The Swiss newspaper NZZ recently published a rich interview with Jean-Frédéric Dufour, CEO of Rolex and President of the Watches and Wonders Foundation, together with Matthieu Humair, Chief Operating Officer of the show.

Starting this week, the Watches and Wonders watch fair is being held in Geneva, and will last for a whole week. During this event, 54 prestigious brands will present their latest innovations. Dufour and Humair offered an analysis of the challenges the watch industry is facing.

On Tuesday, the Watches and Wonders watch fair begins here in Geneva. What do you expect?

Dufour: We expect around 45 000 visitors from all over the world: people working in the watch industry, journalists, collectors and watch enthusiasts. For Geneva and in general for Switzerland it is an important occasion. We can show the world our specialties and explain what constitutes Switzerland. The people who come are typically well connected in their country's watchmaking world. When they return from the fair with good memories, it is good for our country and the watch industry.

Rolex, of which you are the CEO, has worked together with Patek Philippe and Richemont to ensure that there is still a major watch fair in Switzerland after the fall of Baselworld. With what objective?

Dufour: Our main goal is to speak with one voice. In Switzerland the watch industry can be important. Everyone here knows someone who works in the industry. But in the rest of the world, watches are less present among people. That's why it's important that we attend once a year in a way that is perceived – not as individual brands, but as the watch industry as a whole. Our dream is that, with Watches and Wonders, Geneva becomes what Milan is for the furniture industry with the Salone del Mobile, with Watches and Wonders, an event where the whole region talks about furniture for a week. Without such a fair, which showcases the diversity and expertise of the industry, people might only have Ikea furniture at home.

Mr. Dufour, you have worked in the watch industry for thirty years. How is the industry doing right now?

Dufour: 2024 will be a challenge. A phase in which all producers did well is about to end. In good times, too much is often produced. When markets weaken, as now, watch retailers are under pressure and respond with discounts. This is extremely problematic, because discounts hurt emotional products like ours.

Does it affect all brands the same?

Dufour: There are brands that are very well known and successful. Their names stand out from the crowd and are always in the consciousness of consumers. These brands are still doing well. This can also be seen from the fact that the resale value of these watches does not decrease.

What are the reasons for the outlook for 2024?

Dufour: We produce everything here at Swiss costs. So the franc is a challenge. Furthermore, raw material costs have increased massively. A kilo of gold currently costs almost 66 francs. Thirty years ago, when I started in the watch industry, it was still 000 francs. Naturally, this makes the watches more expensive. Furthermore, the increase in interest rates affects the mood of consumers, and the geopolitical situation does not help either. But you know: we're used to it in the industry. We sold Swiss watches abroad when a dollar still cost four francs.

What is still done today, where the dollar costs only 90 cents. . .

Dufour: Because we sell dreams! As long as we do this, no one can tell us at what price we should offer our product. For a Swiss machine manufacturer, the situation on the export market is much more difficult.

Two or three years ago, watches were seen as an immobilization rather than a dream. For example, crypto millionaires have converted some of their money into real values.

Dufour: I don't like it when people compare watches to stocks. This sends the wrong message and is dangerous. We make products, not value investments.

Some brands stand out from the crowd. Do you expect other watch brands, which do not belong to this peak, to get into trouble in the near future?

Dufour: No, I wouldn't talk about problems. The pendulum now swings in the other direction, and naturally strikes harder with less established brands. While they may have seen a twenty percent increase in sales during the recovery, they may now see a fifteen percent decline. Among big brands, the fluctuations are smaller, in the range of plus/minus two to three percent. Big brands never achieve twenty percent annual growth.

Humair: It is even more important that we have a fair like Watches and Wonders in Geneva in such an environment. We are proving here and now, as an industry, that we are moving forward together, even in not so rosy times.

In your opinion, does the event necessarily have to take place in Switzerland?

Dufour: Yes, because these are «Swiss made» watches - and the Swiss watch industry that speaks to the whole world. It wouldn't be the same if the Swiss brands went somewhere. Then they would simply be watch brands trying to sell watches. Here's more than that.

WEF's Klaus Schwab receives daily calls from places like Singapore, New York or Dubai who want the WEF to take place with them instead of in Davos. Does this happen to you too?

Dufour: Of course, and some places are more suitable in terms of logistics, for example. But then it's no longer Switzerland.

The fair is now taking place for the second time under the leadership of the new foundation. What's new compared to the previous year?

Humair: We have increased the number of public days. Out of seven days, three (Saturday, Sunday and Monday) are now open to the public. Furthermore, we have expanded considerably the offer in these days: it is possible to book guided tours on site, some brands offer so-called “touch-and-feels” where you can pick up new products, and there is a completely new program with speakers and conferences. In addition to the fair in the Palexpo halls, we have also strengthened our presence in the city: with guided tours, watchmakers' workshops, events in watch boutiques and concerts.

Dufour: I would like to open the fair to the public for seven days. But here things are the Swiss way: we work with compromises. Perhaps for the moment it is even better to limit ourselves to three days of public viewing. Because there is a lot to do at the start of the fair. It's not bad when we are among us: producers, traders and journalists. I would also have liked to announce that Swatch Group is present. But unfortunately it doesn't arrive; at least not this year.

What's stopping Swatch Group from participating?

Dufour: I don't know, I don't look into Mr. Hayek's head. I visited him and his family and invited them. But Nick Hayek has his own ideas. He says that the Swatch group is very industrial and doesn't want to waste time with exhibitions. However, for us it is not a waste of time. We sell emotions and dreams. To keep them alive, you have to tell stories, you have to be active, you can't just sell products. It's a shame, but it's not for me to judge this strategy.

A great Watch Week in the style of the furniture fair: does Geneva have the capacity for this?

Humair: In Geneva there are around 15 000 hotel rooms – spread across all categories. We currently use 6500, which is less than half.

The fall of the Baselworld watch fair was not long ago. What do you do best?

Humair: Geneva is much easier to reach than Basel thanks to the airport. Furthermore, we have prices under control, because we have direct agreements with hotels, which was not the case in Basel. The hoteliers are satisfied, but they also know that we have a problem if they overdo it. In total we are responsible for 40 overnight stays this year, last year it was 000. We bring 35 million francs in revenue to the hotels.

Dufour: The big difference is the organization: in Basel, the watch fair was run by a company that wanted to fill its exhibition halls and sell as many square meters as possible. Here, it is a non-profit organization that organizes the show on behalf of brands, with the aim of raising awareness and promoting watchmaking globally. This also means that we don't just have our fair, and hope that people come. We actively try to get a great response by inviting journalists from all over the world.

Is it less expensive for exhibitors in Geneva than it was in Basel?

Dufour: We have reduced prices as much as possible. Our system is also very Swiss: half of the brands pay for the other half. Similar to the financial equalization of the cantons.

Humair: independent watch manufacturers pay a price per square meter of 1800 francs at the fair. As a small watch brand, you have access to all retailers, journalists, consumers for seven days for 45 000-80 000 francs.

Dufour: It's not a little money, but even a double-sided ad in the Financial Times' Lifestyle-B magazine isn't much cheaper.

Are you flooded with producers who also want to exhibit?

Dufour: Yes, we had to make a selection this year. The quality must be right, the people behind the watches must also be serious about their commitment. We don't want opportunists in Geneva.

Do exhibitors have to commit for several years?

Humair: The adults for two years, the independents only for one year. So you have to keep in mind that the big guys invest millions in the fair every year.

Who decides which brands can come?

Dufour: This is decided by the Board of Trustees, made up of four members: Cartier, Patek Philippe, Richemont and Rolex. Oddly enough, Cartier, which is part of the Richemont group, and its parent company do not always have the same opinion. However, we usually try to decide unanimously.

Four members – this is a very small body.

Dufour: Indeed, but I hope that soon we will be able to communicate the new additions not only to the participating brands, but also to the Board of Trustees.

While eight new brands have been added since last year, two companies that were present last year are also missing. Have they been “dumped”?

Dufour: No, this was their decision. Rebellion Timepieces stopped making watches, and Charles Zuber had internal reasons.

Some watch manufacturers use Watches and Wonders to unofficially exhibit next to the fair. Is it a thorn in your side?

Dufour: We call them pirates. But it's fine…

Humair: . . . as long as it also helps generate attention for Geneva watchmaking.

How many watch manufacturers from abroad exhibit in Geneva?

Humair: Grand Seiko, Lange Söhne, Ressence and new Nomos and Bremont – it already has some.

Dufour: Producers can apply. But you can't think of so many names.

Is the goal to represent the Swiss watchmaking panorama in the most complete way possible?

Dufour: It would be great if the Swatch group joined us. But we can't decide for them. And as I said: our main goal is to showcase the performance of the Swiss watch industry once a year. It's not just about brands. It's about craftsmanship, about a rich history, about a long-lasting product. A product worth noting that could even disappear forever.

Why?

Dufour: There have always been turning points in the history of the watch where it could have been different. The wristwatch, for example, is a relatively young invention. Between the world wars, pocket watches were mainly produced. It is not a given that the industry has successfully mastered this shift. We need to make sure that people continue to wear wristwatches in the future, whether for social or other reasons. The competition for the wrist is high. Fitness-Tracker, smartwatch, bracelet. It surprises me every time my colleagues say, “People will always wear watches.” This is not God given, it is a fragile industry that we need to take care of.

What makes watchmaking so special?

Just look at what we are driving or photographing with today. The watch is the last purely mechanical product.

The interview is worth a read, and you can find it right here – “I don't like it when people compare watches with stocks. We manufacture products, not investments,” says Rolex boss Jean-Frédéric Dufour