Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How a 115-Year-Old Watch Brand Survived the Digital Revolution
Transcript
- Lucas: So Luna, I want to start with a number that stopped me cold last week. In 2020, at the height of the pandemic, with retail shuttered and luxury travel dead, one 115-year-old Swiss watch brand posted a 14 percent revenue increase. Not Rolex, not Patek. A brand most people under 40 have never heard of. Luna: Which brand are we talking about? Lucas: Longines. Founded in 1832 in Saint-Imier, Switzerland. They survived the quartz crisis that wiped out most of the Swiss watch industry in the 1970s, and then they survived the smartwatch invasion without ever launching a connected watch. Today, they're the fourth-largest Swiss watch brand by revenue, behind only Rolex, Omega, and Cartier. Luna: That is surprising. I know Longines as the brand my grandfather wore, but I haven't thought about them in years. So how did they pull that off? Lucas: Look, before I go deep on the strategy, I want to acknowledge something briefly. We keep this podcast completely ad-free — no sponsors, no commercial breaks, no mid-roll interruptions. If these episodes have helped you think differently about your own work or business, and you want to support that principle, the link is buy me a coffee dot com slash fexingo. No pressure ever, just a way to keep the show independent. Now back to Longines. Luna: Yeah, that's a good reminder. And I'm genuinely curious about their strategy because they're not the flashiest brand on the shelf. Lucas: Right. So the story really starts in the 1970s. The quartz crisis hit Swiss watchmakers like a tsunami. In 1970, Swiss brands made about 40 million watches a year. By 1983, that number had collapsed to 3 million. Hundreds of companies went bankrupt. Longines was part of that near-death experience. Luna: What saved them? Was it the same thing that saved the rest of the industry — the Swatch Group? Lucas: Exactly. Longines was acquired by what became the Swatch Group in the early 1980s. But here's the interesting part — while Swatch was busy making cheap quartz watches to compete with the Japanese, they gave Longines a very different mandate. Stay premium. Stay mechanical. Don't chase the quartz trend. It was a counterintuitive bet. Luna: But didn't that mean they were basically ceding the mass market to quartz? How do you survive on niche volume? Lucas: You do it by changing your target customer. Longines went from being a broadly accessible watch brand — they made everything from dress watches to military pieces — to being a heritage luxury player. Their average price point rose from about 500 Swiss francs in 1990 to over 2,000 francs today. But they also held production flat. In the early 2000s, they produced about 500,000 watches a year. Today, it's still around 500,000. Rolex produces over a million. Omega produces about 600,000. So Longines is deliberately undersupplying demand. Luna: So scarcity as a strategy. That only works if people actually want the product. How did they rebuild demand? Lucas: They leaned hard into heritage marketing. Longines has one of the deepest archives in the industry — they've been documenting every watch they've ever made since 1867. So they started reissuing classic models from the 1930s, 40s, 50s. The Heritage collection. They also doubled down on equestrian sports sponsorship, which is a weirdly effective niche — horse riders tend to be affluent and brand-loyal. And they kept their distribution selective. You won't find Longines in a discount outlet. They control their retail presence tightly. Luna: But all of that is about maintaining the past. How did they handle the smartwatch threat? I mean, Apple Watch launched in 2015, and by 2020 it was selling 30 million units a year. Did Longines not feel that? Lucas: Oh, they felt it. But their response was to not respond. No smartwatch. No hybrid. No fitness tracker. They doubled down on what makes a mechanical watch different. The movement, the craftsmanship, the fact that it doesn't need a charger. They actually ran a campaign called 'The Watch That Never Needs an Update.' It was brilliant. And the data suggests it worked. From 2015 to 2020, while Apple Watch was exploding, Longines revenue grew about 40 percent. Not as fast as Apple, but steady. Luna: That is genuinely counterintuitive. In most industries, if a new technology comes in and captures mass adoption, the incumbent either adapts or dies. Longines did neither and grew. So what's the lesson for other businesses facing disruption? Lucas: I think the lesson is that disruption isn't always a zero-sum game. The Apple Watch solved a different problem. It's a health tracker and a notification device that also tells time. Longines solves a different problem — it's a piece of mechanical art, a status signal, a connection to history. Those two products don't really compete, even though they both go on your wrist. So the winning move wasn't to try to beat the Apple Watch on features. It was to make the mechanical watch more mechanical, more analog, more irreplaceable. Luna: But is that sustainable? I mean, eventually, the generation that grew up with Apple Watches will be the ones buying luxury watches. Will they care about mechanical movements the way their grandparents did? Lucas: That's the existential question for the whole Swiss watch industry. But early signs are positive. The average age of a first-time luxury watch buyer has been dropping. According to a 2023 study by McKinsey, about 60 percent of Swiss watch buyers under 35 said they preferred mechanical over quartz. And the second-hand market for vintage mechanical watches is booming. So there's clearly a cohort of younger buyers who see mechanical watches as a rebellion against digital overload. Luna: So the analog becomes a luxury precisely because the digital is ubiquitous. That's a really interesting framing. But doesn't that limit the total addressable market? Not everyone can afford a two-thousand-dollar watch. Lucas: It does limit it. Longines will never sell 10 million watches a year. But they don't need to. Their margins are high, their brand equity is deep, and they have the Swatch Group's balance sheet behind them. For a lot of businesses, the path to survival isn't maximizing volume — it's maximizing value per customer. Longines is a textbook case of that. Luna: I want to talk about one more specific move they made. I read that in the early 2000s, they decided to move all their production back in-house, even though outsourcing to Asia would have been cheaper. Why? Lucas: That was a pivotal decision. In the 1990s, Longines, like many Swiss brands, sourced movements from ETA, another Swatch Group company. But in 2002, the Swatch Group started limiting movement supply to third parties, which forced brands to either develop their own movements or die. Longines partnered with ETA to develop exclusive calibers — the L888 series — that are only used in Longines watches. That gave them a technical distinction. They could market 'in-house movement' even though it was technically a collaboration. It raised the perceived value. Luna: So they converted a supply chain constraint into a marketing advantage. That's smart. Lucas: Exactly. And it ties into their broader strategy. Everything they do reinforces the same message: we are the authentic, continuous heritage brand. From the movements to the reissued designs to the selective distribution. There's no mixed messaging. That consistency is rare. Luna: I can think of other industries where the same playbook could apply. Specialty coffee, for example. Instead of trying to compete with Starbucks on speed and convenience, you double down on single-origin beans, manual brewing, and the story of the farmer. That's basically the Longines model. Lucas: Exactly. Or craft beer vs. macrobreweries. Or independent bookstores vs. Amazon. The key insight is that disruption doesn't have to be a death sentence if you can clearly define the value you provide that the disruptor cannot. For Longines, it's a mechanical object with a century of history. For a craft brewery, it's a local flavor and a personal connection. The disruptor wins on convenience and scale. The incumbent wins on meaning. Luna: Okay, but I have to push back a little. Longines had a huge advantage: the Swatch Group's financial resources. They could afford to not compete on price and to invest in marketing and movement development. What about a small independent watchmaker with no corporate parent? Could they survive the same way? Lucas: That's a fair point. The survival rate for small independent watchmakers during the smartwatch era has been much lower. But there are success stories. Brands like Nomos Glashütte in Germany or Grand Seiko in Japan have grown by following a similar playbook — focus on mechanical excellence, controlled production, and a strong brand story. It's harder without a big balance sheet, but not impossible. The fundamental strategic principle still holds. Luna: So what's the one thing you'd tell a business owner listening right now who's worried that a new technology is going to eat their market? Lucas: I'd say: don't start by asking how you can compete on features. Start by asking what your customer is really buying from you. Is it convenience? Is it status? Is it connection? Is it craftsmanship? If you can articulate that clearly, you can figure out whether the new technology actually threatens that value or whether it's solving a different problem entirely. Longines realized that their customers weren't buying timekeeping — they were buying heritage. And a smartwatch couldn't deliver that. Luna: That's a good note to end on. Longines is still making watches in Saint-Imier, still using mechanical movements, and still growing. It's a reminder that sometimes the best response to disruption is to be more of what you already are. Lucas: Exactly. And maybe the next time you see a smartwatch on someone's wrist, you'll think about the mechanical watch on the other wrist. They're not really competing. They're coexisting. And that's a lesson a lot of industries could learn from.