produces 170 special editions of its most popular watches, the launch of which is likely to cause a stir among wealthy watch collectors. The unexpected move comes less than a year after Patek discontinued the iconic watch known as the Nautilus Ref. 5711, which led to a sharp increase in demand and prices. Patek says it is producing 170 special Ref. 5,711 Tiffany colored dial watches to be sold in select Tiffany boutiques. The watch was created to celebrate a 170-year partnership between the Swiss watchmaker and Tiffany, as well as Tiffany's new ownership of French luxury goods giant LVMH, according to Patek Philippe. For Tiffany, the opportunity to sell what is arguably the most sought-after new watch in the world will add glamor and marketing brilliance to the jeweler as they make changes under the leadership of LVMH and its chief executive Bernard Arnault. "It was my little gift to congratulate you on your purchase of Tiffany," Patek CEO Thierry Stern told CNBC . “It was very clear to me that I had to choose something unique and exceptional. This is really the last round for this watch.”
Watch lovers all over the world thought the last tour was in January. Amid record demand for top luxury watches, Patek unexpectedly announced the end of production of the Ref. 5711, stating that attention and demand for watches had gone too far. The stainless steel watch, released in 2006, has gone viral on social media. Among wealthy watch lovers, they have become one of the top trophies on the wrist - a mixed blessing for a company that prides itself on its wide range of creative, sophisticated timepieces, as well as exquisite gold, platinum and other pieces.
“I still don’t understand why the success of this watch suddenly came so quickly and became so high ,” Stern said. “But I know I don't want to be a single product company. That's why I stopped the 5711. We made quite a lot of this model.”
Many watch buyers were furious. Purchase Ref. The 5711, which retailed for around $30,000, already included long lines and non-transparent deadlines from dealers, even for preferred Patek customers. Now it would be impossible to buy new 5711. Prices for used Ref. 5711s - already subject to speculation - have surged to over $150,000 online. One copy sold at Sotheby's for $484,000 in 2020.
Stern's decision to make the final 5711s for Tiffany came from the deep history and shared values of the two companies, he said. In 1851, Tiffany became Patek's first official retail partner in the United States. During his first business trip to the US, Antoine Norbert de Patek met Charles Lewis Tiffany in New York. Today, Patek watches are sold in select Tiffany boutiques, and Patek watches are stamped with "Tiffany & Co.".
Both companies are also under family control and plan to pass the leadership on to the next generations. The Swiss Stern family has owned Patek since 1932, while LVMH is controlled by Bernard Arnault, the third most powerful man in the world. Bernard Arnault has for years explored the potential of adding one of the Big Four watch brands - Rolex, Patek, Audemars Piguet and Richard Mille - to his luxury brand stable, which already includes Tag Heuer, Zenith and Hublot. Stern said he had met with Bernard Arnault in the past and told him "we are independent and not interested in sales".
However, Stern wanted to offer Bernard Arnault something special to commemorate LVMH's $15.8 billion deal to buy Tiffany. He held a virtual meeting to present Ref. 5711 at LVMH. It included Alexandre Arnault, the 29-year-old scion of the family, who was recently named Tiffany's executive vice president of products and communications.
"First, I told them, 'Gentlemen, please stay where you are, because you will be very surprised,'" Stern said. “As soon as I showed them the drawings, they were very excited.”
Along with the special color Tiffany-blue, the watch will feature "Tiffany & Co." stamped at 6 o'clock combined with Patek Philippe branding at 12 o'clock. The sapphire crystal case back bears the commemorative inscription “170th Anniversary 1851-2021 Tiffany & Co. - Patek Philippe. Stern also made a tiny "surprise" on the back, which he will leave for the owners.
“I put something secret on the back of the watch,” Stern said. "It's pretty funny."
For Tiffany, a Patek "gift" means the retailer can offer a new sports watch to its most valued customers and create a buzz in its boutiques. Alexandre Arnault said in a statement that Tiffany is “proud to present this special edition with Tiffany Blue dials to our most discerning customers.”
However, this also comes with risks. Tiffany will have far more than 170 VIP customers with cash and a desire to buy a watch, and most of them will be rejected. It will retail for around $52,000 and will only be available at Tiffany boutiques in New York, Beverly Hills, California and San Francisco, where Patek Philippe is sold.
"I had to warn Tiffany and I said, 'Look, this is a fantastic gift,'" Stern said. “But it's also dangerous because you'll only have 170 pieces and it's up to you to sell it to the end customer. There will be 170 people who will be very happy and the rest will be unhappy.” I hope they sell it to the right people. For me, this is really the most important thing. When you make a clock like this, it should go to the right person.”
Pandemic creates scarcity, fuels interest
Ref. The 5711 is the most striking example of the larger supply/demand imbalance in the luxury watch market. Rising stock markets, crypto wealth and a flood of government stimulus have created record wealth while a whole new generation of young shoppers have begun to learn about high quality watches and shop online during the coronavirus pandemic.
However, Patek Philippe, Rolex, Audemars Piguet and Richard Mille - all privately owned - have not significantly increased production. Rolex sold 810,000 watches last year, Audemars 40,000 and Richard Mille 4,300, according to a Morgan Stanley report. The numbers were lower than usual due to pandemic shutdowns.
Patek typically produces around 60,000 watches a year. Like other brands, the company says it cannot substantially increase production without sacrificing quality. As an example, Stern said that it takes 10 years to train a good watchmaker who can master the intricate details and making of Patek watches.
"Quality will always be at the top of my wish list," said Stern. “I do not need to rush, I am not being pushed by the shareholders. I'm not interested in increasing the number in order to have large numbers. I'm more interested in longevity and beauty."
However, the low output of top brands has created a huge gray online market for used watches. Customers entering a Rolex or Audemars store for the first time usually find that the watch they want is not available, and waiting lists can stretch for years for those lucky enough to even make a list. So many buyers are turning to a growing number of online sites such as Chrono24, Chronext, Hodinkee and WatchBox that sell used watches, often at a hefty markup. High-demand watches that officially retail for $25,000 or $35,000 are now selling online for $60,000 or more.