Can a Buzzy Audemars Piguet Tie-Up Boost Swatch?

A surprise collaboration between Audemars Piguet and fashion watch brand Swatch has brought fresh buzz to the high-end Swiss watchmaker and prompted fans to line up in front of Swatch stores ahead of its launch.

Shares of Swatch group got a boost when the tie-up project was first revealed on May 3, though they were down on Wednesday after shareholders at parent company Swatch Group voted for a second time not to grant activist investor Steven Wood a seat on the company’s board.

The tie-up is a “one-off” aimed at recruiting younger generations to the world of watchmaking, Audemars Piguet chief executive Ilaria Resta told BoF.

Product details of the “Royal Pop,” a $400 pendant watch based on Audemars Piguet’s luxury $40,100 Royal Oak wristwatch were leaked late Tuesday, sources said, prompting Swatch to release them ahead of the launch planned for Saturday — several hours before Audemars Piguet. Swatch declined to comment.

The timepieces come in eight colourful versions and draw on Audemars Piguet’s signature Royal Oak, with an octagonal bezel and chequered “tapisserie” dial pattern.

The move is a “a clear brand heat boost for Swatch,” likely to generate traffic and sales for the Swatch brand, said Carole Madjo, analyst with Barclays. Madjo estimates Swatch generates a bit below 10 percent of sales for its parent company Swatch Group.

The product launch prompted RBC to upgrade its rating on Swatch Group to sector perform, estimating it could bring 1.05 billion Swiss francs ($1.34 billion) in revenue to the brand through 2029.

The collaboration serves both brands, creating a cultural moment for Swatch that can help it increase brand relevance among younger consumers, said UBS analyst Zuzanna Pusz. For Audemars Piguet, it broadens cultural reach, potentially supporting the recruitment of a new generation of clients.

But the boost likely will not be enough to offset the group’s “broader structural challenges,” Pusz added, citing the group’s underperformance for over a decade, which has put profitability and cash generation under pressure.

“This one-off collaboration with Swatch opens a new conversation around watchmaking culture, celebrating Swiss mechanical watchmaking in a way that feels unexpected, inclusive and engaging for the new generation,” said Resta.

Audemars Piguet will donate all proceeds to “initiatives dedicated to safeguarding rare craftsmanship and nurturing the next generation of watchmaking talent”, Resta said, without providing specifics. Last month, introduced “Ateliers des Établisseurs,” a programme to produce highly limited watches priced at hundreds of thousands of dollars that promote crafts like gem-setting and enamelling.

The Royal Pop project is the third collaboration between Swatch and a luxury watchmaker, but the first time collaborating with a brand outside the Swatch Group, which owns Omega and Blancpain, among others. It is also the first time co-branding a design with one of watchmaking’s so-called “Holy Trinity”of prestigious watchmakers Audemars Piguet, Patek Philippe and Vacheron Constantin.

Four years ago, Swatch and sister brand Omega released the MoonSwatch, a cheaper version of Omega’s Speedmaster Professional, known as the Moonwatch. The watch generated huge market hype and is estimated to have sold millions of units in the years since, bolstering the industrial end of Swiss watchmaking, which has been hit hard by smartwatch sales. A second collaboration in 2023 with Blancpain, the Scuba Fifty Fathoms, had less market impact.

Online response to teasers trailed on social media since May 3 has already proved the value in the idea, Resta said.

“Ever since rumours of the collaboration between AP and Swatch first emerged, interest in mechanical watchmaking online has surged, showing how together we can spark renewed desire,” the executive said. “This is one of the ways to ensure the future of our industry.”

Audemars Piguet is already well known to younger generations of watch buyers, thanks in part to high profile partnerships with stars of contemporary culture such as LeBron James, the Marvel Universe and Travis Scott over the past decade. Sales have boomed, hitting 2.6 billion Swiss francs ($3.3 billion) last year, according to Morgan Stanley estimates, making it Switzerland’s third largest watchmaker by sales, after Rolex and Cartier.

The growth has come against the backdrop of an industry recession with declines in annual exports of Swiss watches in each of the past two years, according to the Federation of the Swiss Watch Industry (FHS), as the post-pandemic boom has wound down. Volumes have collapsed since 2015 when Apple introduced its connected watch, with Switzerland exporting 14.6 million watches last year, down from 28.1 million a decade before. Declines have been particularly acute in the lowest price category, where Swatch operates, according to FHS statistics which show exports down by 10 million timepieces.

Demand for the Royal Pop is expected to be high. At launch, the MoonSwatch caused chaos on high streets around the world as flippers looking for quick profits on the secondary market broke through security cordons. Prospectors late Tuesday already began listing the watch on online marketplaces for more than five times its retail price.

It is uncertain whether AP’s foray into the lower end of the market with Swatch will prompt a longer term increase in volumes. Buyers continue to turn to smartwatches or opt not to wear watches at all.

Meanwhile, executives at Audemars Piguet are confident the project will have a lasting influence.

“This collaboration matters,” said Resta, pointing to its role as an entry point for new generations into mechanical watchmaking as well as its potential to “spark a cultural conversation.”