Q&APanerai’s CEO Speaks About The Impact Of COVID-19, And The Road Ahead
In a changing world, where we’ve begun to question everything, Jean-Marc Pontroué, the CEO of Panerai, contemplates on how the brand and the industry will move forward from the global crisis, while also sharing his thoughts on the new Panerai novelties from Watches & Wonders 2020
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As you celebrate 70 years of the Luminor, could you talk about the significance of this collection since its relaunch in the 90s?
You know the company was acquired by Richemont in 1997, and thanks to Panerai’s strengths, it became one of the top 50 watchmaking brands in the world—a remarkable achievement of my predecessors, considering that most of the 50 have hundreds of years of history. A major foundation of the brand was Luminor, and, as I say, “Panerai is Luminor and Luminor is Panerai.” Even those who don’t know about the brand well enough can identify the Luminor watch by just seeing it. It’s that eye-catching. It’s this watch that allowed the brand to take off significantly since the 1990s. Then guys like [actor] Sylvester Stallone helped in making the brand better-known in the US.
What was the idea behind making the new 70th anniversary Luminors ultra-luminous?
When you concentrate all your resources on one collection, a lot of ideas are discussed. Luminor is an emblematic product that has hardly changed in terms of materials, design—it’s all been very characteristic of this model. So when we changed from [the luminosity of] Radiomir to Luminor in 1950, the signature elements of the watch were the strong luminescence, the case, the crown protector, etc. When we decided to focus on Luminor’s 70 years, an idea of going beyond the dial with the luminosity was presented, so we decided to go ahead and include it on the bezel, the crown protector and strap as well.
The 70-year warranty that you’re offering with the new Luminor anniversary edition is an unprecedented offering. Is this a way to tide over the current market situation and overcome the challenge?
To be honest, nothing that you see from the brand today has been done because of the crisis; everything was planned at least 12 months ahead. When I joined the company, I was drawn to the claim ‘Laboratorio di idee’ (which literally translates to ‘ideas workshop’). For me, it wasn’t only a marketing claim; it had to be more. So first, Laboratorio di idee exists in our manufactory in Neuchatel. It’s where we test many new materials, out of which maybe one out of 10 will make it to the products. The 70-year warranty is part of my belief that the brand has to be a pioneer in concepts. The reason for Panerai to exist in the world of watchmaking is about how you can really break the existing rules, reinvent services, the experiences, the materials, movements, sizes…you name it! The 70 years is a result of everything that the brand has been doing for many years, for sure before I joined even, in terms of movements, reliability. You know that Panerai already offers an eight-year warranty with our watches. We were among the first to move from two years to eight years. So what we sell is not just the watch, but also the assistance to service the watch for those many years. We are surrounded today by industries that give guarantees with cars, etc, along with the assistance that they can provide. So it’s something we also want to do with our watches.
When you’re developing watches with a warranty of 70 years, are there any particular measures that are taken for these watches?
To be honest, no we don’t. We build all our watches, from the simple ones to the tourbillons, with the same principles. If you come to our manufacture, you’ll see that. They’re not in the same room because the tourbillons are made in the haute horlogerie department, but the same principles are followed throughout. Never forget that we come from the military world. When you’re supplying to the military, the prime concern is not to make nice products, but to make reliable products, that have to perform well in all conditions. Panerai is very focused on durability. Most of our sales are of simple movements—automatic, mechanical movements with hours, minutes and seconds. Resistance and reliability are key factors for success in the watch industry. So the products with a warranty of 70 years are made with the same principles as those with the eight-year warranty.
Panerai has made cases and straps with recycled materials, and rumour has it that next year, we might see a watch made 100 percent out of recycled materials—including the movement. What can you tell us about this?
That would be my dream. Last year, we launched a concept called Panerai Ecological. We are now about saving energy and doing things for the environment, aware of how much the environment has been neglected, and so on. It’s become a major priority for our civilisation. To cut a long story short, there are several initiatives we’ve taken, wherein our 740 employees take into account this new dimension of saving energy. For example, when we build our boutiques, we take into consideration the consumption in terms of lighting and materials used, etc. In transportation, we avoid travel by air within Europe, etc. We also encourage video conferencing a lot between our manufactory in Neuchatel, the headquarters in Geneva and the design centre in Milan, instead of travel—even aside from the current situation when calls via Zoom, etc are necessary.
Last year, we also included recycling initiatives in the making of our packaging and even straps. Some of our models are equipped with straps made from plastic bottles. We are using dials made of the sails of the Luna Rossa vessels.
We are increasing the share of the products that use recycled elements. A fine example is the Submersible Mike Horn EcoPangaea. [Explorer and ‘friend of the brand’] Mike Horn came one day, with this shaft from Pangaea boat, and he told me that we could take it to build watches or he would throw it away. We hadn’t thought of it, but we decided—why not! So we asked our watchmakers of the possibilities of making a few watches with the material, and we could make five watches with it. Ecology is very close to the heart of Mike because when he goes on his expeditions to the North Pole, etc, he sees that even areas that are untouched by civilisation are deteriorating, such as the deepest parts of the ocean, where there is plastic! About 30 percent of this watch is made of recycled materials. We have 15 people working on a project towards creating a watch that is made 100 percent out of recycled materials—not only the habillage, or the exterior, but even the movement, which is the hardest to make, because of the hundreds of components that go into it.
The Panerai experiences have become an integral part of your communication as well. How do you plan to go forward with it this year?
It’s a very frustrating year because we were planning to have at least seven experiences after the two very successful experiences we had last year. We had to cancel the experience with Mike Horn in April. This year, we’re planning to skip most of them, because of the impossibility of people travelling. Today I live in Geneva, which is 2km away from France. Earlier, one would enter France 10 times a day, without realising that one was entering another country, but now that’s impossible. To cut a long story short, we have no clarity yet on when countries will open up. We have decided to concentrate on only two experiences this year. We hope they’ll be possible. We’re still not sure. Our customers will have to be in quarantine for 15 days and so on. But in the next financial year, the plan is to have seven experiences, including the one with MS Dhoni, which we had to delay.
The experiences are a very strong element of the brand’s strategy for the future. We will not exceed 10 experiences per year. We have a dedicated department, but it requires a lot of organising. You need to have the celebrity, and the conditions at the destinations must be suitable, and of course, there have to the limited edition products that the experiences go with. There should be a good cocktail of adrenaline and fun. There should be enough of both.
You’ve been introducing watches in all sorts of new-age materials. Which is the biggest focus material for the brand this year?
This year, Fibratech is something that is very interesting because it’s made of basalt elements. It’s a material used in other industries as well. Most of our inspirations come from other industries that are exploring new materials. We are friends with Luna Rosa (the America’s Cup team) in Italy, and their objective is to make their boats faster and lighter. If you want the boat to be faster, it has to be lighter, but also as resistant as it would be with heavier materials. At the end of the day, we work with the same principles. We want our watches to be lighter, especially the bigger ones. We also want to be very resistant because it has to pass our crash test. All these requirements have to be met. So when we talk about Fibratech, we are very proud of it; we call it the ‘prima assoluta’ because it has never been used, and it exemplifies all that we strive towards with our materials.
Panerai has been making some serious strides in material innovation lately. Has this been a conscious focus area, or is it simply an organic evolution for the brand? Does this change Panerai’s positioning in the industry, since Panerai was otherwise known to make mono-metal cases, while new materials were not such a focus before?
I’ll go back to Laboratario di idee. If you want to take it beyond being a concept and give it some gravity, there has to be research and development. The beauty of new materials is that it positions the brand as one of the operators in the industry that contribute new materials to the field of watchmaking, thereby propelling the industry forward. This should be done provided that the material is not just beautiful, it should also be feasible to sustain in the long term. And it should have a functional significance and advantage.
The principle behind Panerai is that we are a ‘sportive classic’ brand. The association between sportive, casual and classic is not so easy to establish. My only target is to ensure that 50 years later, we are proud of the watches we create now. So 70 years later, if someone comes for their final check [on the 70th anniversary Luminor with a 70-year warranty], will we still be proud of this watch, like we’re still proud of the 1950 Luminor?
And secondly, I am fascinated by the concept of the Porsche 911, for example. The Porsche 911 remains a classic in the car industry. At Panerai, we love to take these kinds of benchmarks. I’m not saying that this is the only one. Models like the Porsche 911 have been around for many years. They change certain elements, but the Porsche 911 of today is very similar to the Porsche 911 from 60 years ago. Similarly, we are here to create emblematic models like this one, which we’ll still be proud of for years to come. This is what’s guiding our research and development. Today, the material Fibratech is a material that has a tonality that is very classic in appearance. But it gives added value in terms of its lightness or resistance. And it’s not fancy. It’s not pink, orange, blue, etc. We have hundreds of sketches at the design studio that could give birth to watches that are much more vibrant in terms of materials, but we don’t do it. We are not a brand that takes into account the trends of today that might not be the trends tomorrow. We are here to create the classics of tomorrow. That is our guiding principle.
The new Luminor DMLS has 3D-printed case, which still promises the resilience of a regular case. Do you think this is a manufacturing technique that can go mainstream and be used for mass production?
You’re very true. This was created by my predecessor, Angelo Bonati, for a tourbillon. It’s simple technology, very reliable. This is the principle of Laboratario di idee. You know how the car industry loves to create concept cars—those that you’ll see at fairs, but won’t be for sale, or might be for sale in very limited numbers. But 10 years later, you might see at least a couple of elements from such cars used on a much broader scale. Now Laboratario di idee is basically the same principle—how we can create new ideas that can be used for the time being only for a high-end tourbillon, only a couple of hundreds of pieces a year. Now this DMLS watch is at a price point 10 times lower than that of a tourbillon, and it is already a larger production. Coming to the question of whether it can be a standard technique in the industry in the future, I’m not sure it can be done with many other materials. Ceramic is different for instance. We can’t work with ceramic the same way we work with titanium or gold or Carbotech. We don’t necessarily do all our cases in-house. We work with different small companies around the region of Neuchatel, which have their own specialisations, so it also depends on what they can do. The DMLS is something we do ourselves, but it’s only a fraction of our production.
You have a lot of watches with five-figure [EUR] prices in limited numbers. Are you planning to target these towards only niche collectors?
Watches & Wonders is very much like an exercise—as I often say—haute couture events are for fashion brands. So what you see at an haute couture event is not what you’ll see in stores. The target is to show to the world the creative direction of the brand. So in terms of the price points, limited editions, we show the most spectacular developments of the brand. It’s like the car show in Geneva. We still have products at EUR 5,000 to 7,000 (INR 4 lakh to 6 lakh, approximately), which are a part of our bestsellers, like the Luminor 1312.
But at Watches & Wonders, we present limited editions and products like the Mike Horn Edition. The Mike Horn is a product, by the way, which sold out before we even launched it. Why would we launch it then? It’s because we don’t take a selling approach at Watches & Wonders. We are making a statement of style, and of the positioning and storytelling of the brand.
And we do limited editions only if we have concepts that are very strong. Additionally, we’re not going to do a limited edition of say 5,000 pieces. We do 270 pieces, for instance, to mark 70 years of the Luminor. Panerai is a brand of exclusivity. Take the Bronzo, for instance. We could probably produce 10 times the numbers. But we want to create that value for those who do buy such watches. With the Bronzo in demand, their watches are growing in value, because it’s sold out.
What has been Panerai’s approach to the current pandemic and is the brand currently working towards providing any aid to the global crisis?
The pandemic really took us by surprise because even though we were aware of what was happening in China, we never imagined that it would arrive so quickly in the Middle East, India, Europe, USA, and so on. So the first priority has been to ensure that our organisation—all 740 people on our staff—are safe. There are cases of COVID-19 in all the places where we have a presence. It’s a nightmare to handle because there are different regulations, principles and protocols on lockdowns and partial lockdowns in different countries and cities. The goal has been to maintain business continuity, despite warehouses being closed. Our contribution has been mostly to help people in Italy because we have a lot of our operations there. We are a part of the programme wherein Richemont has been making millions of masks in its facilities in Italy, to donate to hospitals. We are also in close contact with hospitals in Milan, which was the first city in Europe to be hit. We hope to go back to normal soon. And we hope that the disease will be an old story in the coming months.
How do you think retail is going to change given the current crisis? Do you see sales taking place predominantly through online channels? And what will happen to retail outlets and boutiques?
Today, we have 150 stores across most major cities in the world. Panerai has always been a brand that has believed in retail for many years now. I would say that the current scenario is accelerating some trends. Yet, retail is important. We don’t intend to reduce our number of stores. We will, of course, invest even more in e-commerce because we’ve seen that in the last two months, our e-commerce has continued to see a triple-digit growth. To be honest, e-commerce wasn’t a huge priority 18 months ago, but now it is. Last year, we had a special Submersible edition only for e-commerce. I can already tell you that we’ll be coming out with at least one new dedicated edition for e-commerce. E-commerce is the third-largest network after retail and resale. I strongly believe that 2020 will be a very impactful year. But I really hope that 2021 will see us all going back to normal, without masks and so on.
What kind of trends do you see people interested in after such times? Will people prefer to keep things simple with understated pieces, or will they want audacious products to change the mood after a crisis like this?
First, I strongly believe that human beings have the capacity to forget what’s in the past. When we’re out of this crisis, which I hope will be soon, we’ll have a tendency to forget all that we’re experiencing during these days. Do you remember the crisis we had in 2008? I had to read in some newspaper recently to remember that financial crisis. And it was only 12 years ago. So yes, there will be new trends, an acceleration of e-commerce; there will be people who won’t be as ostentatious as before. Yet, we are not in the watch business, as I say very often. We are in the emotion business. As long as there will be human beings who want to celebrate anniversaries, birthdays, achievements, love, or even if they want to indulge, there will be luxury products. And Panerai is an understated brand. We don’t make these diamond-studded, colourful, exuberant concept watches. I strongly believe that emblematic brands will have a bigger share of the pie. And Panerai is one of them, even though the pie itself will be smaller in 2020. But creativity will still be here, audacious projects, reinventing our industry, working under the pressure of having limited means, resources and people to deliver more. I think it’ll be a good exercise to work under the pressure of less investment—how you can wake up in the morning and do something creative even while having less than what you had the previous day. And this is true for any industry. The biggest challenge we have is to handle the de-acceleration of our business. Hopefully, it will be temporary, but it’s a different exercise, it’s a different way of thinking.
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