What Does The Future Of Audemars Piguet Look Like?
There’s a new wind blowing at Audemars Piguet. Well, it’s about to start blowing, anyway. On January 1st, 2024, Ilaria Resta, who already joined the brand last August, will assume her role as Audemars Piguet’s chief executive officer. She will take over from long-time CEO François-Henry Bennahmias after his 30-year tenure at the Le Brassus-based high-end watch manufacturer. “AP” grew into the stratosphere under Bennahmias, but the luxury market has come under pressure. How will Resta fill Bennahmias’s big shoes, and what does the future of Audemars Piguet look like?
Swiss Firmenich SA is the world’s largest privately owned perfume and taste company. Ilaria Resta worked as President, Global Perfumery at Firmenich from 2020 until 2023, and before that, she was with Procter & Gamble for 22 years. The merger between DSM, the Dutch global health and nutrition company, and Firmenich was finalized, which led to DSM-Firmenich AG. It also led to Resta leaving the company. At Firmenich, Resta’s mission was to pilot “organizational change and [pioneer] digital innovation to lead Perfumery into new markets, augment creative excellence, and drive sales for winning performance with [Firmenich’s] customers.” What will her objectives be at AP?
The future of Audemars Piguet — Life after Bennahmias, the 2.2-billion-dollar man
François-Henry Bennahmias, who had set AP’s course since 2012 as CEO, is a bit of a controversial figure. He’s a love/hate kind of guy with a lot of energy. “Charismatic” is a way of describing him, but after seeing him together with Kevin Hart presenting the Royal Oak Concept “Black Panther”, the word “caricatured” also comes to mind. He was also the man who took Audemars Piguet to the NBA, and as a result, the baller spirit — not only Shaquille O’Neal and LeBron James but also Hollywood glamour and rapper/producer Jay-Z — came to Le Brassus and caused a revolution. The launch of the Code 11.59 by Audemars Piguet was also his doing, and under his reign, the Royal Oak soared to new heights. To put everything in numbers, Bennahmias will leave a brand that, over the past five years, more than doubled its revenue, surpassing US$2.2 billion in annual sales in 2022.
Ilaria Resta has some big shoes to fill indeed. Alessandro Bogliolo, chairman of Audemars Piguet, said in an official statement, “[Ms. Resta] will take Audemars Piguet into the future as we continue to develop our brand, blend tradition with innovation, and strengthen our direct connection to clients. Her proven record of delivering results through clear strategic thinking based on deep consumer insights will keep AP’s legacy relevant for generations to come and ensure long-lasting growth.” Now we know about Ms. Resta’s objectives. However, the luxury market is changing and becoming more challenging, and it looks like only the strongest brands with the clearest identity and undisputed relevance will be able to continue to grow.
Riding the waves
As of January 1st, 2024, Ms. Resta will lead the world’s second-largest independent watch brand behind Rolex but is now ahead of Patek Philippe, the prestigious Genevan brand that AP recently surpassed. The absolute number-one bestseller in the AP collection is, of course, the Royal Oak. It’s estimated that over 90% of revenues come from the Genta-designed watch, which celebrated its 50th anniversary in 2022. In my Breaking Down The Brand article on AP, I wrote, that “it wouldn’t do Audemars Piguet justice to call it a one-trick pony,” but the dominance of the Royal Oak is so strong, it’s really hard not to see it that way.
The danger of betting on one horse was not lost on Bennahmias. The Code 11.59 debuted in 2019 to provide an alternative to the “RO.” Unfortunately, just as former CEO Georges-Henri Meylan found out with the oval Millenary, the Code 11.59 has not managed to make a big impact on collectors and connoisseurs. The reality is that the Audemars Piguet Royal Oak Price Guide on WatchCharts shows that in the last 180 days, prices in US dollars have decreased by 9.2%. Having said that, on the parallel market, the RO still trades above its retail price, and new models are still hard to come by. Prices go up and down, and so does demand; that’s how markets work.
A relevant symbol
The good thing for AP is that the Royal Oak has become an untouchable icon. The watch is a symbol of success, taste, and relevance. Bennahmias made sure to point that out, and the fact that there was a 50th anniversary to celebrate also made it relatively easy to put the watch on an even higher pedestal. Bennahmias also put the RO into the realm of street culture, which brought him a great advantage over rival brands. Once Instagram started growing explosively and became such a dominant social medium, a younger and more diverse audience recognized and knew what the brand and the watch were all about — success.
The success of AP cannot simply be explained by saying that the brand rode the post-pandemic wave very well. It also happened to brands like Rolex and Patek Philippe. These brands were more or less swept away by a tsunami of demand. Yes, a side effect was that brand awareness and perception soared. However, so did prices on the parallel market as waiting lists got ever longer. These aren’t effects that brands necessarily appreciate. Patek’s Thierry Stern didn’t pull the plug on the steel 5711 Nautilus for no reason.
Feeling right at home
Scaling back from 470 stores some ten years ago to just 99 points of sale globally today also brought AP success. It’s the AP House concept that is an important part of the brand’s sales strategy. It’s taking the idea of a brand boutique a couple of steps further. You don’t stand in line behind a rope waiting to get in. Instead, you make an appointment and go to one of the 17 luxury houses that have appeared in cities around the globe like New York, Shanghai, Tokyo, Zürich, and Amsterdam.
“At our price point, [this is] the exposure and space we need to host people the right way,” Bennahmias said in an interview for The Business of Fashion in March of this year. “We’re only selling 50,000 watches. I want to get to know the 50,000 people who are buying every year.” The setup has worked wonders, with clients spending three to four times as much as they would in a traditional store.
Resta’s future challenge
Bennahmias’s excellent run at AP was fueled by a few things. The way he cleverly — maybe even clairvoyantly — infused AP with street culture was way ahead of the curve. The luxury market worked in his favor, and the pandemic also didn’t hurt him. And on top of that, he had in his portfolio a true watchmaking icon, the now 51-year-young Royal Oak. He’s exiting the brand on a high as the luxury market as a whole is showing significant signs of slowing growth. The first challenge for Ilaria Resta will be to go steady. Growth will always be the objective, but the more or less “perfect storm” that Bennahmias sailed through will, most likely, not repeat itself.
Also, Resta will lead a company in which people in key management positions only experienced great success and growth in the last decade. What happens when times get tough and watches don’t sell themselves anymore? How will they react to the headwind? Will they step up or buckle under pressure? It’s not only Resta who’s facing a challenge but also her staff.
The Rolls-Royce way
Will Ilaria Resta, in time, need to introduce a new watch collection? With the flagship Royal Oak still ruling the waves, it will not be on her to-do list for the next three years, I presume. What will be, however, is ensuring that AP will be top of mind when its current and potential clientele is thinking about buying a piece of Haute Horlogerie that is relevant in every possible way. That also means becoming even more exclusive than the brand already is. And becoming more exclusive also means becoming more secretive. The AP House will be the ultra-luxurious hangout for the ultra-rich patrons. You’ll only get in if you know the secret password.
It’s quite possible that Ilaria Resta doesn’t drive a Rolls-Royce — that may be too extravagant for a Swiss CEO. However, she might be familiar with the advertising strategy of the world’s most famous carmaker. Like AP, the car brand with the Spirit of Ecstasy on the hood caters to the world’s most affluent customers. And it reaches its target audience by being present at high-profile events, expensive hotels, and exclusive car shows. Rolls-Royce also relies heavily on word-of-mouth advertising from happy drivers. It’s these satisfied customers that become brand ambassadors for Rolls-Royce. An AP House is an ideal place for exchanging stories — about watches, yes, but also about cars, private jets, yachts, and what have you. This is the safe, sheltered, and exclusive world, far from the main street and common folk, where AP has moved. And it won’t move back to where it once was anytime soon.
Word of mouth in the AP House
The AP House is the ideal setting for word-of-mouth advertising from happy Audemars Piguet wearers who bring their friends. Considering that, Resta will probably focus on finding the balance between two things. The first will be the personal contact between the brand and its clientele while connecting existing customers with potential ones inside the carefully controlled and curated AP House. The second will be keeping AP desirable and aspirational through strategic partnerships, enchanting advertisements in selective media, and a strong digital presence. A new watch collection can wait — for now, at least. And once it’s time to unveil one, I doubt that Resta will take to the stage next to a comedian.