According to US Treasury figures, the mining company Alrosa, which was placed on the list of its sanctions since the first day of the invasion on February 24, alone represents 90% of the mining capacity for rough diamonds mined in Russia and 28% of the world capacity. And if trade between Switzerland and Russia is modest, gold is the first product imported from Russia, ahead of precious metals such as platinum, followed by unmounted or set diamonds, according to data provided by the federal office. from customs to AFP.
Compared to other sectors of the Swiss economy, “watchmaking is a branch which has been less affected than the others by the supply problems in 2021”, traced Jean-Daniel Pasche, the president of the watchmaking federation, during an interview with AFP. “Now it comes up in other terms,” he acknowledged, although it is still difficult, according to him, to assess the repercussions for the watch industry at this stage. “There are obviously stocks. Afterwards, we will also have to see according to the duration of the conflict, ”he weighed.
Recycled gold and palladium
The Swiss luxury giant Richemont, owner of the Cartier and Van Cleef & Arpels jewelry houses but also of eight prestigious watch brands, including Piaget and IWC, took the lead, explaining on Wednesday that all the group’s brands have ceased to supply in Russia for diamonds. This decision, taken early in the conflict, represents a lot of work to reorganize the supply chain in order to find responsibly sourced quality diamonds elsewhere, insisted Jerome Lambert, its managing director during a press conference.
The supply of gold, on the other hand, is less of a concern. For regarding ten years, Richemont has set up a recycling chain for gold, bought from industry and electronics in order to reuse it in watchmaking production, he explained.
For palladium, used in jewelry in particular to manufacture wedding rings and engagement rings, the group decided “upstream of the sanctions” to switch to suppliers specializing in recycled palladium, said the boss of Richemont.
Use inventory
At Patek Philippe, one of the most prestigious Swiss watch brands, his boss is counting on his stocks to watch the storm pass. “My luck is that I produce in small quantities,” said Thierry Stern, who represents the fourth generation at the helm of the company. “So today I don’t feel any difference yet,” he told AFP. For 2022, Patek Philippe plans to manufacture 66,000 pieces. “And if I can’t find certain stones, I can always do some engraving”, explains the owner of this house, which relies on a wide range of trades, ranging from marquetry to ceramic or enamel.
Same tone at H. Moser, a niche brand for wealthy collectors, which produces 2,000 watches a year. “Purchases are made in advance. For example, for the cases that I want to manufacture in 2023, I have already bought all the gold I need,” explains its boss, Edouard Meylan. “But maybe in six months some of our suppliers will be calling to extend the deadlines because they haven’t received the materials,” he admits.
These tensions on raw materials “will obviously drive up prices”, predicts Jon Cox, analyst at Kepler Cheuvreux. But compared to other sectors, luxury companies have more leeway to pass on this inflation to their prices,” he points out.
At the Haute Horlogerie show, which brings together 38 brands in Geneva until April 5, the displays are full of diamonds, reflecting the “generalized optimism” of the sector following a prosperous year in the face of soaring demand for luxury products. very high luxury in 2021, notes the analyst. “But with the war in Ukraine, I can of course imagine that product development will move towards more discreet luxury products”, he judges.
