Diamonds shine brightly at this yr’s Geneva watch truthful however the sanctions slapped on Russia might quickly power the Swiss watch business to provide extra subdued designs. Russia is a significant provider of diamonds, gold and different valuable metals to the luxurious watchmakers exhibiting at Watches and Wonders, one of many world’s prime salons for the status business. The Russian group Alrosa-the world’s largest diamond mining company-was hit by US sanctions inside hours of the Kremlin-ordered invasion of Ukraine on February 24.
Based on US Treasury figures, it accounts for 90 p.c of Russia’s diamond mining capability, and 28 p.c globally. And whereas commerce between Switzerland and Russia is modest, gold is the chief import, forward of valuable metals comparable to platinum adopted by diamonds not mounted or set, based on the Swiss customs workplace. In comparison with different sectors of the Swiss economic system, “watchmaking was a department that was much less affected than others by provide issues in 2021”, Jean-Daniel Pasche, president of the Federation of the Swiss Watch Business, informed AFP. However that will now not be the case, he acknowledged, including that it was laborious to evaluate the repercussions for the watch business at this stage. “There are clearly reserves. Afterwards, we should see, relying on how lengthy the battle lasts,” Pasche mentioned.
Recycled gold and palladium
The Swiss luxurious large Richemont owns the Cartier and Van Cleef & Arpels jewellery companies, plus eight prestigious watch manufacturers, together with Piaget and IWC. The group took the lead on Wednesday, saying all its manufacturers have stopped sourcing diamonds from Russia. The transfer will create a whole lot of work on the availability chain to seek out responsibly-sourced, high quality diamonds from elsewhere, Richemont chief govt Jerome Lambert informed a press convention.
Gold provide is of much less concern. For a decade or so, Richemont has been sourcing recycled gold for watchmaking, purchased from business and the electronics sector. For palladium, used as an illustration for wedding ceremony and engagement rings, the group determined “forward of the sanctions” to change to suppliers specializing in recycled palladium, Lambert mentioned.
Draining the shares
At Patek Philippe, one of the crucial prestigious Swiss manufacturers, the agency’s president is relying on his stockpile to trip out the storm. “Fortunately I produce in small portions,” mentioned Thierry Stern, who represents the fourth era of his household on the firm helm. “So I don’t really feel any distinction but,” he informed AFP. For 2022, Patek Philippe plans to fabricate 66,000 timepieces. “And if I can’t discover sure stones, I can at all times do engraving,” mentioned the top of the model, which depends on a variety of disciplines together with ceramics, marquetry and enamel.
- Moser, a distinct segment model producing 2,000 watches a yr for rich collectors, struck a lot the identical tone. “Purchases are made prematurely. For instance, for the casings that I need to make in 2023, I’ve already purchased all of the gold I want,” mentioned boss Edouard Meylan. “However possibly in six months’ time a few of our suppliers will name to push again the deadlines as a result of they haven’t obtained the supplies,” he admitted.
Considerations over uncooked supplies “will drive up costs, in fact”, mentioned Jon Cox, an business analyst with the Kepler Cheuvreux monetary companies firm. Nonetheless, in comparison with different sectors, luxurious companies have extra leeway to move on prices to prospects, he added. On the Watches and Wonders salon in Geneva, the place 38 manufacturers are exhibiting till Tuesday, the shows are brimming with diamonds, reflecting the “usually upbeat temper” of the business this yr after a affluent 2021. Nonetheless, given the battle and its repercussions, “I think about product growth will transfer to extra subdued luxurious items”, Cox mentioned. – AFP