Perfect timing
TAG Heuer chief executive Jean-Christophe Babin on maintaining the brand’s reputation for brilliance
TAG Heuer’s reputation for precision and performance has endured since the watch company was established in 1860. And it is due to the determination of one man that it still runs like clockwork
TIMING IS EVERYTHING for Jean-Christophe Babin (right). As chief executive of luxury Swiss watchmaker TAG Heuer he safeguards a 146-year legacy steeped in accuracy and innovation. Soon after Edouard Heuer set up the company’s first workshop in Switzerland, it patented the first chronograph mechanism and followed that up with a series of inventions which shaped the future of watches.
Heuer invented the oscillating pinion in 1887 and it is still at the heart of most modern chronographs. In 1916 he created the Micrograph, the first chronograph to measure time to within one-100th of a second, the ultimate degree of precision for the era. By 1966 Heuer had developed the Microtimer, the first one-1,000th of a second chronograph. And the company is still pioneering today.
In 2004 it unveiled a new automatic movement and its latest line of sleek steel timepieces, called Kirium, combine traditional hands with digital faces. TAG’s strongest asset now is one which even the visionary Edouard Heuer could not have foreseen: its status as a top luxury brand. And 47-year-old Babin’s business savvy keeps this ticking over.
After getting an MBA from the HEC school in his native France, Babin spent six years at Proctor & Gamble and two years at Boston Consulting Group as a management consultant. For the next decade, his career was in the detergents industry, first with Benckiser in Italy then with Henkel. Working with consumer chemicals may not seem the ideal background for the boss of a luxury goods brand but marketing blood courses through Babin’s veins. The company’s core values trip off his tongue: “Prestigious, performing, stylish and understated. Dressed up but dressed down.” Babin brings a dynamism to TAG that seems as fresh today as when he was appointed CEO in 2000.
Surprisingly, it wasn’t his energy that put him in the frame for TAG’s top job – it was his formal training. His predecessor, Christian Viros, had come via the same route, having been a consultant for Booz Hamilton. After the Swiss-based Techniques d’Avant Garde group took over Heuer in 1984, Viros was hired to save the company from going under. He replaced family scion Jack Heuer, who headed the company that had been ravaged by recession and whose products were seen more as scientific instruments than status symbols.
Viros transformed TAG Heuer into a lifestyle brand by concentrating on design and marketing. But his masterstroke was focusing on an association with sports. The sports-watch market was a new niche and Viros cornered it with advertisements featuring, for the first time, stars such as French skiing champion Luc Alphand and Formula One racing driver Ayrton Senna.
This strategy remains to this day. In addition to celebrities such as Uma Thurman and Brad Pitt, its “faces” include Tiger Woods, Maria Sharapova (left) and F1 driver Kimi Räikkönen. And, as Babin explains, the firm further exploits these associations. F1 drivers test new prototypes during races, submitting them to extreme G-forces, vibration and shock.
“Nobody is more demanding than a top driver,” he says. And this isn’t just marketing speak. The case on TAG’s Kirium model, for example, is made from grade-five titanium, which is much lighter than steel but more scratch-resistant and shines like white gold. It is a material borrowed from the F1 world, where it is used in accelerator pedals, gearboxes and parts of the transmission.
By sponsoring sports where technology and accuracy are paramount, TAG has polished its reputation for precision while positioning itself as a luxury brand appealing to early achievers. Research revealed that TAG’s target market is college-educated 40-year-olds and that every year approximately 3% of them buy a new luxury watch, costing $1,000 or more. TAG’s average watch price is now over $2,000.
On the back of their brand positioning revenues steadily surged from just $30m in 1988 to over $900m today. This caught the eye of several suitors. Venture capital firm Doughty Hanson bought the business in the mid-1990s and later cashed out in a public flotation before luxury goods conglomerate Louis Vuitton Moët Hennesy (LVMH) bought the company for around $800m in 1999.
It was well worth it.
With over 8,000 retailers globally stocking TAG, its annual sales of around 900,000 watches give it a 20% share of the luxury market. Viros may have identified the key buyers but when he wanted a change of scenery in 2000, Babin came to the attention of TAG’s headhunters.
Babin has such care for his watches that he even refers to them being divided into “families”. Other big successes are revived Heuer models brimming with nostalgia and images of Steve McQueen adorning the advertisements. He also introduced eyewear, with a range of sunglasses and frames for prescription glasses.
With Viros having effectively doubled watch sales every year from their original base, growing is now a tougher task but Babin has a clear strategy.
He has reduced the product range from 800 to 200 lines in the past three years and is looking more closely at women’s watches, which already account for around 33% of TAG’s sales. The CEO adds that one of the biggest drivers is a watch that tennis star Maria Sharapova helped to design. Its selling point is far from subtle: a bezel set with 120 diamonds.
Nor is there any element of the business that escapes his gaze, “from getting involved with product aesthetics to understanding many different cultures, as well as going through 30 subsidiaries’ P&L (profit and loss) in 30 minutes while keeping in mind the big picture. I must know a little bit of everything to grasp the dynamics and steer my company accordingly,” he says.
Perhaps the best proof of TAG’s success is that, having homed in on the lower end of the luxury market, it opened this sector up to watches from fashion brands such as Diesel, Fossil and Calvin Klein. TAG’s greatest challenge to come could be differentiating itself from these newcomers as well as the upper end of connoisseur’s timepieces, whose value is down to the intricacies of the mechanism. It is a task Babin is well equipped to take on.
ALTHOUGH HE HAS a formal management education, Babin admits that “learning by doing probably remains the best training”. He adds: “There’s no recipe but experience, flexibility, curiosity and down-to-earth good sense. The best training one can provide is giving people the chance to become an entrepreneur by delegating projects to them and placing more trust in them than they theoretically should be entitled to. You can always complement that by teaching them standard management modules like ‘managing your boss’ or ‘delivering a convincing presentation’ but this will never turn lame ducks into business mavericks.”
Babin’s goal is to pass his passion on. “Everybody has to feel responsible for the company’s destiny so there should be no monopoly when it comes to innovative initiatives. One feels motivated when one feels he or she can influence the course of the company, from whatever position or function. Every employee must feel somehow like the owner of the company and be proud of success.”
In TAG’s minimalist Swiss headquarters, replete with wood, modern aluminium and wide windows overlooking mountains, the door to Babin’s office “is always open and that’s on purpose. I’m not a king deciding everything from his ivory tower. My office is neither above nor cornered beyond the others. It’s in the middle of the action, between marketing and sales.”
He may say that he is only one cog in TAG’s mechanism – “I am not an artist, I am not a designer and I am not an engineer so I have to surround myself with great talent and skills” – but there is no doubting it when he declares: “But eventually I am the one who decides.” Babin’s passion clearly hasn’t completely overruled his rationality just yet.
Famous faces
The use of celebrity endorsements among premium watch companies has now become widespread. So who wears which watch?
BAUME & MERCIER
In 1830 Louis Victor and Pierre-Joseph-Celestin Baume formed the Frères Baumes watchmaking house in the Swiss Jura mountains. In 1920, grandson William Baume created Baume & Mercier in Geneva. This year actress Kim Basinger (pictured) is the female face of the brand. “Her interest in caring for others and the environment unites her with our brand,” says Baume & Mercier’s Sylvie Hamou. The firm has donated to charitable causes such as the education of underprivileged children.
Prices from £675 to £7500 www.baume-et-mercier.com =
ROLEX
German watchmaker Hans Wilsdorf established Rolex in London in 1905. Within two decades, the company patented the Oyster, which boasted the world’s first truly waterproof casing. For many years Rolex has been closely linked with tennis, particularly Wimbledon, where it has been official timekeeper since 1979. The company has supported Roger Federer throughout his illustrious career. “His talent and determination make him an exceptional personality,” says a Rolex spokesman. Prices from £1,770 to £157,000 www.rolex.com
RAYMOND WEIL
In 1976 Raymond Weil created a company that has been making waves in the luxury watch market ever since. In July 2005 Charlize Theron (pictured) became the face of Weil. This year they are teaming up with British singer Lemar, who has created a bespoke watch for a summer auction in aid of the Nordoff Robbins music therapy charity. “We chose him due to his incredible talent,” explains Laurie Milne from Swico, the brand’s UK distributor. Prices from £300 to £15,000 www.raymondweil.com
OMEGA
Omega began back in 1885 with the Gurzelen Patent, a beautiful gold pocketwatch. Fast forward to October 2006: they open their first boutique in Russia, bringing James Bond to Red Square. Nicole Kidman (pictured) is currently one of their ambassadors. “As patron of the arts and through various philanthropic causes, she also makes an invaluable contribution to increasing social awareness on a worldwide level,” states Stephen Urquhart, president of Omega.
Prices from £850 to £160,725 www.omegawatches.com
SEIKO
Seiko began with the production of Japan’s first wristwatch in 1913 and the world’s first quartz watch in 1969. They have also been the official timekeeper at many international sporting events since the 1964 Tokyo Olympics. Racing for the Honda Formula One team, Jenson Button already owned five Seiko watches and was a natural choice as an Ambassador. “Seiko is a sporty brand so it’s perfect for the team,” he says.
Prices from £100 to £3,500 www.seiko.com
Words: Christian Sylt
