An exclusive virtual meeting between AWJ andJean-Christophe Babin - Group CEO at Bvlgari during the LVMH Watch Week 2021 provides a unique opportunity to understand andanalyze the market situation for Bvlgari watches and the watch industry atlarge during 2020 and also going forward in 2021. Excerpts from the interview:

Highlights

·We couldmanage growth in some critical geographies in 2020.

·Bvlgarisales will witness a double impact in 2021.

·Bvlgariis reviving Gerald Genta and this is already being done.

·TheSaudi Market is a very strong market for luxury and we are opening boutiques inRiyadh and Jeddah soon.

1. 2019 was historically a record year for Bvlgari, and despite thepandemic and the lockdown, Bvlgari managed to score another outperforming yearin 2020. Is this due to the product mix, or the E-commerce platform launchedduring Q2 in 2020 or the geographically balanced distribution of the brand?

We have always been very transparent. Globally, we didn't do so wellin 2019. Like most brands, we did lose some sales. Even so, we managed to growin some critical geographies. More importantly, the last quarter was in linewith 2019, which for me is most important because the final quarter alwayscapitalizes on initiatives that go into the succeeding first and secondquarters. Despite the trouble with COVID in Europe, we have managed a historicachievement in December 2020, which was not expected, to be frank with you. Thisproved that Bvlgari jewellery is probably more desirable than ever, and makesme reasonably confident about 2021.

2. Okay, so moving with the second edition of the LVMH, Watch Week2021, what was the impact among retailers and among the LVMH brands?

Well, as you know, it is continuing into next week. We started withthe media, and as of the day after tomorrow, we continue with retailers, and itis a 10-day event. The only feedback we have so far is from media, and I knowour friends, much like you, are experts in watches and with enough knowledge tounderstand what makes sense or what makes less sense. The media feedback wehave received in terms of consistency with Bvlgari standards and marketexpectations is extremely positive and it makes me really enthusiastic and excited,because in 2021 we are sure to have a double impact. The most significantimpact are the two novelties reborn in 2021. 70s Rotary was launched in October19 but eventually it was stopped six months later and resumed only in October20. The two models will be very vital in getting a substantial market sharethis year. I might as well say it will be probably be enough for us to growbetter. But obviously our mission as a global gallery is far more than that. Weaim to enter the segment of the top 10 luxury watch brands in the coming yearsand therefore we have planned our 2021 initiatives starting with jewellerywatches.

3. Bvlgari succeeded in producing and building up on more than one icon,Serpenti, Octo, Lvcea and recently the reintroduction of Bvlgari Aluminum. Whatcan we expect more in terms of designs and complications? 

Firstly, we have a gold complication which is a famous Octo Romatourbillon. We consider it as not only a technical innovation, but also adesign innovation and I think in the field of complications it is probably themost contemporary ever designed. It is really setting a trend in Hong Kong asyou will see, satisfying your daily lifestyle, your way of dressing, yourinterior decor, your arts and reactions even, which are more and more contemporaryand less and less historic. Therefore, I feel the future of complications liesin very contemporary designs and this new Roma tourbillon is really opening theway to a new generation of complications, which are truly global. Theycapitalize on three centuries of excellence and at the same time, perfectly matchwith the present, whereas traditional complications look like a piece of oldfurniture in an ultra-modern loft. I think this fit is very important becausewe live in an aesthetically integrated world and long to be consistent with thesurroundings. This is all there is about the new generation of complicationsBvlgari.

4. Gerald Genta and Daniel Roth are substantial assets of the Bvlgaribrand. With the current vintage reissue trend will you revisit the archives ofthese brands and continue to offer collectors and lovers a piece of historycombined with the historically strong haute Horologie of GG and DR? 

Right now the first priority is Genta, I think reviving the brandis very challenging and something that takes time if you want to do it properlyand successfully. Therefore Bvlgari is reviving Gerald Genta and this is beingdone already in two steps. The anniversary 50 years edition, which was thekickoff has all been sold out. Of course, last year the Covid pandemic left uswith no real space to promote the regular GG collection of the iconic Arenadesigns and so we should be really promoting them actively this year. The nextinnovation in the Genta range has been postponed purposively to 2022 as thepriority this year is to focus on what we have launched but not promoted lastyear as planned. The objective is to create a pretty exclusive and limited collection,of not 100 watches, maybe five or eight which will be sold essentially onlinefor around 15000 to 16000 euros, a price bracket which is covered by Bvlgarijewellery and jewellery watches. We are very strong online, I mean we have seventeenmarkets selling online. We are confident there is ample room in the market forsuch brands without competing against the mainstream Bvlgari brand. Ourcompetition will be with other niche brands and we know that niche can beextremely profitable as long as we are unique, quite exclusive and very, verywell crafted.

5. In the recent past some watch brands used, as part of thematerial of the watch, tantalum which is commonly used in the surgical industry.Does the pandemic inspire you to use any special material in your watches andjewellery, that could give more confidence to the customers especially when itcomes to hygiene issues, because it seems we are here to live with the virusfor some time?

You know we have been using pretty advanced technologies all along.We have used titanium already, and also carbon not so much for the sake ofusing fashionable or fancy material, but for functionality. I mean, titanium isa perfect material for a Minute Repeater in terms of acoustics, and therefore,by drilling the dial, we will eventually gain fantastic acoustics. When we usematerials like steel and gold it is not for the sake of claiming anything butfor value and economy. If we find a sense of purpose with any material, we aregoing to use it.  If it is only for thesake of claiming a new material, most probably we won’t use.

6. How would you describe Bvlgari performance in the Middle East?How far are you from restructuring your distribution in the KSA? What projectsdo you hold for the largest market of 36 million habitants in the Middle East?Do you have any plans for 2021 for the Kingdom?

Well, last year we obviously suffered not having Saudi Arabia, atleast directly. And we know that some competitors did extremely well performingin Saudi Arabia. There is a very strong market for luxury out there. So thisyear we have the alternative, and by this summer will be opening one boutiquein Riyadh and one in Jeddah. Bvlgari flagship outlets in these two major citieswill enable Saudis to rediscover the brand. Our existing boutiques operated byour suppliers are a bit old and not comparable with the ones you find in Dubaior Qatar, and our new boutiques will be the youngest and the most appealing inthe region. We are aware of Saudi Arabia’s potential as a domestic market andare already revamping our marketing strategies which were kind of neglected inthe past. The new initiatives will also be of advantage to our Dubai business.Many Saudis frequent Dubai and if the brand is stronger in Saudi it also gains strongervisibility in Dubai. Dubai is a favorite travel destination of the world andour excellent marketing team and infrastructure and our studies have revealed astrong potential for brand Bvlgari, especially among the European and Chinesevisitors to the Middle East.

Coming back to Arabia with the activities, do you have any specificproduct trying to be integrated along with the boutiques?

We have in mind a similar product line that we presently have inthe region. We are well aware of Saudi preferences, many of them are alreadybuying our brand from Dubai Mall and our own boutiques in the Emirates and manyare buying in large volumes. We might add a few classic specials as tribute toSaudi Arabia as we do in Dubai, but I would say 99% of the collection will bevery similar to what we have in the Dubai Mall, or in any other country in theregion, because there is uniformity in customer tastes across the region.

7. In Q2 2020, you launched your e-commerce platform, how do yousee e-commerce developing? How is Bvlgari benefiting from it? Do you think itwill have a negative impact on the traditional shop retailing?

Not in the least. It is a mixed bag in well developed countries likeUSA, where e-commerce share is around 15%. In countries like Italy, where westarted three months ago it is only 4%. So an overall number makes no sense, Ithink it is more prudent to see market by market, in accordance with the yearsof existence and size of investment. It would be worthwhile to learn from themost mature and most interesting markets like USA, but also Germany, which isdoing very well. I would safely put a share of 20% as possible with our rangeof high profile luxury brands. Conventional marketing channels and e-commerceportals are here to stay side by side in the future, and we have to see thatsome countries have better infrastructure, some customers are more loyal andsome are still unsure about new avenues of marketing since the country does notoffer exactly the same kind of safety one would expect. I think 20% is normaland you can be the number one player. We have a good presence in seven marketsand are number one already in five of them. We are young and growing good andby 2023 expect to be the first in all the countries. True that the pandemic hasled to closure of many major stores but what is more important to see is thatpost–Covid era will be a key period for growth. With the 24/7 connectivity andcapability of e-commerce, buyers and sellers are able to interact instantly,while many buying decisions could be slept over in conventional marketing. Itoften happens that you have the longing to buy in the weekend but Mondaymorning when you wake up, you don't think about it any longer. So e-commerce isa new opportunity for luxury brands and for Bvlgari in particular.

Will you continue to develop the e-commerce platform or is it just areaction to the COVID disclosure we had last year?

We had planned the initiative already in some countries, but notfor 2020, it was scheduled more for 2021 and 2022.  But when we saw that coronavirus will disablethe market for months we invested heavily in Customer Care Centers, so that wecould prepone 2021 and 2022 rollout already during the summer of 2020. The onlymajor country we left out was Russia where we will be operational by March andthis will help us tap 85-90% of the world luxury market potential effectively. Sothen it will be all about enhancing the experience and the service. We arealways innovating using new tools and technologies that are more and morecustomer friendly and seamlessly developing. We have a virtual store now, withimpressive display of models but we need more facilities such as brandexperiences for which we have to develop separate apps. Our goal is to bringthe trial facility for regular jewellery and watches so that you can figure outfrom your screen how you look with a new watch or with a new pendant. There aremany additional features that we are working on so that the experience is verysimilar to that in store in terms of emotions. The two are interlinked however,because even if you buy that watch online you may have to go to the store toadjust the gold bracelet to fit your wrist.

So physical experience is a must at the end of the day.

We should not mix the two. When I say 20% e-commerce, it means 80% isstill conventional boutiques.

8. Just to wrap up, 2020 has been very challenging year to say theleast. And obviously in 2021 we will continue to have some challenges due tothe second wave of the pandemic. What is your assessment of the current stateof the watchmaking industry and since we always try to move forward, what doyou expect for Geneva Watch Week during August 2021?

Firstly it is still a project that has not been confirmed yet. Ibelieve a lot in its importance and will try to organize it this year.Hopefully, by August Covid will be quite under control and so the possibilitylooks good. Of course, we will maintain the digital dimension of the event. Ibelieve we need this kind of event once a year at least in Switzerland. Manybrands who participated in the previous event are already asking when it isgoing to take place and I find their satisfaction level is pretty high. Detailsare yet to be confirmed and we are working earnestly on the probable dates andvenue and will certainly interact with the participating brands. The event willbe open to the public which is what the clients want, so it will be a similarbut bigger event once the pandemic threat recedes. A lot of brands that couldnot participate last year are definitely going to participate this year.

What do you expect the general scene of the watch watchmakingmarket in 2021, with many watch brands having some difficulties, and facingchallenges?  Do you see further product developmentsor will you be putting market developments on hold until you get more of returnon investment? How do you assess the market situation at the moment?

Well, the market will be better than last year around the world aswe can expect the massive vaccination drive to cause the virus threat to recedeand eventually disappear. Also because of the pandemic people have beenspending very little time last year on business trips, movies and dine-outs, sothere is a lot of disposable income on hand. This is currently evident in thestock markets. People are sure to come out to enjoy life after a year-longhibernation and this will be particularly good for luxury products. Animportant factor in this regard is that brands that are reputable, consistent,and smart in their innovations will perform better under the circumstances. Ibelieve in the case of Bvlgari Finissimo this is very relevant and I am surethat brand Bvlgari will be one of the winners of 2021. As to how much are wegoing to win, we will talk about it later. But for sure these brands will bedriving the market recovery. And this is why we are talking today as early asJanuary, because the sooner we do it the better.

Great, thank you very much for your time and cooperation. We alwaysenjoy our chats and hope will be seeing you physically in Dubai soon.

As soon as I can I will be. Lilia will come soon, I think nextweek, and Vincent in a couple of weeks. I myself will be in by April or Maybecause I'm missing it badly. It is even more important than before and I have somany reasons to come to Dubai, not forgetting the hotel, which scored a hugegrowth last year. We never speak much about the hotel, but it scored an amazingdouble digit growth last year, confirming that our brand was extremelyresilient and desirable even in Covid times.

Will we see the hotel resort brand entering other markets in theMiddle East like Saudi Arabia as well?

Right now, I mean, the last project we signed an agreement is inthe US since we are not at all in the continent. Obviously, as a globalhospitality brand, we want to be in all continents. So the first priority is toenter America and our Miami Beach hotel will be completed in 2024. We also planto be in LA and New York as well. Saudi will obviously be on the radar screen,but probably after we are well settled in America, because if we want to dothings properly, we need to take time, you know. Luxury market is a different kindof challenge. So far we are a leader in every city where we are present, and wemust remain the leader because we are a quality jeweller at heart, and as ajeweller we must be able to offer the best experience and satisfaction to ourcustomers, and to do that we have to proceed slowly and with caution.

You are definitely on the right track. Thank you very much.  All the best for the future, and look forwardto seeing you soon!