Zegger. We're here with Niels Eccling, who is the Chief Executive Officer of Frédéric Constant. You also oversee Alpina. Yes. As well. Thank you for joining the podcast. I'm super happy to be with you, Andy. Excellent. Excellent. So, you know, let's start with where we are. We're more than halfway through 2025. Um, it's been a challenging year. A lot has gone on. There's been a lot happening. Tell me, you know, where Frederic Constant is at and and what you're doing in this market. Yeah |
| Niels Eggerding | , so I think a brand like Frederic Constant, we have been um you know, I I I always say that the brand has the diversity to act in multiple ranges, because we do manufacture, uh but we also do a lot of volume. And but manufacture is the biggest speaking and loudness of our storytelling. But it's only seven percent of our volume. How much percent? Seven percent of the volume. Seven percent. So but it's high value. Yeah. But we still do a lot of volume in the manufacture. So we do like three and a half thousand wheel timers a year. So and that's just one movement we have. But ninety-three percent is volume. And in the past years after COVID, uh we cannot neglect the fact that the hype was high-end and we could lift on this hype. We did tourbillon, we did a perpetual calendar tourbillon, we did exclusive world timers, we launched several new movements and we really seen the success of that. Yep. But what you don't see with that is your margin because it's an expensive production line for us. And because we are accessible in price with that, we don't have a lot of margin there. We need the volume to basically reinvest back into innovations on manufacture. And I'm very happy that last year the volume picked up. And we we are ahead of the game for me. We have invested a lot of noise, distribution, everything is well set. And for me it's just a matter of now turning the machine |
| Andy Hoffman | right on the right way. Let's talk about the history of Frederick Anston. It has some history, it has some heritage, not quite as much as some of the other Swiss brands. But you know, you've been here around thirteen years and you've been in the CEO job for about eight years. But what is the history of Frederic Const |
| Niels Eggerding | ant as a Swiss watchmaker? It all started on talking about 37 years ago by a Dutch couple, Peter and Aleta Stas, the founders of the brand. They were expatriate in Hong Kong and they always had a passion for watchmaking. They were traveling back from ski holiday up and down to Switzerland, looking at the windows, at retailers, seeing uh the brands like Fachon, Gesel de Coutre love the brands, but as a Dutch you don't want to expend so much, right? So so they came up with the idea why don't we make a watch that has the same look but is much more accessible in price. And they started to work on the on the kitchen table back in Hong Kong because Peter was working for Phillips as a marketing director for products, and um Aleta was doing legal for ING, the Dutch Bank. And they were really doing it on the side, and they created some samples going back and forth. Took them a year, and they went to an Hong Kong-based uh show where Swiss watch brands, Hong Kong-based brands, China brands were selling Japanese brands. And a Japanese distributor was super interested. And they were the first one placing an order of 300 pieces and there it all started. So they produced, of course, with uh not having suppliers, not having movements, nothing. So it took them two years to produce. The moment they shipped the watch, it was sold in one week and they placed an order of three thousand pieces. So for them, the idea of having a watch brand and seeing the success was one, but feeling the success was number two. And they felt it and they went into okay, this is a this is a hit. We can continue now. And from there it really started. And it built to a brand now after 37 years. I would say we are no longer adolescents. Yeah. We are major, we are senior, but we are far from the big ones that are existing for two hundred years. But still yet we are in the top thirty seven watch rents in Switzerland. Mm-hmm. So it's quite an achievement I would say for a young couple in |
| Andy Hoffman | that time. And um Frederic Constant and Alpina are part of the Citizen Group owned by Citizen of Japan. What's the history of of of that um acquisition? When did it happen and and what role does, you know, Citizen, a big giant watchmaking company Aaron Powell Well it all started back in |
| Niels Eggerding | 2016. It took one year of discussions in that time with Peter and Aletta and they really wanted to have their feet into the Swiss business with a luxury brand, although close to volume. So there's a few options. And Frederick Gostar is of course a serious option because they had the manufacturer complication. And Peter and Aleta were very happy to have the acquisition happened by citizen because value wise it's very similar. Although you can say it's much more volume than luxuries, Japanese versus uh Swiss company. Keep in mind that the Japanese and the Dutch culture are very conflictual. Japanese are not direct, Dutch are very direct. So it has been a marriage, I would say, a bit complicated in the beginning. But the strength of citizen has been industrialization. They purchased Le Jouperet, a Swiss uh manufacturer in the center of uh Switzerland, La Chautefour. They have massive affiliates in the world where America is basically citizen. You could say citizen is the number two watch brand in the US. And Rolex. Yeah. So what is an achievement? The team there has done a remarkable job, and we had difficulties to build distribution, in particular the countries where Citizen was strong. And from day one, that has been a strong focus. How can we merge the brand into those affiliates? UK, Italy, Japan, China, US, Canada, Mexico, all strong companies, strong countries, Mexico, think about Mexico, how potential it is. Sure. US, huge potential. UK, Italy, one of the leading markets from Europe. So uh we really had the entry there on strong distribution. |
| Andy Hoffman | So Citizen owns uh many other brands, many other manufacturers. You know, they own La Jou Pray here now. What you know, what um interaction is there, is there any connection with what La Jou Peray is doing and what Frederic Constant is doing here in Switzerland. Absolutely |
| Niels Eggerding | . I think um I think le Jou-Perret has been a raw diamond tool in the past years and shown that they have capabilities of strong innovative drive. So they have brought their G-100 movement, they have their L hundred movement, they do all the modifications on movements, they do tourillon, they do finishing, they work with the m all the big brands. On top of that, they really decided strategically to build together in that time with the LV Image Group, a solar quartz movement. Right. And recently we have been able to launch it also in our uh brands. So Alpina is the first one where we have access to that caliber. And for us, that's exactly what we needed. A volume-driven, sustainable movement that is, of course, with the heritage of citizen a Swiss made movement with that know-how in Swiss made has been for us yeah an strateg |
| Andy Hoffman | ic move. Interesting. And do we see you know, uh there we see it with the new Solar Quartz movement um and you're using that in Alpina. Do we see La Jupure movements in Frederic Constant? Um |
| Niels Eggerding | do we see you know what yeah so definitely the G hundred is one of the uh let's say in between a base caliber we have uh automatic where we still work also with Celita, for instance, that we do large volumes in let's say 995, 1295, 1495 range. And the Jouparede G100 is more in a luxury, I would say the premiere collection, it's just below 2000 euro, US slightly above, but highly finished. It's a very qualitative movement, 68 hour power reserve, nicely decorated. And you can see that uh it's it's really a competitive move and a competitive movement. So definitely you will see more to come in |
| Andy Hoffman | the future. And you know, when I first um met you was probably back in twenty twenty two and I was at Bloomberg and and you were here and it was a different time uh for the watch industry. And you were talking a lot about, you know, moving up in price and moving up in complications and the kind of watches that Frederic Constant can do and can make and and can compete with in uh with the rest of the market. You know, the it's a different time now. Where are we in the in the strategy and in the watches that you're focusing on |
| Niels Eggerding | for your customers at this point? So I can bring you over a bit of range what we are doing, but I think it's more important to understand that how our collection is built. Number one is manufacture collection. Starting price around three three, and a half thousand is a US dollar. And then you go to the classics, 60 to 70% of our business. And then you have high life. Highlife is integrated bracelet, a little bit more sports chic. It was a collection that we created back in 2019 to launch in 20 because we were very classical as a brand and the trend in that time was less classic. Right. And we missed opportunity to engage with a new audience. So High Life was definitely a new audience for us. And it nicely integrated into the collection. The biggest storytelling we do is manufacture. Although it's seven percent of the volume, it's 20 to 25% of the value we are doing, and it's fifty to sixty percent of the storytelling. Right. Then if you go to movements, we start the collection of seven95 euro, let's say 850 US dollar. I don't know exactly the rates, but let's say 850, that's quarts. Then you go above 1000, you go to solar quartz now, then around thousand you have a base solita movement that goes all the way up with le Jouperet to two two and a half thousand euro. We have chrono solita or le juper around three and a half thousand euro and that's where the manufacturer collection starts. I see. And the manufacture collection has always been unique for us because we do it industrialization on the manufacture calibers, and we are the only one who's capable of doing it in our price range. There's no competition, who's able to do what we are doing in that price range. You can debate that certain brands are doing small batches themselves. Multiple brands are doing it external. We really do it internal. So we have CNC machines, T0, we have T1 where the assembling of movements takes place. Of course now with Le Jouparet's an interesting move because we can collaborate much more with each other. How can we optimize even? How can we bring efficiency in there? But manufacture has been for us a strong innovative push to tell the story and to differentiate compared to the compet |
| Andy Hoffman | ition. You make a perpetual calendar that last time I checked was around $10,000 francs, around $10,000. I mean, that was a real achievement, I think, you know, for the brand. And talk about the process to develop that and and to make that happen and then what you're doing now to keep that price there uh because it's not easy. That's not |
| Niels Eggerding | an easy one. I have to say it's also not an easy one to protect those prices against my shareholding company because of course they want to see profit and they want to see margin. But on the other hand, we also want to stay true to our DNA and that's let more people enjoy luxury. That's the mission we have. 2016, we launched for the first time the Papa Calendar. Three years of development. And the beautiful part of that is it has been designed based on a 42mm case design in that time where the dial is quite spread. Where the competition, uh, you had uh multiple brands who were doing an uh perpetual glander, but they were very narrowed designed. So the counters were very close to the center. And we designed first the dial, they watch, and based on this, we designed the movement. In that time, the the caliber was launched for 8,000 euro, 7995. It was a hit. So all the years after we have been working with different movements, upgrading movements, and two years ago we started with an upgrade of power reserve because the the base we have of manufacture has thirty-eight to forty two hour power reserve, and we really want to it to go a weekender. We called that a weekender. You put it away, your dress watch on s on Friday, you pick it up on Monday, it still runs. So seventy two hour power reserve needs to to be in place. So that update took place two years ago. We launched last year in in the base of our manufacturer caliber, point of date, moon phase. And this year we launched it at the perpetual calendar. But I wanted no longer a forty-two millimeter case. I wanted a 40 millimeter case. So 96 to 97% of the components of the movements are the same. So also after sales, quality, it's all important to stay close to that. But we didn't want to go over 10,000 euro. The problem was if you only look in 10 years' time on the index of the value of money, it would have been already going over 10,000. Yes. So you thought you've had to work. But I want to keep it accessible. Especially in the time where I live in where all the brands have been going up with price aggressively, in some extent, even price themselves completely outside their DNA, what is very dangerous, because the customers one day is noticing it and they don't appreciate it anymore. So we felt it's the right moment to make a punch to the competition but also to the consumer to give them really value for the money. Interesting. And that's where we positioned it below the ten thousand euro. Yes. |
| Andy Hoffman | And and what is the biggest well, I presume for the US market, tariffs are now certainly uh the pressure point there. But yeah, what is the what is the major pressure points for keeping it? Or is it simply a matter of you know, reducing your margin. To |
| Niels Eggerding | keep it very simple, it's mo mostly reducing margins, because supply has been going up, uh labor cost has been going up. You need to think about the industrialization we have in place for a QP, it's less industrialized, although it needs to be qualified for us for industrialization, but we don't produce uh thousands of pieces. It's around uh I would say we blocked it in the production capacity to seven seven hundred fifty pieces per year that are sold out by the way. That's just to give you a visualization. But it's really taking less margin on this on this piece. And |
| Andy Hoffman | I think um Morgan Stanley estimates you make about sixty thousand watches per year and your revenue is around a little more than a hundred million. I mean uh what should we think of that estimate |
| Niels Eggerding | ? So they're quite accurate in the variations of it, but uh I can't t I cannot disclose numbers, but they're very low at the volume. Understood. They're very low at the volume |
| Andy Hoffman | . Okay. And significantly. When we think about distribution and how people find your watches and buy your watches. What's been the evolution of that? Um uh we see Frederick Constant a lot at retailers. How has that changed and and what kind of retailers are you are you work |
| Niels Eggerding | ing with these days? It d it depends a bit. In the US for instance, uh there um US is a continent, correct? It's no longer a country considered for me. It's so big. It's the size of Europe. And if you look at Europe, uh only Europe we have uh we have close to a thousand retailers. Right. So and I think the US has around four hundred retail um knowing that the machine we have running there with citizen behind it, they have so much manpower. We can easily go to five, six hundred retail there, I would say. But there's much more uh the approach of segmentation. So not all retail is willing to sell an a wheel timer or is willing to sell a QP. They don't have the brand environment. So are we going to say no with our volume to retail that can sell volume? No, I would say no. You should reward them because today for retail it's very difficult to get brands and we are a perfect example where it can fit into both worlds. So it has always been this way, but we are more focused on the volume |
| Andy Hoffman | , I would |
| Niels Eggerding | Well the consumer has become very important. I think many brands uh they made mistakes in the past years where they were just deciding what to do, hoping that the retail or the consumer will pick it up. In today's world, if you don't listen to your consumer or your retail, you lose it. Because they're so knowledgeable. They are the ones who need to follow your brand or not. They are the ones who are buying your product or not. So if you think you can just produce whatever you produce and they will pick it up, you're wrong. So for me, it has been very important to create that customer experience, but also have a lot of let's say video content. And I'm always reading myself feedback about what we launch. And we have a solution where we can see every watch is sold. Today data is the new uh the new money in a way. And it's for me very important to follow by reporting what kind of profile today is buying our watch. And that we can see via Densu solution where we have instant insight about where the watch is sold, what store, and what kind of profile. And that's very important. And what I can see in this, because that's probably your next question, is that we became attracted for more women than expected and younger audience. So the two. And that's exactly what we wanted. Younger audience was really one of the aims we had six, seven years ago. And women has become a major opportunity for the brand because there are many brands who producing women watches or female feminine watches, but it's not about diamonds, it's not about a pink watch. There's much more to do for women. And I find that women are cornered a bit. They're almost forced to buy muscular watches to be to be fulfilled with what they want. So it's a lot of attention and I would say a lot of eye for detail to jump in that segment and to penetrate the market. But we are absolutely doing very well there |
| Andy Hoffman | . Interesting. Can you can you talk about an any way to quantify how big your you know customer base of of women |
| Niels Eggerding | is, how much it's grown? I can tell you a bit of a direction that I've uh been seeing in the US. It's almost fifty fifty, yeah. Yeah it's it's very big. Interesting. And the latest launch we have been doing um that came to birth last year, it was really based on vintage look. We were looking with the team, what is now attracted by women, and you could see in that time the trend of that bracelet design of watch that was very popular. And if you then look at that, who is doing it now accessible? There was zero. So for us, we just looked at the archives we had 2 ye0ars ago, we had like a bracelet design watch, the manchette, and we just redone it completely in a modern way with stone dials, but also with diamond setting. Uh and it's a huge hit. In the past thirteen years, I've never seen such a hit for women colle |
| Andy Hoffman | ction. Because women watches are very complicated. So th this watch you're talking about, I mean it's basically uh you know, a tank style |
| Niels Eggerding | . No, it's not a tank style. It's really one bracelet. Like a cuff. Like a cuff. Yeah. Okay. Yeah. Right. It's like a bracelet with a watch in it, integrated. And it really is a perfect match and it sells very |
| Andy Hoffman | easily. Aaron Powell And you know, you talk to in this case you were able to access a sort of heritage design heritage for uh such a cross indeed. Which is interesting. Um e I mean even you ha can are able at this point to go back to your archives. But how nimble can you be? I mean, would you agree a few years ago everybody was talking about sports watches and so you created the high life line but would you agree we've moved back towards smaller watches, more uh shaped kind of watches, classic watches, and and how nimble can you be in terms of your product and and design? Aaron Powell For us, uh the strength of my company |
| Niels Eggerding | and and my team has been the speed of working. It has been on the pressure because we became very corporate also. We are part of a big group, you have to report, uh you have to discuss on strategy, you have to engage on So it brought down a bit the speed, but in some extent, I would say the Japanese company are keeping us very independent. So they know that the advantage is speed. And I think it's very important for Watch Brand, the moment you feel you miss something and there's a trend that follows your DNA, you need to go quick. And that's specifically also that that bracelet design. We have caré watches that are popular. You have to develop. You have to be quick with development. And you should not leave it down for 15-16 months. You should really narrow it down to nine to twelve months. But it's not easy, yeah? So big pressure for the team, I can |
| Andy Hoffman | tell you. Aaron Powell Yeah, it's very difficult to be reactive and quick in watchmaking um simply because of the manufacturing process. I mean, how involved is a corporate parent citizen in terms of, you know, design, strategic direction? They've been the owner for a while, but yeah, I mean how involved |
| Niels Eggerding | are they? I I would say they're heavily involved. I would say five years ago it was uh less, but if you really want to make a difference in the industry, you need to collaborate stronger as a with a big group behind you, especially after uh the difficult times we have been going through. But also, key markets like the US, you should really have an engagement with them. The big mistakes that many Swiss brands are doing is that they just put a Swiss guy in the US and they believe he will run the show there. Now forget it. It's never been successful. Look at many brands, big groups who did that. You really need someone who know he comes from there, from the US, who knows the language. And I'm speak um not speaking about language, but really understanding and knows how to penetrate the market. And definitely we have a team there that knows everything, so they're very capable. Um, but by collaborating together, listening to what they need, answering, and strategize that together with a mother company, that's the strength. And then the moment you have an agreement and an engagement with all together, you go. And that execution can |
| Andy Hoffman | go quick. Interesting. Yeah, no. I mean it is it is now the biggest uh single country watch market in the world and it is incredibly important. It's also incredibly challenging right now. Can you talk about it? Yeah. Because indeed, I mean uh you know, y Europe is is uh has long been sort of a key market for Frederic Constant. But yeah, how has that evolved? |
| Niels Eggerding | Europe is continuing to to to go strong. Less growth. So you cannot expect double digit growth every year because it's already major market. But it still goes strong, and I would say we have always been very European driven as a brand. That's where I think with the US, uh, so if you look at Europe strong, continuing to be strong, that's the trick with the US. If you stay too strong in your European DNA, you miss the boat. And that's where the collaboration is important. They need to have input. What do you need for the US? Where is the need of the consumer and what do they like and what do we need to enter. Now that has been very important and we did that in the past years together with the help of the US team and we have seen a major growth happening. And we are just in the beginning of this, I can tell you. So tarif or no tarif, I'm not concerned about that. We will find solutions. I also found find that many brands are super nervous and anxious about it. Kind of agree with that but you cannot control so we can we can debate for hours about it but we just have to manage what we can do so everything you cannot control you should not at least get nervous about that. Now I know that next month uh the authorities are in the US. They didn't sign anything yet. That's why the US put the tariff on it. And they will settle a deal. They will have to take all the other deals. I mean |
| Andy Hoffman | so yeah, just to be clear, um Oh you never know. Yeah, w we're in September near the end of September, but you think you think there there may be something in October. You're certainly not the only person uh No, no, I've been speaking |
| Niels Eggerding | with a few uh people that are very close to to uh this kind of deals, and I've a close source that tells me that they they will eighty percent they will make a deal. Now, it remains a crystal bowl, so I don't know, and uh I think uh L VMH was informed by Trump that there will not be not happening any anything about tarif and they had a tariff impact. So you never know. And Trump is also very unpredictable, of course. So uh but he's right in the part also. I mean if you look at all the business going around from the US and and to Europe, I think somehow there is a truth in the middle about taxes and import duties. So we just need to settle it. That's it. And that we have to pay something, I think it's clear. Inde |
| Andy Hoffman | ed. So the US is a big focus for you. Um it is an incredibly important market and it has a different demand and taste profile than than some other markets. Where does the US sit for you in terms of your distribution and your sales and what are you doing to make more inroads in that market. Obviously you i as you say, you know, design and and the kind of product you're bringing is |
| Niels Eggerding | uh really important. Yeah, you know, it's it's always dangerous to mention this because then uh you know I've learned if you speak too long and too too detailed about your strategy, then uh the competition will wake up, correct? So I will not disclose too much, but definitely pricing is key. I think choose the price range where you're strong as a brand, don't get overwhelmed or don't feel too confident that you can increase because that's a dangerous move. And definitely product. And I would say the third one is for me: uh the women development. They they are pushing us already for multiple years in a row. We have been able to answer it. We have able to find unique launches also, but that's where the trick will take place. Have the right watch for that market. And that's where we are working on. For sure. What have you And distribution, of course. And and answering the demand. Very important too |
| Andy Hoffman | . Do you think um you know the traditional way of selling watches though is changed dramatically? I mean, do your customers buy watches in different ways now? I think where |
| Niels Eggerding | the challenge is is much more retail. So, and the US is not the right example because I think the US has always been that commercial drive. They always had that commercial drive. Uh, much more than, for instance, the European retail has. Where I do see a problem and I visit regularly retail myself, if you visit a retailer and we just deliver the QP, an exclusive piece, and I will ask him, hey, did you get some did you already get some traction there? No, a few people came in. I said, okay, interesting. Then I'm asking, how many people do you have in your in your database? 10,000 people? Okay. How many people out of the 10,000 people would buy a watch around 10,000 euro. Niels, that's maybe 2,000. Okay. How many people have an interest about something special? Maybe 1,000? Okay. Why don't you take ten percent of those thousand pieces and you just write an email? Or maybe you take one percent and you call them. You say, I have something special in my in my room here. I want you to offer it, I want you to see it. First come, first serve. See how it reacts. And they look at me if they see water burning. And this is the problem for me. Because the time that someone comes in and they want to buy something as a Daytona or submariner, we all know that's over. You need to be super proactive. Yep. Retail is reshaping and you need to be super proactive to gain margin again and to gain your your customer because your customer became very knowledgeable what he wants and where he wants to buy. So if you don't offer him the way you will never get it |
| Andy Hoffman | . I mean it's been a volatile year on a lot of fronts, and you talked about other brands. Obviously, the you know the trend we've seen, especially with some of the higher-end brands, is to be raising prices and taking price quite aggressively over the past few years. What have you done with pricing and considering that you've got these new pressures like tariffs in the U.S., but also that you are a value-driven brand and in that approachable category. Yeah, what have |
| Niels Eggerding | you done? Yeah, so we we didn't have that much aggressive price increase done. So we have been very careful. And I have to say it has been a huge discussion every six months with my shareholding company, because supply has been going up, and uh cost has been going up, and your margin didn't go that much up. So that means your profit is under pressure. But for me it was very important to discuss with them, guys. We are penetrating markets, we gain market share. Of course, there's a time of profit, but there's also a time of waiting and see what competition is doing and see what the market is doing. It fluctuates heavily. I think now it's the best time to say how many percentage the competition went up. And some brands went up to 40% of their prices. Yep. And they struggle, I can tell you. It's confirmed. They struggle with sellout. So we have been doing price increases but much less aggressive. What positioned the brand differently than it was before. Before we had much more competition, today we are squite lonely in a certain price range with a massive strategy behind s well distribution, well prepared distribution worldwide. So for me, yeah, I see a huge opportunity. Now do we can we manage prices that we have today? No, we also have to do of course price increase and if the tariff is going to be applied or settled, we have to see how to handle it. Anyhow, if there's a tariff imposed, we have to do an increase somewhere. And all the brands are waiting, because of course they have been so aggressive in pricing, now they don't dare to move anymore. But you have to move because if there's twenty percent increase anyhow, we have to do something. We cannot take the hit. |
| Andy Hoffman | Well yeah. I mean we've seen an initial round of increases from from some of the big brands, but not too heavy. And um indeed they have the ability at the moment to wait, but they can't wait forever. And we've seen a lot of the small guys, smaller um manufacturers have to pass on that tariff increase. And so how much time do you have to wait |
| Niels Eggerding | ? Well, very transparently we have been able to discuss with the US shipments June, July. We have advanced shipments. So that helps. Then they have done an increase. We have done a global increase as of September. We prepared it already as of April when the first tariff was applied. How much was that? Between four and six percent. Okay. Super marginal. We didn't increase much. Now the US has lucky that they had stock and big shipments from us, so you can survive a few months with that. So for me, we really aim on the deal that uh is that is going to be done in October. That's key for us. Interesting. Or else after that, if tariff is gonna stay, we have to find a solution in the US globally and on the chain. So we cannot just let the consumer in the US pay the bill. I don't feel that's that's fair. And I think many brands struggle with that because they have boutiques. Yeah. So if you have a brand so for me, a watch that is 2000 euro, if you bring them 50% up, it's still marginal, in a way, I would say. It's still a lot, but it's still marginal. Interesting. So if you have ten thousand euro, that's another ballgame. Then you can pay a ticket to Canada. You can pay a ticket to London or Paris. Yeah. And for us it's still not the case. So for them it's difficult because they have boutiques, high fixed cost. So they have to find a solution there, those brands. That's where they're getting so nervous |
| Andy Hoffman | . You know, there's been a lot of talk about being a approachably priced brand and how that segment of the market is struggling in a way, and we see everybody else, you know, trying to premiumize and move higher and higher up the chain. W you know, how do you see that market considering where we are with so much economic uncertainty, a a a client, a consumer who who's economically, you know, potentially nervous, how is that segment performing overall and and and what do you see the future of of that segment in the |
| Niels Eggerding | market? My segment is core is seven fifty to three thousand. That's my segment. That's where I belong as a watch brand. And I always say stay true to your DNA because if you think you are higher, you start to lose it. Because quickly going higher, we have learned you need to have a nice complication, wheel timer, you need to have a QP, but you need to be able to do that to answer higher price products and demand. But our strength is 7,000 and 3,000. And that's where we should stay. So I would say we should find alternatives on the supply and on the whole chain to constantly offer this beautiful price range instead of going up. Yeah. Let the comp |
| Andy Hoffman | etition go up. Are you finding ways to manufacture and source supply um components, etc., that are um allow you to keep that value proposition? Are you going elsewhere for No, no |
| Niels Eggerding | , no. We it it's it's becoming easier now because of the economical turnaround. So suppliers are also uh different again. In in after COVID it has been completely different. Yeah. It has been impossible to work. Today, I would say because of pressure on luxury, um, it gives me more opportunity to negotiate with the supplier on the pricing. But overall it's a bit more expensive. We need to realize that. So you need to really have group leverage. That's where group comes back again. The group leverage you have really helps to work within a difficult time like |
| Andy Hoffman | this and use it on the right way. Trevor Burrus For sure. And you know, looking forward, uh the tariffs are the sort of immediate challenge in the U.S. and that economic uncertainty persists. But where do you, you know, w brannaing the brand, say in the next two, three years? I mean, you know, we've seen some v quite interesting new products, sort of more some of a lot of it more classic in design, but you know, recalling some um great attributes of of uh of traditional watchmaking. Where do you want to bring the brand um in the |
| Niels Eggerding | next uh little while? Well I definitely uh the idea is that we are going to make more valuable products for the consumer to to purchase for a very fair price. That's anyhow going to be the mission. But what we can see is that in the coming years is the idea to really innovate more in the manufacturer calibers. So I would say more aggressive in pricing. That's the aim. More specs, better value proposition. But also solar quartz, for instance, that it comes in, I'm expecting a lot from that. So it's sustainable, it has an approach, not a lot of talking around it, but very strong in terms of commercial focus because it's exactly where we are. Thousand to three thousand euro with a beautiful movement solar card starting at around 1200 euro, it's perfect. So there I expect a lot of volume to pick up, to continue to to to build volume. And then on the manufacture we will have anyhow beautiful exclusive lounges. We will do we we have a lot of things in the pipe. And Dubai Watch Week we're gonna do another fantastic lounge there. So you will see something very exclusive coming up. Excellent. |
| Andy Hoffman | Excellent. And anything else we should be thinking about, Frédéric Anston, in the immediate term and what's new with you and and the brand and what's next? |
| Niels Eggerding | No, I think we covered a lot. I think the people should stay tuned and and follow us and we always uh aim to surprise uh different variations of consumers from consumers that are the first time they buy their first professional watch, serious watch. That's where they enter in the world of Frederick Constant. And we can build them up all the way to a perpetual calendar in a time frame of 20 years. They can take a first uh automatic watch, they can have a bit of a complicated automatic watch, they can go to the first manufacturer caliber with the moon face, they can go to perpetual calendar. So we have a retention that is quite long with the consumer and the consumers are very happy with the brand. So |
| Andy Hoffman | let us surprise you, I would say. Okay. Good., Go goodod, good, good. Yeah. I meanan you wna you're creating new product to keep you know, because you have that distribution in many places where you can be there for a serious watch and now you feel you have more and more of the products to keep them with you on their watch turns. that's the trick Yeah |
| Niels Eggerding | we don't want to lose them. So at least they're fine to go one day to to Patek, but let them first uh stop with a perpetual clear from Friedrich Most. That's fair enough, correct? Then they can buy five watch it from the from the fact and we have a lot of customers that come to me that even I Friday for instance a consumer coming here he bought a tourbillon and he really wanted to visit the factory and he approached me and he's gonna visit and I'm gonna have a quick discussion with him. And he wants to see uh perpetual colour to beyond so you can see also people are very interested about how we do the how we do it. Yeah and to visit and we are open for it. And I'm learning from that also. Have you had to change though the |
| Andy Hoffman | way I mean in the past it used to be just sort of people would discover the brand when they were in a rock watch retailer? You've had to change the way that people hear and learn about Frederic Constant though. It's a different ballgame in terms of awareness and and visibil |
| Niels Eggerding | ity? Yeah, we have we have worked much more on exclusive drops in the past year, collaborations. So a little bit more outside the comfort zone of the brand. We did collaborations with watchmakers like Pieter Spiedmarin. We did collaborations with Secon Secon, Romaric, very exclusive. It was super cool. En the watch is even two times the price now available on the market. So I've never seen that before. So that helped to create desire of the brand. And then we have worked on a lot of I would say uh YouTube content, so video content, where we explain what we are doing, how we are doing it, and also those collaborations. And that really created I would say demand, and that really brought the brand out over the radar where we below we were very often below radar volume. But with those collaborations and those YouTube content, it really helped to speak more about the brand, what we are doing, and people saw that and then they have an interest. Okay |
| Andy Hoffman | . Good. Well Niels Eckerding, thank you for joining us and we look forward to what comes next for Frederick Constant. Thank you and And that's the business of watches for this episode. We hope you enjoyed. Please head on over to hodinky.com where you can join the discussion and leave any comments or questions about this episode or the business of watches in general. Who knows, we might even answer your question on a future episode. Thanks for listening and see you next time. We'll be back in two weeks with a fresh episode of the business of watches. Until then, I'm Andy Hoffman, and I'll see you on hodinky.com |