Steeped in a rich heritage, German manufacturer A. Lange & Söhne has long flown the flag for quality, craftsmanship and exclusivity – here, Luxury Society sits down with its CEO Wilhelm Schmid to go behind the brand.
Earlier this year, at the prestigious Salon International de la Haute Horlogerie (SIHH) in Geneva, German manufacturer A. Lange & Söhne presented seven debuts – including the highly acclaimed Datograph Perpetual Tourbillon.
Quite an achievement, yet, the brand – which for several generations, has pursued one goal: to craft timepieces that are at the pinnacle of international haute horlogerie – never fails to impress and make its mark – albeit amongst a sea of fellow brands.
In fact, and despite being part of luxury conglomerate Richemont, A. Lange & Söhne has consistently found ways to stand out – whether it be its exquisite in-house complications, strict, limited production, or its unwavering loyalty to craftsmanship and quality – championed by its CEO Wilhelm Schmid and highlighted in its fierce stance, even in the face of changing markets.
“We don't design watches for X, Y, Z. We do watches in line with our brand DNA. There's also no discussion about the quality and demand of craftsmanship that goes into every watch. We don't accept any shortcuts there,” says Schmid.
It may seem obvious, but at a time when many brands are altering their designs to best cater to the geographical and generational shifts emerging, Schmid’s approach could well be classed as novel.
Even its manufacturing base (Glashütte, Germany), is a defining factor for the brand – one which Richemont itself alluded to at the time it agreed to acquire A. Lange & Söhne's former parent company, Les Manufactures Horlogères SA ("LMH") from Mannesmann AG on July 21, 2000.
As it identified in its press statement at the time: “A. Lange & Söhne's products rely upon craftsmanship used to produce a limited number of handmade watches every year. The product positioning is that of tradition alongside innovation, together with the concept of ‘Made in Saxony’ as distinguished from ‘Made in Switzerland’.”
Yet, for all A. Lange & Söhne's history, the meaning of tradition is something Schmid says is often misinterpreted – and it’s not to be seen as a barrier to progression, expansion, or innovation.
“There’s big misconception about being traditional,” he says. “Traditional doesn't mean repeating what you did in the past. Traditional means that you have a set of values that you carry with you, while you may change your approach – and that's what we do.”
Now, as the tail end of the year approaches and the next SIHH beckons, we review with Schmid his aspirations for A. Lange & Söhne's future and what the brand plans to ‘wow’ us with next.
I always thought: “I'm going to be hired to run a watch brand” – but more and more I have to think like a hedge-fund manager.
A. Lange & Söhne has been referred to in the press many times as the “pinnacle of watchmaking”. However, from your personal point of view – what are the greatest milestones the brand has achieved while under your leadership?
I think there are different ones and it's not due to me, it's due to the team – but it has happened during my time at the company. So, I think the first one is certainly the launch of the Grand Complication in 2013, because we caught everybody by surprise in that we didn't come up with a complicated watch, but with a Grand Complication. It just answered the question about what we were capable of doing once and forever, so everybody understood then that it's up to us when we launch things, but that we are actually capable of doing it. That has been questioned by certain people because we only restarted the company in 1990 and the first collection only came 1994. So, the Great Complication in that sense is definitely a milestone.
The Minute Repeater, which we launched a year later, that's the other milestone – because that's the first watch that is solely and exclusively developed and produced in Glashutte and it represents a minute repeater that has no comparison, which is also quite rare.
A third milestone is not so much product, it's more manufactory. The opening of our new manufactory in the summer of 2015. If I had to boil it down to three – and I could mention many many more – but these three certainly ... If in, let's say, 30 years somebody writes the book about the history of our company, I'm pretty sure these three things will be mentioned.
How’s the business doing?
It was a very positive start, at SIHH, for us I have to admit. But, in saying that – I used to live in South Africa and if there is one thing that you should always remember in South Africa, it is to stay vigilant.
It's a general life attitude there. Stay vigilant because otherwise you become a soft target. In terms of a business perspective, I've adopted this general attitude, so while I'm pretty optimistic, I'm also pretty vigilant.
Fundamentally, our business model is dealing with very wealthy people. There's seven billion people on the planet. Some of them are rich. Some of them collect and some of those collectors collect watches.
Soon, there will be eight billion people on the planet. That extra billion, the wealth distribution will be very similar to the first seven and there will be collectors and there will be watch collectors. Generally speaking, our marked segment stays in tact and is growing. But it comes with challenges. We all know that. The world is full of surprises and more volatile than ever before.
I always thought: “I'm going to be hired to run a watch brand” – but more and more I have to think like a hedge-fund manager, because the currencies are doing funny things. Things like that don't make our lives much easier, but on the other hand we deal with it. Fundamentally, I think there is an appetite across the world for exclusive products. I don't say luxury products, I say exclusive products. I think in that market segment we have our little niche. I don't think that our business is becoming less complex though, rather the opposite, but I also believe that, fundamentally, our market is still intact.
Speaking of volatile markets – that whole issue with the Swiss Franc and the Euro left the luxury industry a bit shell-shocked – but now that the dust on that has settled, looking back in review, has it affected your pricing structure and impacted your business?
No, not really. I mean, what we should bear in mind is that we are producing in the Euro zone. We're in Germany. We're not in Switzerland. We do belong to Richemont, which is a Swiss company, but we've now all had time to adjust. Don't forget, we've been dealing with currency movements for the last 20 years. Today, it's more erratic than ever before and it goes quicker. The percentage is higher, but generally speaking it's something which we've been managing for a long, long time, so we deal with it.
Tell me a bit more about what your brand produces each year and whether there are any plans to increase that or to progressively expand into new categories?
Well, as we're part of the Richemont group, we're not allowed to give any production numbers – but, besides that, specifically for brands like us, even if I give you a number it wouldn't tell you much, because our most expensive watch is about just short of two million Euros.
That’s with no diamonds and a leather strap, but it's just hyper-complicated. The least expensive one is about 14,000 Euros and we have a lot of products in between. If in one year we produce more complicated watches, we may even go down in terms of the total number of produced watches, but our turnover may rise significantly, so any number I give you wouldn't really help you to evaluate what we do. Because in general, we only produce a few thousand watches. That's the simple fact.
In terms of new categories – particularly ladies’ watches – there’s no particular change in focus on the horizon for us. We always produce a few watches for ladies, but only really a few. The problem for us, or the challenge I should say, is we can't even fulfill the demand for our fine men's watches, so if we start producing more ladies’ watches, every lady’s watch more means one less men's watch. Then, at the end, I end up with two unhappy groups of customers. So, we focus very much on men's watches. That's our niche. We don't produce any steel watches. It's only gold, platinum. Only precious metal. That's the core product and the only market segment that we really work on.
In terms of the changing landscape, and digital particularly – how has its increasing prevalence changed your marketing mix and business strategy?
Look, it's very easy ... I mean, in the last five years I can remember, and that's a typical thing, five years ago every journalist came with a little tape recorder. Today they all come with either an iPhone or an iPad. Five years ago, we could keep very clear deadlines because everybody had to produce for print. Today, 90% goes into digital. We, of course, changed in line with these market changes for obvious reasons because that's where the market is really going right now. It's quicker, it's faster, it's more digital. For press and the same goes for customers. They inform themselves in the digital world before they even enter a shop.
In terms of markets, what are your key markets now? How has that changed, if at all, in recent years with the downturn now in markets like Russia, the growth that I've been hearing about in the Middle East?
Actually, I have a very easy position because ... My core target market are watch collectors. That hasn't changed and will not change. It may be more difficult to get them because now they move from A to B and from B to C. That, I admit, is a bit more complex than in the past, but fundamentally we target watch collectors across the board and internationally.
In terms of your clients, a lot of people are now talking about Millennials, many of whom are also new age watch collectors. Is your brand narrowing its focus on this generation?
Well, to set the scene – the European approach, in general, is that wealth comes with age. But that's not the case in many other cultures. Definitely not in Asia. Definitely not in America. To some extent, not in the Middle East. And these markets are gaining importance, and we are aware of that.
But I always say I cannot answer the question, "What does a typical A. Lange & Söhne customer look like" – because some of them are 70 and some of them are 20. Some of them are from Asia. Some of them are from Europe. All of this makes the landscape we operate in more interesting, but also more difficult at the same time.
But in terms of design and the products, we don’t alter any of that to specifically cater to Millennials, no. We don’t do that. The only benchmark we have is our own brand DNA and we'll always continue to do what is within the brand DNA. Yes, we push boundaries like with the ‘Grand Lange One Moonphase Lumen’ that we launched this year or with the Minute Repeater that we launched last year, but we don't follow any of these ideas you must make a watch for Asia, or for America, or for younger, or for older. That's not what we do.
What challenges do you foresee ahead for the brand?
I think the challenge for us is always to deliver on our promises.
We launched three new movements at SIHH 2016 and that, of course, is a huge stretch for us to launch three new movements in one year. That comes with its own challenges in the manufactory. That's one.
The second thing is, of course – which for us is very important because we don't have a big stock of watches – is for us to bring the stock where the customer wants it. And that is definitely more difficult than ever before. That’s because some of our customers buy local, some of them travel, and these days, certain world events also impact on travel schedules of people more than ever before, and that’s an element that we never had to take into consideration in the past. Today, that's something that we have to bear in mind.
The world is certainly changing – do you believe the definition of luxury is changing with it? What does luxury mean for you in 2016?
Quite frankly, I don't like the word luxury too much because it's completely inflated. Everybody's using it. I've recently heard about a luxury muesli, because it has more raisins in it than others. I mean, that's how far the word luxury has been used.
That's why I always say we're an exclusive brand. I think exclusivity is the new luxury. People have realized that just a big price ticket doesn't mean automatically high quality, doesn't automatically mean luxury. For me, we're entering the area of exclusivity and that will come with its own challenges.
For example – information – it's not exclusive anymore, but that doesn't necessarily mean that you can get the product.
If you produce only 100 watches of one specific kind, in the big wide world that's a very limited number. That's a very exclusive product, regardless of whether you can see it on internet or can source it. That will always remain exclusive. That's how I see it.
