Away from the limelight, without the allure of celebrity ambassadors or flashy events, Hermès is quietly building a luxury watch empire.
Hidden within the brand’s recent earnings report, which boasts a 20.6% growth in 2023 over 2022, Hermès reveals a remarkable trajectory in watch sales, soaring from €193 million in 2019 to €611 million in 2023. The watch category now contributes approximately 4.6% of the company’s total revenues of €13.4 billion, surpassing even the trendier beauty category, which accounted for 3.6% in 2023.
This surge in watch sales has propelled Hermès to the 16th position in the top 20 bestselling Swiss watch companies, ahead of established names like Bulgari and Chopard, as per the latest report by Morgan Stanley in collaboration with Luxeconsult.
“Hermès has shifted from merely offering watches as accessories to establishing them as a distinct product category,” notes Oliver Müller, a business consultant at Luxeconsult.
Notably, Hermès is the only brand without a longstanding heritage in watchmaking among the top 20. The success can be attributed to the quiet launches of two modern icons: the H08, introduced in 2021, and its feminine counterpart, the Cut, unveiled at Watches and Wonders in April. The event underscored a burgeoning interest in women’s watches as a key area for growth.
“We have developed expertise while preserving our unique approach to timepieces. This has positioned us alongside other esteemed watchmaking brands,” explains Laurent Dordet, CEO of Hermès Horloger, the brand’s watchmaking division. However, can Hermès sustain this momentum in such a competitive category?
The journey to elevate Hermès to the pinnacle of watchmaking excellence spanned decades. It began in the early 2000s with a strategic move towards vertically integrating its watch manufacturing. By 2006, Hermès acquired a 25% stake in Vaucher Manufacture Fleurier, a Swiss manufacturer known for high-end movements. Subsequent acquisitions included Natéber for dials and Joseph Erard for cases, leading to the establishment of Les Ateliers d’Hermès Horloger in Le Noirmont, Switzerland, in 2017. Today, Hermès Horloger operates as a fully integrated watch manufacturer mastering all aspects of production in-house.
“Gradually integrating manufacturing processes has established Hermès as a legitimate player in haute horlogerie,” Müller observes, highlighting the brand’s shift towards mechanical timepieces alongside its original quartz offerings.
The brand’s commitment to excellence is reflected in accolades from the Grand Prix de l’Horlogerie de Genève (GPHG), the industry’s prestigious awards. Noteworthy wins include the Slim d’Hermès Perpetual Calendar (2015), Arceau L’heure De La Lune (2019), and Arceau Le Temps Voyageur (2022), solidifying Hermès’s reputation for masculine timepieces with intricate complications.
“In addition to designing award-winning timepieces, Hermès has spent 15 years repositioning itself in a more exclusive market segment,” Müller notes. This strategy included streamlining its product range, reducing volume, and increasing average selling prices while maintaining strong ties to the brand’s heritage.
In recent years, Hermès has successfully translated iconic designs from its other product categories into its watch collections. For instance, the Cape Cod watch, inspired by the house’s Anchor Chain motif since its debut in the 1990s, has seen multiple iterations, including diamond-encrusted versions. The Médor collection, introduced in 1993 as a reinterpretation of the collier de chien motif, has transformed into a high jewelry watch. The padlock, originally a feature of the Hermès Kelly bag, has been reimagined with diamonds, alongside Métiers d’Art craftsmanship on the dial.
This approach of “premiumization” echoes strategies implemented by luxury watchmakers like Omega and Audemars Piguet, influencing Louis Vuitton’s Tambour line, which recently underwent a similar transformation with new mechanical movements and higher pricing. However, Hermès continues to offer fashion-driven timepieces like the Heure H as entry-level options, priced below £3,000 and available through retailers like Net-a-Porter.
Looking ahead, Hermès aims to forge new icons in high watchmaking. The recent debut of the Cut, a feminine 36mm athleisure design, alongside the H08, reflects the brand’s pursuit of designs that epitomize Hermès’s distinctive aesthetic and craftsmanship.
“These two watches embody Hermès’s design language perfectly. They are refined and understated, yet instantly recognizable,” Müller remarks.
“When designing the Cut, my focus was on women. I carefully considered shapes, proportions, and finishing techniques to achieve beautiful light effects and reflections. Ergonomics were also crucial; the 36mm size ensures comfort on the wrist,” explains Philippe Delhotal, Hermès Horloger’s Director of Creation. The Cut has already resonated strongly with female consumers, contributing to a broader trend favoring smaller, more delicate designs embraced by both men and women.
The success of these new designs underscores Hermès’s evolution from a cross-selling category to a thriving standalone business. “Hermès leverages its immense brand equity in leather goods to fuel its watchmaking endeavors. It has taken significant time, financial investment, and a steadfast strategy to unlock this potential,” Müller concludes.
