When the Swiss central bank unpegged the franc last week the markets panicked, spread-betting firms went bust and people who had just booked skiing holidays in Verbier probably swore loudly. Edouard Meylan, though, reacted with cool anger.
The head of family-owned Swiss watch brand H Moser & Cie wrote an open letter to the president of the Swiss National Bank “on behalf of entrepreneurs” who had just seen their exports take a severe hit. Meylan said that foreign retailers had immediately called to cancel orders of his product. H Moser & Cie’s tagline is “very rare”, and its boss quipped that the central bank's actions could make them “very, very, very rare”.
A week later, the 38-year-old is still deeply concerned about the effect the appreciation of the Swiss franc will have on his industry. “It was a big hit,” he says, adding that he agrees with Nick Hayek from the family-owned Swatch Group that it was a “tsunami”. Meylan adds: “We all feel that there was a better way to do it. We all knew that we had to unpack at some point, the problem was the way it was done and announced, especially for small businesses.”
The timing could hardly have been worse for the watch industry, coming just before the Swiss watch industry’s annual trade fair - the SIHH, which is happening this week - in which firms sell 30-70% of their watches. Bear in mind that watches account for 10% of Switzerland’s exports.
“It adds more uncertainty in a market that already has a lot of uncertainty because emerging markets are slowing down, Europe is slowing down, Russia is pretty much dead, in China they are buying less luxury,” says Meylan. “It was already not an easy market and suddenly came this big hit, which hits the key aspect of our business, which is margin.”
Edouard Meylan makes a compelling spokesman for the industry, because few people can be as embedded in the Swiss watch world than he is. His family has been making watches for “five, six, seven” generations, and his father, Georges-Henri Meylan, was the highly-respected CEO of Swiss watch-maker Audemars Piguet. The family now has a holding company, MELB, which bought watch brands Hautlence and H Moser & Cie in 2012.
These are tiny, highly specialised brands. Hautlence makes about 400 watches a year, and Moser’s 55 craftsmen just 1,000. The business is truly a family affair. Meylan’s brother works alongside him, his father is chairman and his mother vice-chairman. His sister works for another watch firm. “When we sit down we talk about watches,” he laughs. “It drives other people crazy but it is who we are. And of course the first time we meet someone we look at their watch.” In a nice touch, a descendent of Heinrich Moser, who founded the Moser watch brand in 1828, is honorary chairman.
Family businesses thrive in the luxury sector, says Meylan, because they look to the long-term and “it takes time to build a brand. A lot of people see huge margins and they say, ‘let’s invest in luxury’. No. You need people with experience and time because a brand doesn’t become a brand overnight. It takes time, and you need the right people behind it, and that is where our background comes in.”
The Meylan family’s plan is to add more brands to build a stable of niche players which can then achieve economies of scale that these micro-brands can’t alone. “It is a family investment, we want to grow it, how far it goes on its own we don’t know,” Meylan says.
“We will need strategic partners because at some point you need to put it into third gear, and that requires significant investment in marketing and a strategic partner would be helpful for that. But,” he adds, “we want to keep it as a family business. We grew up in this industry and I hope that my children will be in it too.” The franc's volatility notwithstanding, you have to say it sounds likely.