In my previous columns I highlighted why the Bugatti Divo, the Hermès Birkin bag and even the world?s most expensive omelette are too cheap. What all of them have in common is the ability to create extreme customer value. Typical features are long waiting times and significant investment value. Birkins outperform almost any index. Pre-owned bags are significantly more expensive than new ones, reflecting the value in immediate availability.

The market for fine watches resembles this. The Swiss watch industry at large has had a catastrophic performance over the last three years, declining at a double-digit annual rate. There are few brands at the top that are able to create extreme value, while those that are relatively undefined ?in the middle? have lost relevance at an unprecedented speed ? they are unable to maintain attractiveness for millennial target groups who buy Apple Watches or go watchless; their business models are outdated; they have weak brand positioning; and they missed the boat in terms of digital mastery. Few industries have been hit harder by rapidly shifting consumer preferences than watchmaking. Complacency in understanding the shift and resistance to embracing digital have amplified the pain for the mainstream-focused brands.
Patek Philippe Calatrava. Photo: Patek Philippe

The picture is different at the top, where two brands are considered to be best-in-class: Rolex and Patek Philippe, alongside a few others like Audemars Piguet. They not only ma...