The Business of Watches [004] Tag Heuer CEO Antoine Pin On Carbon Hairspring Setbacks, Pricing, Tariffs, And Formula One

0:00Welcome to the Business of Watches, where horology meets high finance and each tick tells the story of markets, margins, mish, and mechanical mastery. I'm your host, Andy Hoffman, Senior Business Editor at Hodinkee. 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 smartwatches and microbrands at north of$100 billion globally.

0:51But behind that figure is a complex web of legacy, innovation, and ever-shifting consumer taste and demand. This is the podcast for collectors, analysts, watchbuyers and sellers, and anyone who's fascinated by the intersection of riskwear and wealth. Because if time is money, then money is most certainly time. So let's get down to business.

1:21Antoine Pinn is on track. The Tag Heuer CEO is leading the brand through one of the most important years in its history. This is the first year Tag Heuer is the official timekeeper of Formula One. It is part of a decade-long multi-brand deal for Tag Heuer owner LVMH, said to be worth about$1 billion. The agreement marks a major shift in visibility for the brand, and last year it brought back the iconic Formula One model to coincide with the new Formula One sponsorship. So, have Pin and Tag Heuer been able to take advantage? Amid an industry-wide downturn in demand, he has been cautious about overproducing when consumers are dealing with economic shifts and upheaval.

2:14But Tagg is also innovating. After a first attempt in 2019 proved to have issues, the brand is back with its own in-house carbon hairspring. It is a brave move to double down on the previous setback. PIN says it aligns with the brand's new slogan, Born to Win. The Heuer name is a hallowed one in the Swiss watch world, but it also has a lot of challenges in telling its message. With the iconic Monaco and Carrera models, its history is one that is synonymous with motorsports. But it also needs to serve as the LVMH entry-level priced watch brand. charged with bringing people into the luxury watch world with watches priced at under 2 ,000 francs.

3:03At the same time, it has an innovation lab to push the boundaries of watchmaking, technology and design, and also produces watches priced at more than 100 ,000 francs. That is not an easy cake to bake, but Antoine Pynne believes he has the recipe. recorded at Geneva Watch Days in September. Here's our conversation with Tag Heuer CEO and industry veteran, Antoine Pinn.

3:38Antoine Pinn, CEO of Tag Heuer, welcome. Thank you for joining me here at Geneva Watch Days. Thank you for being with us. Excellent. It's great to see you. It's great to see you, sir. And congratulations on your new releases. Tell us what Tag Heuer is bringing to Geneva Watch Days this year and what message you're sending with the product. Well, I think the first message we're sending is for the first time we're at the Geneva Watch Days because one of the great retailers of this industry once told me, you know, what I like about the Geneva Watch Days, it's the geeks moment. And it's true that the population that joins us here, from collectors to the press, are people who clearly have deep insights and solid understanding of the industry.

4:24And so we took advantage of our first participation to the Geneva Watch Days to re-expose collections bearing our carbon air spring. Because obviously this is quite technical, but this is a major, major statement from us because this is the first time that we do bear in our hands this possibility to produce our own air spring, matching the qualities of silicon, somewhat surpassing the qualities of silicon. And we've developed it internally. We're producing it internally. We're fully producing it. So we are taking advantage of these announcements to expose the two limited editions, one in Monaco, carbon limited edition, and one Carreur-Tobillon, carbon limited edition as well.

5:14interestingly celebrating the 350th anniversary of the WU-Egans regulating organ development, innovation, but also displaying this carbon air spring. So it's an interesting statement because, yes, we are working on developing our magnetic calibers. That's the beauty of dealing with silicon or carbon. and you're basically protecting yourself from the influence of magnetism. And beside this, you are also developing materials that are very insensitive to numerous number of external factors, such as pressure. The issue we have, and that's where we are closing one chapter of our history, was that when we first introduced this innovation, we unfortunately identified a problem while we were launching the piece.

6:07and it was an element of fragility, which was a sensitivity to humidity. And as much as I think it's the story about this innovation is major because it opens up massive opportunities for the future. For us, the moment we manage this technology of carbon items production, which is extremely special, we can develop that in different fields, but it also closes the chapter of what we all face the moment you face a challenge in your life you sit down, you recover you relaunch the machine and you surpass the challenge and you achieve and in that sense closing the chapter by launching these collections is also a way to pay tribute to the people of the Tagore Lab who've been spending the last six years sorting out this issue we identified and finally coming with this carbon.

7:08We didn't give up. They didn't give up. They didn't say, okay, that was an option. They went back and they worked harder. And it clearly was extremely complex to sort out. And I've not necessarily witnessed the whole struggle. Sure. But I love this idea, which is really probably the signature of Tiger about surpassing yourself. This notion of being designed to win means you're designed to win because you surpass your failures. And for me, it's very much representative of our identity. And to find it not just through the expression of sports, which is our natural expressions toward the public, but to find it in our teams is really extraordinarily satisfying.

7:53And so it's a human adventure. It's a technical adventure and a promise for extraordinary developments. And that's why I think the Geneva Washes was the perfect moment to expose those two conditions. And can you address, you know, specifically, but hopefully fairly easy to understand, how those issues with moisture and humidity for carbon have been addressed here and you've sort of solved that riddle? First, I'm not able to understand the whole process. I mean, too many PhDs in the room for me. But what I can tell you is basically, so we are structuring the carbon. Okay, we are building, we are really creating the air spraying shape with carbon.

8:38But to protect this carbon structure from moisture and humidity, we coated it. Right. We're talking micron level of precisions or even smaller dimensions than micron. So we're really dealing with extraordinarily tiny, tiny dimensions. You can imagine we're talking 10 microns kind of precision and you're doing this coating which is extraordinarily thin and that's the coating that's protecting the carbon. And that's as much as I can explain. Then the nature of the coating, I'm sorry, I don't remember and I'm not sure I'm allowed to mention it, by the way. It's proprietary technology. Completely proprietary technology, both from the development and the production, by the way.

9:23And you're showcasing this in both Monaco and Carrera. Talk about why these models, both in carbon, I guess. Both models are actually displaying hierology. Hierology is a big, big basket of so many things. So we like to call our hierology avant-garde in the philosophy of what the brand is about. So really focusing on innovation. And Monaco and Carrara are the two collections bearing those developments. And we wanted somewhat to expose this air spring in both collections. Wanted also in somewhat, it's just, again, the promise for the future. So the plan today is to continue to develop our expertise from small production, progressively expanding production, so that eventually we are equipping all our avant-garde horloges, which is products from, let's say, I can't really get into the details because I would unveil some stories about next year.

10:29But let's say all products that we consider innovative in terms of caliber to be equipped with these air springs from now on. So you will see it's spreading progressively. but first in limited quantities. Part of this move to carbon spring is about access to silicon and patents that existed around that. So yeah, I mean, it's part of the business strategy as a competitor to others. Carbon gives us two things. It first gives us independence when it comes to air springs. I mean, non-traditional air springs. And it gives us, again, opportunities to outperform silicon on some aspects, from isochronism to the weight of carbon being lighter than silicon and therefore lower exposure to gravity, which we know is another one of those external factors that are influencing the performance of our calibers.

11:27All with this idea to provide products that eventually will be so precise that, again, they're matching. I mean, we're not matching quartz, but we are getting so close that we are providing products that are mechanically engineered, sustainable, and providing the level of precision that people would expect in their daily life today. So it's really projecting ourselves in the 21st century of mechanical watches. Somewhat, I love this idea. It's quite paradoxical that we are talking about an item that was invented centuries ago, But it's jumping or diving into the modernity of extraordinary complex technologies, but also of socially very advanced concepts such as sustainability.

12:20It's almost like jumping from very traditional perspective to extremely modern perspectives. Let's look back a bit. You made a huge splash earlier this year bringing back the Formula One. You began being the official timekeeper of Formula One, backing that and part of an LVMH sponsorship agreement. How's that gone so far? What has it done for the brand? How has the consumer interest in the product been? It's been an extraordinary booster. I think we did have this return to Formula One. We also sharpened our communication around the concept of design to win. And it all brought the brand up front and exposed it.

13:08And it exposed it to a very large population. Formula One is now a very universal platform. And the beauty of Formula One for us, it's the fact that it's both a media, obviously, but it's also the story. I mean, putting Tiger as the timekeeper of Formula One is self-explanatory. And there is such a high level of logic that felt so natural to people But in the same time, I've had so many reactions about, yes, of course, our Comtag was not there. And so there are moments when you feel it was a bold move to challenge the existing and to invest heavily in this project because it's a very expensive project.

13:53but from a public global reaction perspective from the level of marks of attention from potential clients from the reactions of our existing clients from all those perspectives it made more than sense it was an exceptional decision and it was the right one to make we just created the platform that we needed to expose ourselves but also an element of motivation to push this notion of avant-garde and modernity even more and to concentrate on our identity deeply. And which again, you'll see even more in the coming times, concentrating on our identity, which is based on the notion of timekeeping, of course, of connection to sports and performances.

14:46And this philosophy of surpassing yourself, of really finding in yourself the potential to grow and to be a stronger person. And those philosophies, we will try to expose them in the product. And that's why I was telling the story of the offspring, because it's a human adventure and you'll see more of it in the coming times. You and I talked back, I think, in March about, you know, your decision, the decisions you made in terms of production and, you know, how much product you were going to create here. And you didn't want to overstuff the channel. sort of uncertain economic time. How has that played out as a decision?

15:25Next time, I'm going to say that the future is going to be unbelievably predictable and positive. And we won't have such crazy events as what happened over the last six months. I mean, the fact is that I think the presence that I mentioned at the time proves right. Right. You obviously we are we are dealing with with times that are not so easy and being prudent allows us to be very reactive as well. I mean, again, being cautious doesn't mean that we are closing our productions or whatever. We're just I mean, I've spent enough time in this industry to learn from some important watchmakers. And there is an extraordinary level of entrepreneurship.

16:13but with entrepreneurship comes also a form of prudence. You know that miracles do not happen, that we are connected with people who are spending, investing their own money. And so they're both very enthusiastic. They believe in their faith. They believe in what they're developing, but they're also prudent and cautious because they know that everything can happen. And so you're learning from them and you're learning this form of prudence. And I think the cautiousness was the right step to do. We're okay. We're really, really happy about the momentum and the dynamics. But it's better to progress and improve very progressively, matching the way the demand is growing, than to anticipate and unfortunately being wrong with this anticipation.

17:01So we continue with this journey. We continue to accompany the growth rather than anticipating it. Yeah, I mean, the Formula One is a watch that's priced around$2 ,000 below. I think that was important for you to hit that. It's an accessible timepiece. Have you got the balance right, though, in terms of what's available and the demand? Well, there's more demand, but that's okay. I mean, that's sometimes unfortunate. We're missing people's birthdays. We're missing some celebrations, and I'm sorry about that because it's always a form of frustration. But that's the price to pay. Again, there's not a magic ball.

17:44And you're either overstocked or understocked. And fine, okay, yes, we are out of stock. Some partners are unhappy. Some clients are unhappy because they don't have enough and they would love to have more. We're adjusting. I mean, we've increased our production and too much demand and fair enough. Right. And again, it's a choice. Your choice, choosing is renouncing. So we accepted it. These are management decisions we make every day at the end of the day. And let's talk briefly about straddling that line and being in that category. You've got a watch priced like the Formula One or the Aqua Racer, which are sort of approachably priced pieces.

18:28And then, you know, you have your high horology here with the new carbon technology and the hairspring. And some watches are over 100 ,000 francs. How does a brand like, I mean, you know, as a CEO, how do you navigate that wide berth in your product offering? Most of the brands I've worked with have the same kind of gap in reality. The leaders of this industry deal with the same kind of gap. You've got jeweler brands that are selling watches above a million and with entry price at the level of our products. We've got the leader of this industry with selling watches with a ratio of 1 to 100. I think when you're dealing with a brand that has a form of universal appeal, meaning worldwide exposure, dealing with all genders and different age category, there is a natural tendency to address different demands in terms of pricing as well.

19:28And on another end, on the totally opposite side, we're dealing with innovation, avant-garde, but also with precision, with chronographs, because that's really what we're looking into. Avant-garde is a very expensive product. I mean, the Tagore Lab is a 50 million Swiss franc investment over 10 years. it's a huge amount of money that has a price and you see that in what we call the avant-garde neurology what drives us is this vision not the price one specifically even if I think that we do have a duty to remain reasonably affordable within the constraints of the industry and the world today but to maintain this form of affordability And my dream being that we manage to share this innovation we're working on through all price points.

20:25But of course, it's a progressive process. And that leads to this kind of price differences because we do have products that are mechanical products that are made of extremely complex materials that require the actions of Swiss talented watchmakers. Those have a price. And I believe that in reality, This is matching the diversity of our clientele. We have some of our clients are 80-year-olds, some are 50-year-olds, and I love that. But they don't necessarily, they share the philosophy, they share our values. The ones I mentioned, they understand what Tiger stands for. But some may have five Tigers, some may have just their first one.

21:11And we are telling them a different story, even if it's, again, granted on the same basis. For me, the price is not an issue. Actually, I don't like to think that the price is an element. It's a consequence. It's a conclusion. The beauty of our industry, which is fundamentally part of the luxury sector, it's the fact that people are ready to pay the price if they see the value. Our challenge is to make sure that the value they feel is there and is tangible. It's not just, you know, let's say shallow but that's what we're working on but I can guarantee you that the brief to the team right now is when we're talking about the Vanguard Orology is and I mentioned it still this morning again if tomorrow we have to price a product at half a million or a million for good reason and then the reason is here and then the people will be engaged because the story will be unbelievable and the product will be unbelievable free yourself from two constraints price target and timing but you remain committed though to also you know producing and offering the Formula 1 and the Aquaracer and those the one doesn't prevent the other you're not but you're not going to I don't know so much of this industry has just simply moved upscale no and my point is and by the way my point is yes let's talk about how difficult it is to make exceptional products below 4 ,000 or 5 ,000 Swiss francs.

22:44Because in reality, we are celebrating extraordinary pieces, and we should. But we should never forget the extraordinary pieces under a certain price point. So now the challenge is more difficult. I mean, as much as I'm happy to give as many resources to some of our people who are into the R &D system, I'm really helping, I'm really pushing the teams to also take advantage of these innovations, but find ways to enchant people at a more reasonable price. And probably this is where the challenge is much more difficult. And this is where we need to spend even more time and more resources. But this is where, I mean, I'm clearly not, we're not clearly not going to escape that part.

23:26It's where the challenge is. But I like it. And I must say, I've got high respect for some of those brands, some of those leaders of the industry who managed to deliver that. And we were talking about them. There are many brands who have a very wide scope of prices. And that's good. That's good. We can be universal brands. I was speaking to Monsieur Babin, talking about the market in general. Obviously, tariffs in the US is the issue. What he suggested is certainly for Bulgari and others is that you've got enough stock that's been sent to the US to last for a while. Are you operating, though, and planning, looking forward and making decisions, budgeting decisions, with these tariffs remaining in place?

24:14Or are you hoping for a change? And what's that going to mean for pricing? I think this is exactly, I mean, we go back to the previous question. It's extremely unpredictable. And we need to be ready to react to this unpredictability. So what does it mean? It means we have scenarios with or without the duties. We give ourselves the time to react because we know there could be adjustments within a certain period of time. So we basically put ourselves in a position to wait and see until we can't wait anymore. But for the moment, let's say the reaction is really to sort of keep calm and work on our desirability, work on the enchantment, because that's what we can control.

25:08Okay. And then we'll adapt. Again, coming back to the fact that this industry is extremely reactive, pragmatic, entrepreneurial. So we'll find a way. But it doesn't make our life easy, obviously. How long can you wait and keep calm and carry on? Can you give us how many months is that? We're basically all in the same ballpark of three to five months. And then we can see we are clearly staying in close connection with the authorities and we see how things go. Anything else you'd like to hit on today in this short time we have at Geneva? Just bear with us. Again, I mentioned the fact that we were closing the chapter of the Carbon Spring, but we're opening the chapter of Avant-Garde Urology based on those technologies.

25:59So bear with us. There'll be many, many things coming in the next time. So we'll really work hard to continue to enchant people who like watchmaking. Super. Antoine Pinn, CEO of TagHoyer. Thanks so much. Thank you very much.

26:18And 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 Hodinkee.com.