ALTitude

Investing in the private luxury market

The behind-the-scenes story of how Partners Group is establishing a storied Swiss watch brand in the top league of luxury watchmaking—and how Canadian accredited investors can take part in this exclusive growth opportunity.

January 21, 2025

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In the retail business, and especially the luxury goods industry, understanding your consumer is key. Today’s most globally relevant consumer trends include the expansion of the middle class, particularly in emerging markets such as China and India, and generational wealth transfer, which has expanded the consumer base for luxury goods to a new and younger cohort. Within the portfolio of the BMO Partners Group Private Markets Fund, these themes are represented by a storied name in the luxury space: Breitling.

Founded in 1884, the Swiss watch maker has undergone a significant transformation under Partners Group’s ownership, leveraging the asset manager's global resources to support Breitling's continued growth and maturity. Here, Luke Chapman, Partners Group’s Senior Investment Leader, Industrial & Consumer, shares the owner’s perspective on the historic brand—including what made Breitling a perfect fit for Partners Group, the importance of storytelling in the brand’s appeal to both new and dedicated consumers, and how Breitling and the BMO Partners Group Private Markets Fund offer accredited investors the opportunity to tap into private equity’s unique value-creation model.

Why Breitling?

Partners Group’s investment in Breitling began with our purchase of a minority stake in 2021, followed a little over a year later by our acquisition of majority ownership. From the start, there were two primary motivations that drove these investment decisions. The first is our firm’s focus on thematic tailwinds—we strongly believe in delivering access to globally-relevant themes.

Given evident demographic megatrends, including the emergence of a global middle class that is increasingly interested in expressing themselves through luxury brands, we became convinced that the luxury watch space was a thematically compelling place to invest. In particular, our research revealed Breitling to be very well-positioned to capitalize on what we call the “neo-luxury” theme. Consumers, who are responsive to this “neo-luxury” concept—a more casual, relaxed and sustainable interpretation of luxury—are younger, informal and more digitally-engaged than traditional luxury consumers. With our deep focus on consumer insights, we realized that there is a strong overlap between Breitling’s identity and this new cohort’s self-image, making Breitling an excellent fit for this evolving marketplace.

Secondly, we view watches as a uniquely attractive category within the broader luxury market. In fashion, for instance, there are always winners and losers in any given year—it’s difficult for a brand to remain consistently relevant and successful when consumer preferences change with each passing season. The luxury watch industry, on the other hand, is less volatile—an established legacy of over 100 years is practically a requirement for operating in the category, and successful brands tend to remain relatively stable and consistent over time.

Of course, they also need the necessary watchmaking know-how and ability to engineer unique timepieces, and Breitling is one of the few watchmakers in the world that has excelled in that respect for decades. More than a century ago, it was Breitling that invented the first wrist-worn chronograph, a stopwatch with a push button separate from the crown. It is that spirit of innovation that makes the company special, enabling it to maintain a sterling reputation across decades while fuelling a thriving secondary market for its watches.

An image of a Breitling wrist Chronograph circa 1915 next to a Breitling print advertisement circa 1946.

Left: Inventor of the modern wrist Chronograph: Breitling’s first chronograph, with an independent pusher, circa 1915.
Right: Advertisement for Breitling’s lineup of watches, circa 1946.

Investing in an aspirational market

The luxury watch industry represents an attractive investment opportunity, but it is not easy for individual investors to gain direct exposure to it. The reality is that many of the largest and most widely known brands are either owned by families or private foundations, or they sit within groups comprised of many different kinds of luxury goods companies. With Breitling, Partners Group recognized an opportunity to provide such exposure to our clients. That is ultimately what motivated our investment in the category.

As an asset manager working with an established consumer brand, we’ve learned that numbers cannot dictate everything. With Breitling, we spend a higher-than-typical percentage of revenues on marketing in order to invest in the brand’s success. It is not always easy to identify the direct connection from this marketing spend to sales. Ultimately, that’s because, in the most literal sense, Breitling and other luxury watch makers do not sell a product that is essential—everyone already has a phone that can tell the time, so instead they sell a dream. It is incumbent on us, then, to stoke consumers’ desire for the product—hence our focus on marketing.

As investors, we like to try and convince ourselves to make decisions informed by hard data. However, the luxury watch space can make this more challenging. It’s the intangible, unquantifiable aspect of the business that makes Breitling and this industry uniquely fascinating.

From a historic watch brand to a leading global player

In an industry led by 100-plus-year-old companies, including Breitling, brand-building isn’t a short-term exercise. Historically, the brand’s marketing largely focused on aviation and automobile enthusiasts. Balancing this existing image with a refreshed and informal identity has been a challenge, but we consider creative storytelling to be one of the hallmarks that sets us apart from our peers. Ads for other well-known watch brands are most often found in high-profile, exclusive settings that quickly run up an expensive tab—major global sporting events like yachting, golf’s major championships, and tennis’ Grand Slam tournaments, for instance. Breitling instead finds ways to build engaging and personal stories that resonate with specific audiences.

One recent example is Breitling’s partnership with professional surfer Kelly Slater. When Slater was younger, his father had an orange-coloured watch that he lost while surfing. With this in mind, Slater worked with the Breitling team to create the Superocean Automatic 42 Kelly Slater.

Launched in 2022, it features an orange design and is an ideal timepiece for water-based activities like surfing and scuba diving, with water resistance to a depth of 300 metres. Within the past 18 months, we have also launched campaigns with celebrities and organizations that have built strong communities within their following—including the NFL, Six Nations Rugby, Charlize Theron, Erling Haal and and Victoria Beckham.

A picture of the orange Breitling Superocean Automatic 42 Kelly Slater watch.

Breitling Superocean Automatic 42 Kelly Slater.

As the caretaker of a historic brand, we continually look for creative ways to integrate the richness of Breitling’s history with modern tastes and sensibilities. One of the forward-thinking initiatives introduced by Breitling’s CEO, Georges Kern, is a design aesthetic we call “modern retro.”

These watches, which feature classic designs drawn from the company’s 140 years of history, satisfy consumers’ desire for a timeless feel while also incorporating cutting-edge materials, movements and innovation. We’ve also begun to use artificial intelligence (A.I.) tools to monitor consumer preferences and industry trends, combining those findings with our own historical sales data and publicly available data from competitors to ensure that we are crafting timepieces that appeal to contemporary consumers.

Navigating short-term trends in the luxury watch space while remaining focused on long-term growth can be challenging. Our answer is a coherent brand and product strategy—one that reflect the ways that Breitling’s values differ from the rest of the industry.

Most luxury watch companies, especially at the very top, trade off of exclusivity. Breitling trades off of inclusiveness. From supporting our “squad of ambassadors” in our retail storefronts—Breitling Boutiques—to our external partnerships, we always strive to foster a sense of community and belonging.

Perhaps the best expression of this spirit is the design and layout of our stores. If you walk into other luxury watch boutiques, you’re likely to be greeted with white gloves and a very formal sales presentation, almost as if you were buying an engagement ring. At Breitling Boutiques, on the other hand, the walls are often made of exposed brick, and you might see a surfboard on the wall or a motorbike at the centre of a display. The intention is to create a retail experience unlike any other seen in the luxury watch industry—one that reflects our consumers’ more casual form of self-expression.

Growth opportunities: China, women, and Universal Genève

When Partners Group first acquired an ownership stake in Breitling, numerous opportunities for growth were identified. First among them is China. Under previous ownership, the Chinese market was not prioritized, and as a result, Breitling is underrepresented in the country relative to other luxury watch makers and to its market share in other regions. Many of our competitors have at least 20% of their sales in China, while Breitling currently stands below 5%. That creates a tailwind for us relative to our peers, as the low baseline means that we have plenty of room to grow.

In fact, in 2024, while some of the top luxury watch brands were struggling in the Chinese market due to the sluggish economy, we were the only company whose sales in the country grew. Achieving a position in the Chinese market that is commensurate with our standing in other markets globally will take time, but Partners Group is in a position to accelerate that process, including through our relationships with wealthy Chinese investors who have connections in real estate or other areas that may be beneficial as Breitling expands its retail footprint in the country.

Another category where we are under-represented is the women’s segment. In the decades leading up to its relaunch, Breitling concentrated primarily on men's watches, building on its strong heritage among aviation and automobile enthusiasts. In order to balance out the gender mix of our consumer base, we are devoting significant resources to developing products and a brand that appeals to women.

Last year, we had one of our most successful product launches ever in the women’s category by collaborating with Victoria Beckham’s fashion label. Earlier in the year, we also launched the new Navitimer 36 with Charlize Theron as face of the campaign. Our hope is to expand our women's collection to represent at least 15-20% of our business.

Breitling and Partners Group also recently acquired ownership in the iconic—and largely inactive—Swiss watch brand Universal Genève. In the early to mid-20th century, the company’s groundbreaking timepieces helped to establish an enviable reputation for artistry and innovation. In recent decades, however, the company has faced significant challenges. We aim to restore the brand to its former glory while tapping into the super-luxury watch segment, with prices expected to range from CHF 10,000 (approximately $11,000 USD) to CHF 200,000 ($227,000 USD) compared to an average price point of approximately $6,500 USD for Breitling. The first new collection of Universal Genève watches will be unveiled in the fall of 2026.

A black-and-white print advertisement for Universal Genève’s Ideo watch, circa 1933.

Advertisement for Universal Genève’s iconic Ideo watch, also known as the “Cabriolet,” first patented in 1933.

The road to exit

We remain relatively early in our ownership tenure of both companies; Partners Group’s majority investment in Breitling closed in May 2023 and the deal to acquire Universal Genève was announced in December of that year. While it is too soon to speculate on what an exit may eventually look like, our focus is on building the levers that could eventually drive an exit case.

From growth in China and the women’s segment to the re-launching of Breitling’s back catalogue and the revival of Universal Genève, we are excited about the future. We believe the scarcity of investible options in this sector—luxury watch brands’ inaccessibility via public markets—will fuel a very attractive exit for Partners Group and our investors.

Accredited investors can access Breitling via the BMO Partners Group Private Markets Fund. For more information, contact your Regional BMO Global Asset Management Representative or the BMO GAM Alternatives Team at bmogamalts@bmo.com.

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