Chanel’s acquisition of a stake in the MB&F watch brand last August has not gone unnoticed, and above all it has raised a number of questions about the strategy of the venerable luxury brand. This 25% acquisition is probably not just a transactional maneuver; it echoes a profound shift in the way luxury brands are nurturing independent watchmakers. Similar prior investments into boutique firms such as F.P. Journe, Manufacture Romain Gauthier, and Bell & Ross have positioned Chanel as a trailblazer keen on fostering niche brands and ensuring their longevity through strategic capital influx. But can this be only about patronage or is part of a long-term plan for Chanel’s watchmaking division?

Where does Chanel today stand in the watchmaking world and what could be its ambitions?

Looking at Morgan Stanley’s estimates for 2023, Chanel sold for CHF 400m watches putting the brand in the 22nd rank of the Swiss watch industry. Compared with Hermès at CHF 593m, it is trailing but doing much better than Louis Vuitton’s watch category at CHF 162m. The watch division is a marginal sales and margin contributor — ~2% of the brand’s overall sales of almost USD 20B last year — but that doesn’t mean that it doesn’t bear a major growth potential.

Chanel’s product offering is very much concentrated on one iconic product which is the J12 launched in 1999 (I consider that 20 years is the minimum to reach the icon status). Code Coco, Boy-friend and Première are other product lines following Chanel’s design seam. Where it gets really interesting, in terms of what the brand’s investments in niche players could trigger, is the Monsieur de Chanel product family. This product line features a movement made by the manufacture Romain Gauthier in which Chanel has bought a controlling stake and it shows that the brand could be looking for some watchmaking legitimacy. And it’s also a good example to illustrate the collaborations that Chanel’s investments can possibly trigger and create interesting new products.

The most impressive example of what Chanel has done recently in the field of haute horlogerie is the J12 automaton with Gabrielle Chanel featured in her workshop. The 355 components speak for the complexity of the timepiece and embodies anything that a watch aficionado associates with mechanical watchmaking.

And what is also very interesting to see is the signature architecture movement design by Romain Gauthier — who continues to exist as an independent watch brand — is kept for the movements he develops for Chanel.

The coolest thing coming from the brand recently — even though it’s probably not a bestseller to say the least — is the Première sound watch that’s in fact a necklace. On top of featuring a quartz watch which is integrated as part of the necklace, it is also fitted with earphones, making it possible to pick up a phone call or listen to your favorite music whilst being dressed in the typical Chanel elegance. Priced at € 14,800, it won’t probably sell in big quantities, furthermore fitted with an audio jack connection that’s not quite the latest in technology, but the concept is a lot cooler than a connected smartwatch with a short technological lifetime.

Chanel: A strategic leap into the watchmaking arena or patronage for heritage preservation?

In recent years, the luxury watch industry has been abuzz with discussions surrounding Chanel’s notable investments, particularly in independent brands such as Bell & Ross, F.P. Journe, and MB&F. While much attention has been focused on the Maison’s acquisition of established manufacturing houses like G&F Châtelain and Manufacture Romain Gauthier, these new strategic partnerships raise an intriguing question: Are these investments aligned with a larger strategic plan aimed at solidifying Chanel’s position as a major player in the watchmaking arena, or do they simply a form of patronage with the long-term objective of preserving the heritage and know-how of Swiss craftsmanship?

On the surface, Chanel’s forays into these partnerships may seem more inclined toward heritage preservation than aggressive market expansion. The conscious effort to engage with brands that emphasize craftsmanship, design, and technical prowess suggests that Chanel understands the intrinsic value of skilled artisanship. This could imply a cultural and historical respect for the art of horology, where Chanel aims to safeguard the traditional methodologies associated with timepiece creation.

However, digging deeper, one could argue that this relationship is more than just preservation — it’s a well-crafted strategy to innovate and diversify without losing their identity in the saturated luxury watch marketplace. Instead of flooding the market with mass-produced options, Chanel is positioning itself within the watchmaking elite by developing a subtler and refined product strategy, leveraging the unique strengths and aesthetics of each partner brand.

For instance, consider the individual characteristics of brands from Bell & Ross, with its aviation heritage, to F.P. Journe, renowned for its avant-garde complications and a very distinctive product signature, and MB&F, recognized for creating mechanical marvels that are more often playful than traditional complications. By collaborating with these iconic names, Chanel is not merely adding these brands to a portfolio. Instead, it is integrating distinct philosophies and creative visions into their offerings, thereby cultivating a diversified product line that appeals to a broader range of connoisseurs.

Moreover, time-limited collaborations and special editions could serve as a tactical weapon in Chanel’s arsenal, drawing consumers with exclusive offerings that stimulate desirability. This careful orchestration of limited releases is akin to the luxury game, where exclusivity and prestige become synonymous with value. With Chanel’s strong brand recognition combined with high-profile collaborations, these collected pieces will inherently carry the allure of luxury and exclusiveness that the market craves.

There’s also the tangible value in knowledge transfer. Partnering with those who have established mastery allows Chanel to absorb invaluable techniques and craftsmanship that could be utilized in their own production processes. This approach can potentially enhance Chanel’s existing watch production capabilities, fostering innovation while still echoing the tradition that has shaped the world of haute horlogerie.

While the narrative of patronage plays a role in understanding Chanel’s approach to the watch industry, it may be more critical to view these investments as a calculated strategy towards crafting a multifaceted strategy in a competitive landscape. Chanel demonstrates a keen understanding of market dynamics and consumer desires, striving to balance the art of preservation with the ambition of innovation. By engaging in collaborations that respect the intricacies of watchmaking, they are likely positioning themselves for a significant and influential role in the luxury watch industry, reimagining what it means to be a major player in this prestigious realm.