The Business of Watches [018] Zenith CEO Benoit De Clerck

0:00Welcome to the Business of Watches, the Hodinkee podcast where horology meets high finance and we go behind the scenes to find what's driving the economic side of timekeeping. I'm your host, Andy Hoffman. This week, we sit down with the chief executive officer of Zenith, one of Switzerland's most storied watch brands. Benoit de Klerk tells us how Zenith is throttling production to keep its sell-in to retailers and sell-out from retailers to consumers in line and balanced amid an industry-wide downturn and financial cost pressures. We also discuss Zenith's increasing role as a movement supplier within the LVMH group, and we ask him straight up about the rumors and stories that the Zenith brand is up for sale.

0:56But first, I'm joined by a very special guest from Geneva. Logan Baker is the senior editorial manager at Philips, a former Hodinkee editor, and a bit of a Zenith guy.

1:14Welcome, Logan. Thank you, Andy. Excited to be here. It's been, I think, three or so years since my last appearance on Hodinkee Radio. I'm pleased to be back and with you. Yeah, well, welcome back and it's good to have you. So you live here in Geneva, as do I. We've known each other for quite a while and I think the first time we ever met was at the Zenith manufacturer in La Locke. You're a Zenith guy, right? I am, absolutely. And I think you're right. I remember having lunch in La Locke with you and Laurence, the heritage manor at Zenith, was directly across from us. And we had a chat and that was definitely four or five years ago when I was working at Hodinkee and you were at your previous role in Bloomberg.

2:00Indeed, indeed. And yes, you've taught me lots about watches over the years. And you own a bunch of Zeniths. You know, Zenith is a great brand. I mean, it's 160 years old, amazing heritage, once, you know, sort of one of the largest manufacturers and continue to manufacture out of the lock. I mean, what do you like about the brand and how do you think they're doing these days? Yeah, Zenith is, to me, it is one of my favorite brands, absolutely. And the heritage and the history is a big reason why. Of course, there's the El Primero automatic chronograph movements, but it's not just that. I mean, it's their history and chronometry with the caliber 135 that they brought back last year, you know, working with Guillaume Balances.

2:45And they were also one of, and I think this is really important, often underrated about the brand, but they were one of the first vertically integrated manufacturers for watchmaking in Switzerland. The founder, Georges Favre Jacot, I probably butchered that, sorry to my Zenith friends, but he saw what the American brands Waltham and Elgin were doing in the 19th century in integrated manufacturing assembly lines. And he took that idea and brought it to Switzerland. And that's what we see today at basically all major brands is that kind of integrated assembly. And Zenith is at the forefront of that.

3:28And, you know, over the past 20, 25 years, they were bought by LVMH in 1998, I believe. They've done quite a few interesting things. There's been a number of eras there, a number of leaders and CEOs. There's the Thierry Natoff era, which... Notorious era. Yes, which is always interesting to look back on. And, you know, at that time, they were trying to market to a different audience than what maybe they had been historically been. And then there was Jean-Fréderic Dufour, who kind of stabilized things and brought his own eye and perspective of watchmaking to the brand. And he was, of course, rewarded by Rolex to become their CEO and leader for the past, what, 10, 12 years?

4:12Yeah, he's been there over a decade now, for sure. Then there was Aldo Magata and Jean-Claude Biver, who brought their own style and sensibility. And then Julian Tornar, who I thought did, you know, as long as I've been on watches, he was kind of the steadiest hand and the most thoughtful about bringing the brand's history to the forefront. and he worked hand-in-hand with Romain Marietta, who's still there, who, shout out Romain, he's a fantastic guy and has a really tight vision for what Zenith watches should be. And the current CEO who's been there about two years, Benoit de Clercq, who's coming on after me, I think.

4:50But I haven't spent a ton of time with him, but he seems great and it's interesting. And, you know, usually we don't do wrist checks on this show, But, you know, we're here at the Phillips office and you brought in some of your Zenith collection. I mean, I'm looking here, I guess, first of all, we'll start with this very simple time only small seconds watch. I think this is from the 1960s, you know, beautiful sort of eggshell white dial. Yeah. Tell me about this one first. You've got three here today. Yes. So these are all the different Zeniths I've collected over the past few years. So this is a caliber 40T, which was produced around the same time as the caliber 135.

5:35It's a famous caliber 135, which is now thought of as the observatory movement, right? Yeah. And Zenith, I mean, in their history, they won thousands, over 2 ,000 chronometer competitions. And that's really important history within Swiss watchmaking. So this is the caliber 40T, which, again, is kind of one rung lower than the 135. but it's just a really handsome watch and it speaks to the brand's history in chronometry. And then let's move on to this one. This one is my favorite. I'm a big fan of all the weird and wonderful Zenith Defies over the years. This is a square shaped case on a metal bracelet, a stainless steel bracelet.

6:17It's a Defy but it's quite an unusual, strange one. I mean, yeah, talk about that one. Yeah, so this is the first Zenith I bought. But it's from the 70s. Like you said, it has kind of this weird, almost like the Paddock Lobster bracelet. But it's an integrated bracelet, steel, very square, not even TV-shaped, I would say, but just speaks to the brand's kind of experimental nature. And again, this is the 70s. So they're adapting to trends at the time and trying to fight against the quartz revolution. So making something kind of trendier and more interesting to people at the time, stylish. Yeah, absolutely.

6:54So, you know, that certainly is a nice example of that design sort of driven era of Zenith, certainly in that time. And then this watch is in some ways my favorite because it is so unusual. It's a black dial Zenith Elite, but it is a GMT, basically. And, yeah, this is a wild, unusual watch. Talk about this one. Yeah, absolutely. So this is a mid to late 90s elite GMT. Zenith came out with the time and date automatic elite movement in 94. They got a lot of attention and press around it. And this was before they were acquired by LVMH in 99. And I just kind of like this era because it takes place between the late 70s when Zenith ownership returned to Switzerland.

7:48And a lot of people don't talk about this era because, I mean, they talk about it in the sense that Zenith was the supplier to Ebel and Rolex with the El Primero, but they don't necessarily focus on the watches that were produced. But Zenith continued to make watches in the 80s and 90s, and it's just not something people talk about all the time. There's the Rainbow El Primero that people like, but the Elite is just a really nice, easy to use automatic time and date movement. And with this GMT version, it has the pusher at 10 o 'clock so you can advance the GMT hour hand. Yeah. And, you know, last thing about Zenith, I mean, Zenith is certainly a favorite among watch enthusiasts and sort of watch people in the know.

8:32So, and I wonder from your perspective, if you ever think that, you know, Zenith can sort of make that next move to be, you know, a truly mainstream brand, because I'm going to ask you about Breitling after this, which has certainly, you know, sort of made that move to that mainstream. But, you know, can Zenith ever get there to be a real mainstream brand like Breitling, like Rolex, et cetera? Yeah, it's a really good question. And I think when you look at, you know, Every industrial, large-scale Swiss watch brand, you know, there's always this idea that, oh, can they ever get big enough to compete with Rolex and Omega and Cartier and Paddock and AP?

9:13But I don't necessarily know if that should be the goal. I mean, a more flexible manufacturer business that produces really high quality, interesting watches to a broader demographic is, you know, I think what Zenith should be. But, you know, I don't know if they need to be a billion dollar brand. You know, the Morgan Stanley report that you talked about last week, I believe, you know, I think it had them at around 98 million Swiss francs in turnover in the top 40 of Swiss watch brands. I think there's definitely room to grow and improve, but is the goal to become a top five Swiss watch brand?

9:54If you ask, you know, the employees at Zenith and LVMH leadership, it probably is, but I don't know if that's necessarily the best choice. because what I really appreciate about the brand is the intellectual aspect of it, the history and how it all comes together in a industrial powerhouse that, you know, is looking toward becoming the manufacturing center for a lot of the LVMH watchmaking group. Yeah, I mean, we're going to hear about that more in the interview with Benoit de Clerc, but indeed. And speaking of mainstream brands, last thing, we saw a report in the Financial Times this week when we're recording just about the valuation.

10:37So, you know, Breitling is owned by basically controlled by private equity partners group now is the majority shareholder that is a Swiss private equity firm. The original private equity owner back when they bought out the brand from the Schneider family was CVC and they've reduced their stake. We've also had word though from the FT that CVC had reduced the valuation of that stake based on what they transacted for previously in 2023. I mean, you know, what does this tell us about sort of where we are in the Breitling journey and, you know, can that brand grow, you know, much more than it has? Because it certainly has grown significantly under George Kern.

11:24Yeah. So I read the Financial Times story that you're referring to. And, you know, I think on one hand, it makes sense for the valuation to have declined within the past year. I mean, it's no secret. The Swiss watch industry over the past two years has been on a downturn. There's geopolitical reasons, tariff related reasons, all sorts of different reasons for that. So from a business people doing business idea, yeah, I mean, when they're doing their due diligence, they have to lower the valuation. But I'm not personally worried about Breitling. I mean, they just signed a deal with the NFL. That's tens of millions of dollars a year.

12:02They just took over the Aston Martin sponsorship. Would they be doing those things if things were as negative as that FT article potentially portrayed it? I don't think so. I mean, I think Kern is as solid as it gets as a brand leader in the Swiss watch industry. So I feel positive about their future. We have the Galet launch coming later this year, the Universal Genève launch. There's all sorts of positive headwind for the brand or the potential group, if you want to call them that. So I still feel quite positive about their future, and I view this valuation discussion as just a solid business governance kind of idea.

12:45Well, Logan, it was a pleasure to have you on. Thank you so much for joining us. Thank you, sir. I appreciate it. Excellent. And now we will have our conversation with Benoit de Klerk, the chief executive officer of Zenith.

13:06We are in Aizan in Switzerland, near Nyon and also near Geneva. I'm with the chief executive officer of Zenith, Benoit de Klerk. Benoit, thank you for joining us on the Business of Watches.

13:23Benoit De Clerck:Hi Andy, happy to be here. Excellent, excellent, good. So, you know, Zenith is a brand that we at Hodinkee know quite well. It's a brand that we love and we've covered for many years. We've done collaborations, limited editions with Zenith in the past. But for those who don't know everything about the brand, talk about Zenith and its history and what sort of role you play in the market as a well-known storied watchmaker. Well, Zenith, you know, we celebrated 160 years of Zenith last year in 2025. And we had a tremendous success in the anniversary, per se, because we created four, you know, limited pieces that were sold very quickly.

14:12Benoit De Clerck:160 years is pretty unique. We're not the only one, of course, but it's pretty unique because at Zenit, we remain in the same location in Le Locle. The manufacturer. The manufacturer and the manufacturer remain there for uninterrupted years. And this is pretty unusual. A lot of, I mean, some brands have been there a bit older than us, but have moved manufacturing and all that, whereby we stayed in Le Locle. And this is where everything started. Indeed. And talk about, you know, the sort of lines, the model lines that Zenith has now. And it's fairly focused. You know, you have the Defy line, you have some other lines, but it's definitely, you know, sort of focused around, you know, the Chronomaster, etc.

14:57Talk about, you know, the kind of watches that Zenith makes and who your target audience is.

15:03Benoit De Clerck:So what we did in the last years is to streamline the collection. So, you know, we had quite a few references and we decided to streamline the collection. And we have four main pillars. We have the DeFi, as I correctly said. We have the Chronomaster. We have the Pilot and the JFG that we launched last year in 2025 in celebration of 360 years. Those four pillars are pretty different because we use the DeFi as a modern design and we use that model as well to launch complicated watches and to add on some complication to the movement. Then we have the Chronomaster, which is the epitome of the chronograph, which is the highlight of the chronograph and El Primero in particular.

15:47Benoit De Clerck:And then we have the Pilot, which is the third pillar of the collection. And then we have the Georges-Far Jaco, Georges-Far Jaco being our founder, what we call JFG. And we decided to launch that line last year. And we did 160 years of that specific model with a very, very specific movement, the Calibre 135. And that Calibre 135 is exclusive for that model for now within that JFG collection. And talk about that special anniversary piece with the caliber 135. It has a great history, winning many observatory accuracy awards and sort of, you know, why the brand is focusing or has at least in part sort of focused on that line.

16:35And then, you know, talk about the price of that model, because it's a real collector's piece. It is a it's a very special movement. And in terms of, you know, what you're trying to do with with that kind of piece in the collection.

16:50Benoit De Clerck:Well, you know, the best testimony is last year we launched it. And the best testimony is that we won the Grand Prix of the Haute Orlogerie, you know, in Geneva. And that was great for the brand, but most importantly, great for the team. I was very proud for the team on behalf of the team. And it was great for Zenit. And this caliber 135, as you said, has won many prizes. But the latest it won is last year, which we're very proud of. And this is a well-known caliber. It has, you know, it's, of course, we improved it. We made it better. And we decided to pay tribute to our founder. And we will continue within that segment and that philosophy using that Jean-Charles Jaco, the JFG, in precious material, in limited quantities as well, intentionally to make sure that it remains very exclusive.

17:45Benoit De Clerck:Quantities will be limited. The price that we launched last year was around 50 ,000 Swiss francs, a bit less than 50 ,000 Swiss francs, and it will remain within that price range. Of course, you can go up and it will probably increase as well, but this is where we're going to stay and focus on in a very limited quantity. The beauty is that the Georges-Lav Jaco that we launched last year are sold out, which is the best thing that you can have, is that those watches, they're finishing to come up now and they're already sold. When a lot of people think about Zenith, they think about the El Primero, which is the famous automatic chronograph movement, once used by other brands, including Ebel and obviously Rolex.

18:31What role does the El Primero play in the brand and the model line these days? You know, the outside criticism sometimes of Zenith is that it's the El Primero and that's it.

18:43Benoit De Clerck:Yeah, I mean, of course, Zenith is more than El Primero, but definitely El Primero has played a very important role within the establishment of the brand itself, you know as a brand because the technicality the advancement that the movement had at that time 55 56 years ago 50 57 years ago this is when we launched the El Primero and this at that time was a revolution in terms of movements and we were the first one to launch that integrated chronograph movement and this is where it started and from there it developed so this is the El Primero is an integral part of the brand itself it's not the only one but it's definitely a strong pillar within the voice and the image and what Zenit aspires for.

19:26Yeah, absolutely. And then, you know, last year we saw sort of the coming together of two great parts of the brand and its history. And that was within the Defy case, the Defy Revival case, you did a limited edition, a sort of special collaboration with USM, the Swiss modular furniture system maker. And, you know, talk about what that piece was and, you know, bringing together that case with the El Primero and then, you know, what you were trying to achieve with a limited edition like that and how we might see it utilized in the future.

20:07Benoit De Clerck:Sure. I mean, for us, it made sense. We are Swiss made and USM is Swiss made as well, you know, and for us, it was very important to tie in with the Swiss company. We are in Le Locle, in the mountain of the Jura, Suisse. They are within the mountains as well. And they represent what the brand is all about. And we quickly saw that potential, that symbiosis. And to be honest with you, I believe that a partnership, if you have to work hard on it, it's not going to work. And that partnership came in very naturally. When we spoke to them, they were very much interested and it came in very naturally.

20:46Benoit De Clerck:And obviously, we created that watch that's, as you know, sold out as well. And why not continue to develop? You know, maybe not this year in 26, but maybe in 27, maybe 28. Absolutely. Yeah, there's lots of possibilities in many places that one can go with something like that. Talk about the business and how things have been going in terms of customer demand, in terms of activation. You know, we all experienced the great boom during the post-COVID era. And, you know, everybody had a pretty easy time selling their watches. It's a different era now. It is. How's Zenith doing in that? Well, you know, I mean, facts are facts.

21:28Benoit De Clerck:I mean, and your facts are correct. It's not a walk in the park. It is what it is. But at Zenith, it's what we call it more like a normalization. You know, it's more like something that's now it's becoming normal. It's very important. The beauty, and we're very lucky because at Zenit, we have the manufacturer's aspects and the movement aspect. And we have everything integrated within our manufacture. So we integrate design, we integrate technology and all that within the manufacture. And we produce 100 % of our movements are made in Switzerland, in Le Locle, at Zenit. And this is very important.

22:06Benoit De Clerck:So that gives us more flexibility as well. And we can quickly adapt to the demands. And, you know, I'll be very honest with you. When I started two years ago, for me, selling and sell out are two. It's a definition of the health of the brand. Exactly. And for those who don't understand, you know, what selling and sell out is, maybe explain it. Because it's a fundamental part of the watch business. because this is my daily lingo. But what we managed to do at Zenit is that we managed to produce what we have sold, but not sold to the retailer, sold out to the rest of the customers. So yeah, sell-in is what goes to the retailer, but sell-out is what goes to the rest of the people, the customer, the buyer.

22:55Benoit De Clerck:And this is a very, it's an easy equation, but it's a very complex equation to achieve in the sense that because you have a lag time between production between and then you have selling and then you have to sell out so this takes a little bit of time but we were very attentive to that and i paid a lot of attention last year and the year before to make sure that we don't produce more than the demand is capable of absorbing and i'm very proud to say that in 24 we produced less than the demand was demanding and in 25 and we were finalizing the numbers and even better so 25 we produced less than what the demand has purchased or what customers have purchased and this is definitely an important indicator and how healthy is the brand that means that we didn't have to push stock with our partners or in the market we didn't have to do that Of course, we could have done more turnover and all that, but this is where we define the quality of what we do with the team at Zenit.

24:00Benoit De Clerck:We could have done more, but we wanted to really match the demand of the product. And that's where we have managed to produce less than what the demand wanted. And that was, I think, an achievement. Indeed. So if I'm hearing you right, I mean, we are talking about sort of throttling back production for those two years in order to have that right ratio or equation with sell in, sell out. I mean, how did you achieve that, that sort of, you know, that throttling or, you know, trimming production? There's a lot of analytical aspect to this, but for us, it's very important because we don't want to have oversupply and want too many watches all over the place and all that.

24:42Benoit De Clerck:It's not good for the brand. It's not good for our partners. It's not good for our customers. We have to remain true and honest to our customers as well. So having that equation in place was a relief because we did it well. You see what I mean? And how we do that? We do that every week. We have a meeting with the sales department, with the supply and production department to make sure that you adapt that. You never know exactly because you always have like a lag of like a couple of weeks to know exactly. But we knew how to make it to make it work. Indeed. And let's talk, you know, I want to give you every opportunity to answer this question.

25:20There's been reports in some Swiss publications here that Zenith was up for sale and that LVMH, which is the parent company of the watch brand, was looking to sell Zenith. The company has addressed this to a point, but what do you say to this suggestion that the brand is for sale?

25:41Benoit De Clerck:Well, you know, first of all, we don't comment much on rumors, number one. However, that rumor came through, and of course, we heard about it. That newspaper, you know, happened to publish something that is completely erroneous and not correct. Unfortunately, it was taken back by other newspaper and other magazines, the like, from that source. But the source was incorrect. so uh of course what's important is that the group lvmh has completely uh refuted that argument and as you say in french has dimented information because that's that information was not correct so we said it on the same day on the same night unfortunately you know the news travel fast and it created some some questioning and all that but at the end of the day we know what's going on and the brand is not for sale.