The co-founder of Frédérique Constant Group discusses Citizen’s acquisition of the business, the Japanese giant’s future strategy and the smartwatch spin-off that’s going it alone
By James Buttery
QP: Did you achieve everything you set out to achieve when you established Frédérique Constant 28 years ago?
Peter Stas: It’s never finished, of course but I think we’ve pushed it quite far in the past 28 years. We’re happy with the result, the company’s still growing but we realised when we were approached what would be the next step. The advantages of being part of a larger group are fairly obvious: more technology, more distribution and also, partly, more funding. We were approached by two [watch companies] and then another, so we had three suitors at the same time. That’s when we asked ourselves ‘are we going to continue to be independent and make the best out of that or are we going to jump and really make sure the company has its longevity secured?’.
QP: What was Citizen’s motivation to acquire Frédérique Constant Group? Was the Horological Smartwatch part of the attraction?
PS: They did not buy us for the smartwatch. The Japanese are not yet convinced about the longevity or sustainability of smartwatches. That’s not necessarily what I believe but that’s their opinion.
So that was not the motivation. For them the motivation was to have a Swiss brand in a segment that is more logical based on the strengths that they have – and don’t forget they have more than $3bn turnover, so are one of the larger groups – and now we start integration discussions to really bring Frédérique Constant to a higher level.”
QP: How so?
PS: Mostly on the distribution side. When I mentioned technology, it was really from our side. We have always been quite innovative – that has been one of our core values. That’s how we started the heartbeat, that’s how we started the company in the first place, the manufacture activity, the different calibres and also the smartwatch. This culture of innovation you also find at Citizen. It’s primarily on the quartz side but they do have radio technologies, solar technologies, ultra-thin movements. Compared to some of the other groups, Citizen is a much more technology- and manufacturing-driven company.
QP: What affect will that have on the Frédérique Constant brand?
PS: In terms of positioning, we’re going to continue the way we’ve been going, meaning we’ll continue to stay classical with Frédérique Constant, but of course with Alpina we have sports, which will be expanded.
QP: Will the loss of independent status be an issue?
PS: Our independence was very important to some of our retailers. But on the other end, Aletta [his wife], myself, the management team and another 25 key people have all signed up to stay for a minimum of a further five years. Citizen has very clearly said that it wants to maintain the independent direction of the group. That was also one of the things that made us decide to go with them.
Some of the others said they were going to keep it independent, but when we did due diligence and checked how that went with some other brands they [had] acquired in the past, that was not the case. With Citizen, they clearly function more in a holding structure with 125 different companies and only 93 people managing that on the top level. So you see already that they are not going to interfere in all kinds of details. It’s really a set-up where we can continue to do what we’re good at but with the strengths of the Citizen group.
QP: As well as Bulova and Miyota, Citizen also owns Prothor Holding (the parent company of La Joux-Perret, Arnold & Son and Angelus). Do you see the potential for any crossover or business cooperation?
“We’ve worked in the past with La Joux-Perret on certain Valjoux modifications, so we may work more closely with them in the future. It’s too early days, but I can definitely see that there will be nice synergies as well.”
QP: Following the Perpetual Calendar launch you are on record stating you could produce an affordable tourbillon, but planned to go in a different direction next year. Which direction?
PS: That I’ll leave for Basel 2017 otherwise we won’t have anything to talk about anymore. What I can tell you is that if we can manage everything it will be something really spectacular. It’s something that’s been on the books for some time and we are making good progress. The prototypes are coming out now, but it’s a bit early to say that we will make it for Basel. You will be quite surprised.
QP: The Horological Smartwatch is just over a year old. [You can read our hands-on review here]. How has it been received?
PS: Citizen did not take over the smartwatch activity, we spun out the MMT company [Stas announced the completion of this move earlier this month and introduced Philippe Fraboulet as the new company’s CEO]. MMT’s future is much more investment in terms of people here in Switzerland, versus the initial road where we were more dependent on software that we got from Silicon Valley. There will be the announcement of two new modules: one being a ladies calibre, which will be the smallest smart calibre that has ever been developed. We’ll also be working together with other watch companies meaning Movado, Mondaine and Ferragamo – and there are other [future] candidates. Then there will be new apps.
QP: So you’ve bought out technology partner Fullpower Technologies and moved MMT to Switzerland?
We already have the offices in the Skylab building, a new tech hub in Geneva [fittingly based in Plan-les-Ouates, a district already home to the likes of Patek Philippe and Rolex] – that’s where the team has moved to already.
Aletta and myself remain the majority shareholders, and there are also two minority shareholders. But Citizen is not involved there.
QP: What direction do you anticipate smartwatches heading in next?
PS: “We know now who has bought and why they have bought, and we have shipped about 50,000 modules over those four brands. But it’s early days. My philosophy is the first year that you introduce it, you have to make a lot of noise around; it will not have so many sales. Then in the second year it starts to be understood, and in the third year you really see the take-off. For the smartwatch, what we’ve seen is that price is a critical issue. Within the group of brands we were probably the most successful because the Frédérique Constant position is a little bit higher and the earlier watches were €1,000 up to €1,400, whereas, for example, an Apple Watch is €350-600. So the next modules will come down in price significantly.
Those new modules will have new features as well, and at the same time we have already made two new agreements with other companies which are going to license applications that will connect to the Horological Smartwatches. This means you will not only have activity and sleep but also more business functions. It is this area, the more universal type of apps that are going to be on this platform, that we feel is important to make [the platform] wider.
QP: Back with Frédérique Constant, are you likely to stay on longer than the five-year minimum?
PS: It’s early days, we’ve just been taken over, and so far we’re very happy with how everything is going. We signed up for a minimum of five years, and within those five years certainly we are going to make sure that both Aletta and myself will become less necessary so that we ensure the longevity of the company beyond us.