TAG HEUER. A lively conversation with 27-year-old CEO Frédéric Arnault.

So I joined the brand almost five years ago. Yeah, you worked with them, it's true, 2017. Yeah, and initially I joined through the tech side, connected watch. We took over these departments, yeah, and we built through the true vision, building your own in-house team. We have more than 60 people based in Paris with software developers, product managers on that, and we have the vision and the ambition to build it as a true pillar for the brand. It's 15% of our sales today, it's growing very fast, and with a unique positioning: a connected watch that looks like a proper watch, where design is very important, also software design, and we have a lot of great functionalities on sports, on health and wellness, on connectivity. Now I got closer and closer to the core business and the industry, and since I joined I fell in love with the craftsmanship, the product, the industry, the history of the brand also, which is so amazing. And we see that the demand for mechanical watches is skyrocketing, it's higher than ever. After COVID it boomed even more than before, and we're very confident on our core products, you know, our icons: the Carrera, the Monaco, the Aquaracer. And when I joined we took on a journey of redesigning and really finding some of these icons. So we did the Carrera with the rolling out of our in-house manufacturing movements, the Heuer 02 on the chronograph, and we redesigned last year the Aquaracer to make it much clearer, simpler also in understanding, and with deep stories. And one thing over the years, you know, to go higher in quality and perceived value also in price points, and continue to elevate the brand as much as possible, not forgetting on your price points. No, we've always been on this strong segment which is the first watch that someone buys or is offered. This is so strong and we want to keep this segment for the years to come. So that's some elements of the vision. Then of course in terms of the brand association, performance is very important. Sports, sports have speed. You know, when I joined, the number one sport for us investments was soccer. We did a survey worldwide asking people, 'Okay, what do you associate the brand TAG Heuer with?' Of course sports was very high, but this we could have expected. And then, 'Which sports do you associate the most the brand with?' And we had a series of sports. Football, soccer was not even in the top ten, even though it was the number one investment of the brand. And the top three was just speed and motorsport related, and we're not investing in it anymore. So okay, we have to refocus on what we call our 'noah's ark' for what we're very strong in. And I believe also, you know, motorsport has a bright future ahead. Yes, the car industry is being transformed, but we can accompany part of the transformation, and it's still very inspirational and iconic. And so we did a partnership with Porsche, we went for the partnership with Red Bull Racing. This year on our novelties we have two of them that are motorsport related: the Monaco Gulf, the Carrera Porsche. So this is an important part of the strategy, and it goes back in the history of TAG Heuer. Oh yeah, before it became TAG, it was part. And you all know Jack Heuer was pioneering timekeeping with Formula One teams, and he was really a pioneer and the first one to give watches to racers, to pilots. So it was really wow, that's core business. We gave to Max Verstappen a gold Carrera just after he won the championship. Written success, and congratulations for the championship. Exact same thing that Jack Heuer did in the past with Formula One champions. That's a good... it's an amazing wonder. When we told him that, it meant so much for him, yeah, because he's part of a greater story. So he probably didn't even know that in the past Jack gave those watches, but now he knows. Yeah, it's all crazy. That's how it should be. And Max is a fantastic guy. Forgive me if I said I was so happy he won the Formula... I'm really a fan of Max. No joke, it's not because I'm sitting here. I like the guy. This is what you need: enthusiastic people, charismatic people, and they should also expose themselves and say, 'Okay, I am with TAG Heuer, I am proud of wearing such a watch, and I'm part of the history of the brand.' And having a boring Formula One driver as your testimonial? No, he wins and he's very determined, he's very focused on what he does, always racing, always. If he's not on the track, he's on esports and practicing. And the last part is also brand innovation in all the touch points. So we invest a lot online, on the retail, having stronger points of sale, you know, to express the brand and create an experience. It's not just about products, it's a brand experience we want to offer more and more.

So we see a strong appeal from the young generation on the proper watches, mechanical, also a quartz. I mean, we believe that quartz has a bright future ahead, it's a strong segment for us, and it's growing a lot. And we're continuing to invest. I think it was a territory that was a bit forgotten by the Swiss watch industry. It was seen as much lesser value when it has amazing functionalities as well. And we are investing in the solar powered movements. This is a watch we're launching at Watches and Wonders, and I think this will appeal to young generations also. But to come back to young generations, the appeal is there. We just need to make sure we connect to today's culture. I think that's what's important, because the watch is not about telling time anymore, it's about values, it's about what it represents. And if we can associate these products with today's culture, today's phenomenon, today's icons, it's going to stay desirable. I'm 100% certain of that.

Yeah, I agree, yeah.

And now we also have these customers that will buy their first Formula One. We're looking also at continuing to engage them over the years with TAG Heuer. We have amazing Aquaracers, the Super Diver that we're introducing with a high technicity, higher price point, very qualitative movements. Of course the Monaco at even higher price points with such an iconic story. So we're also looking to do that, you know, keeping the customers engaged and building a collector base. We have a lot of them, but we haven't nurtured that enough in the future. I think it happened without us really trying to engage with collectors as much, and I think it has a lot of value for the brands.

So first, TAG Heuer used to have a lot of points of sale, too many. We were too distributed. So one of the big strategic directions that I gave was reducing number of points of sale year after year quite aggressively, to invest more strongly on the ones in which we are staying, to make sure that it's not pure commercial but we can offer an experience. There's the right people with the good level of training. It's a place where people can meet, talk about their passion. And more and more we will also build some real experiences in the stores. So this is something we are working on. I think promotionalize the product? Yes, because online is working very well, and the growth in the past two years online has been exceptional. In some markets it represents 30% of our sales, it's the case for example in the United States. So if we want people to come to stores, we need to give them a real reason. They already know the product, they've discovered it online either through our website or through a lot of trusted media and YouTube channels. That's how they get it. So they need something else. Once they come, they need to have emotionalized touch and feel sessions and everything. So you're really reducing the network of the... opening a lot of monobrand stores in key cities throughout the world. Very good, that's the way it should be. I think I very much believe in the concept of having own boutiques because you really 100% represent yourself, and the people working there are trained, know what to do. And then you go in the world and you are in the world of TAG Heuer with all the water, land, sea, whatever you do, car racing, solar panels, whatever it is, but you are in your world. Definitely very good.

I had my first watch when I was 12. It was a TAG Heuer... photograph? Yeah.

Thanks, thank you Alexander, thank you for coming. Yeah, and I think I'm looking forward to present to you that you can see all the great novelties we have. Six stories, four Watches and Wonders? Six deep design technical stories, and with strong storytelling in the background. We have a lot of content and video that accompanies everything we're doing. I am sure that our PR teams will provide us these videos and we will integrate them in our videos and show what we can do with it. I will film then the novelties as we always do in perfect 4K quality, great, so people can really enjoy them on their screens and magnify if they want. Great, okay.