Tiffany and Swatch announce a 20 year pact

Isaac Mostovicz writes...

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This week Tiffany and the Swatch Group announced a new partnership lasting at least 20 years that will expand Tiffany’s small watch business into “one of the most important watchmakers in the world in the next five to 10 years,” according to Nicolas G. Hayek, Sr., Swatch Group chairman and co-founder.

Tiffany will continue its current lines and expand them in a new company, Tiffany Watches, which will be entirely owned by Swatch. Both companies will share their expertise to collaborate on design, engineering, manufacturing, marketing, distribution and service. Tiffany will have a seat on the company’s five-member board of directors, product design and marketing committees, and will get a share of the new company’s profits.

Many consumers associate Tiffany with fine diamonds and Swatch with cheap watches (even though Swatch does own several luxury timepiece brands, including Breguet, Blancpain, Glasshütte Original, and Omega). Tiffany will have to be careful so as not to pull a ‘DaimlerChrysler’–tarnishing the brand image of both companies (bringing the Tiffany brand ‘down’ to Swatch) and losing a great deal of money in the process (when expected synergies don’t actually happen). It sounds like Tiffany and Swatch are on the right track though, as they’ve already said distribution will be “selective” through the Swatch Group global network, Tiffany stores, and areas where rivals like Bulgari watches are sold.

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