Rotary Is Sued by Its Distributor
Just as Rotary poised itself to launch a new advertising campaign, the brand is due to make headlines in court.
In a decision directly from its worldwide chief executive, Robert Dreyfuss, Rotary S.A. terminated its U.S. distribution contract with Midland Park, N.J.-based Rotary Watches USA. Dreyfuss says he wants to guarantee a higher level of service for American retailers. But the terminated distributor is contesting the decision, citing breach of contract.
Rotary Watches LLC, a wholly owned subsidiary, will be the new exclusive distributor for the Rotary brand in the United States, unless a court decision or settlement stipulates otherwise. Timothy W. Greene, vice president of sales and marketing for the prior U.S. Rotary regime, will head the new organization.
Rotary – like Breguet and Van Cleef & Arpels – is the latest brand to buck the freelance distribution system.
“We ultimately feel the best way to service the United States is to operate through our own subsidiary,” says Jonathan Strauss, export director of Rotary S.A., based in La Chaux-de-Fonds, Switzerland. “We feel this new solution will be far more proactive, and it ensures that our brand values and ethics are fully adhered to.”
Rotary Watch USA filed suit in London, where Rotary’s parent company is based, claiming it has five years remaining on its contract. According to Astad J. Clubwala, Rotary Watch USA president, the litigation will go through an independent arbitration process, upon which a hearing will be set to resolve the matter.
“They attempted on very flimsy ground to terminate the agreement,” says Clubwala, who was aware of Rotary S.A.’s intentions but still was caught off guard by the sudden final decision. “We established the brand name in the United States, and we spent all our money doing it, suffering big losses financially. Right when we were perhaps turning the corner, they pull the rug out from under us. This is not a simple termination of an agreement. We’re not going to walk away from the millions we’ve already spent. If they are doing this, we want to reclaim damages from our investment in the brand.”
Citing a possible reason for the termination, Clubwala says his company is a “stickler for quality” and often sent back product to the factory because it didn’t meet his standards. This led to late shipments and financial losses, he says.
Ironically, Rotary’s watches have improved dramatically in the past year. In fact, the company upgraded quality while lowering prices. But the better, newer watches meant old product was returned by retailers – and Rotary Watch USA took the hit because Switzerland doesn’t recognize stock balancing, says Clubwala.
Regardless of distributors, Rotary hopes to turn around its business in the United States. In the past, the brand tried to be everything to everybody. Today, Rotary focuses on dressier timepieces, just ahead of a predicted dress watch resurgence. Its prices, which previously reached $1,200, were made more affordable, from $195 to $495 – a range that comprised 80% of its sales.
Rotary’s collection was upgraded to sapphire crystals, ETA movements, and 18k gold plating or rhodium plating. The more focused line has 65 models. The brand enhanced its warranty to three years on the movement and one-year “clasp to clasp.”
To hammer the dress-watch message home, Rotary watches showcase pavé diamonds, Swarovski crystals, and stylish bracelet sets. Highlights include the $495 Monaco Collection set, which comes with matching bracelets that essentially become four different models.
Yet Another Brand Enters the United States
How many watch brands are sold in the United States? Some say 600-plus. Now there are 600-plus, plus one. The latest brand to sprout from the Swiss watch tree is Voilà Suisse, a watch line designed by former Gucci designer Antoine Tschumy (of “G Watch” fame). Voilà watches will be sold for $160 to $300 retail in department stores and fine jewelry stores.
The Voilà watch line is highlighted by the Wave collection, which features unique curved crystals and bracelet links in a wave shape. This collection retails for $235. Voilà also offers the Elegant collection ($195 to $255) of steel and 18k gold-plated timepieces; the Statement collection, a classic square-shaped line; the For Women Only collection ($160), a feminine line of steel-plated watches with round or tonneau-shaped cases; and the Chronograph collection, a colorful line of sports chronographs.
Voilà features ETA movements, butterfly clasps, water resistance to 30 meters, and some sapphire crystals. Each watch has Tschumy’s signature on the casebacks. Voilà Suisse’s parent company, West Concord Ltd., has been a private-label specialist for 10 years and has manufactured watches for Yves Saint Laurent, Playboy, and others.
More Changes at Swiss Primetime
Swiss Primetime (formerly UTime), the luxury watch distributor that has dominated headlines in the past year, made news again in August when it named a new president for its Bertolucci brand. The new appointment came after the sudden departure of its previous president, who had served only seven months with Bertolucci.
Scott Olund, a past West Coast sales representative for Ebel and Cartier who has 10 years’ experience in the watch industry, was named Bertolucci’s new president, after a hiatus from the watch industry. He replaces Jim Imhof, who had been named president of Bertolucci in January.
“Scott is a talented industry veteran, and we very much look forward to working with him to continue to grow the Bertolucci brand in the United States,” said Charles R. Widmer, president of Swiss Primetime, in a statement.
With the upscale marketing push of its diamond timepieces, combined with the launch of the youthful Serena line, Bertolucci made strides this year from a product and strategy viewpoint. But according to a source, Bertolucci’s sales had been down 53% in the last four years. And Olund is Bertolucci’s fourth president in four years.
At press time, Swiss Primetime executives were not available for comment regarding the most recent management change. Imhof says he and the distributor had conflicting views regarding the goals and rebuilding of Bertolucci. “They quoted numbers to Switzerland which were unattainable,” he says.
This year, Bertolucci launched a three-year growth plan, which includes increasing its average retail sale. But one source says Bertolucci expected about an 88% increase in this, its first year of rebuilding.
Swiss Primetime rebuilt itself from the former UTime after Breguet, its highest-end brand, surprisingly spun off on its own last fall to become Breguet LLC. Swiss Primetime had also lost distribution of the Chronoswiss watch brand. Times were looking bad.
The company rebounded quickly. Executives changed UTime’s name to Swiss Primetime and added a new Swiss watch brand – Daniel Jean Richard – to its portfolio, which already included luxury brands Bertolucci and Girard-Perregaux. However, sources tell JCK that Girard-Perregaux had not renewed its contract with Swiss Primetime and the brand is in discussions with other possible distributors. Again, Swiss Primetime executives were unavailable for comment.
Swiss Primetime is the exclusive U.S. distributor of Bertolucci, Girard-Perregaux, and Daniel Jean Richard. The company is based in Rutherford, N.J.
Festina: No News Is Bad News
In some circles it would be viewed as an endorsement nightmare, but to Festina, it’s been an unusual wake-up call. The famed cycling team it sponsored in the Tour de France – the sport’s pinnacle race – was expelled from the event (as well as other teams) because of suspected drug use. But the scandal, which put Festina’s team and the Tour de France in the world spotlight, did not sideline the watch brand – in fact, surprisingly, it gave the brand momentum. Festina’s name was seen on network news, sports channels, newspapers, and newswires.
Negative publicity is still publicity. And Festina’s publicity was free. While the drug scandal was unfortunate and doesn’t reflect the quality of the watch brand, it gave Festina hundreds of thousands of dollars, if not millions, in free exposure. Now the brand is set to ride like the wind, turning a negative into a positive, using the newfound exposure to its advantage.
“We wish it didn’t happen this way,” says Phil Schwetz, vice president of marketing for Festina USA. “We’d much rather have the publicity by celebrating the team’s victory in the Tour de France. But we remain committed to the sport – a drug-free sport.”
Festina USA produced a special commercial that communicated its position on the issues of cycling and performance-enhancing substances. Festina reaffirmed its commitment to cycling by becoming the official timekeeper of the U.S. Cycling Federation and sponsor of the U.S. Cycling Team.
Nine West Line to Debut
At press time, E. Gluck Corp. was nearing a deal to distribute a Nine West watch line, which will be positioned as a lifestyle collection, not another designer line, according to a source within the company. E. Gluck currently distributes Armitron, Anne Klein, Anne Klein II, and Joseph Abboud watches.
The Nine West watch line will follow in the footsteps of the Nine West jewelry collection (by Victoria Creations), the No. 1 costume jewelry line in department stores, says the source. The watch collection will be sold in department stores and Nine West stores at price points below those of Anne Klein II, which retails from $65 to $95 – likely with a little overlap.
Nine West watches will be introduced in the January market. E. Gluck is renovating its showroom, which will likely feature the new collection.