Fratello Thought Experiment: Will Rolex Ever Not Be Number 1?
Switzerland is a monarchy. This might be news to you, but from a watchmaking perspective, the neutral Alp country is not a democracy run by many. Rolex is the one watch brand that rules them all. And its reign, which dates back many decades, doesn’t show any signs of weakness. On the contrary, sales revenue numbers show that Rolex is becoming mightier and mightier. And that knowledge produced a provoking question: will Rolex ever be not number 1? This Fratello thought experiment will question the seemingly ironclad laws of watchmaking. What would it take to bring down the mighty “Crown”? Is always being in first place taking its toll on Rolex?
Let’s not mess around: the answer to that question is a straightforward “no.” A constant stream of relevant new watches has sales booming. And with 2023 watches like the latest iteration of the GMT-Master II with its black and gray ceramic bezel or the revamped Daytona, why would sales go down? The clear-cut answer “no” is supported by the 2022 Morgan Stanley Swiss Watch Industry Report. The report shows that Rolex soars high above the competition when it comes to sales revenue. Let’s take a closer look.
Will Rolex ever not be number 1?
Last year, Rolex generated approximately US$9.7 billion in sales revenue. The brand is leading the competition by a mile. The other two brands on the unofficial podium are Cartier in second place with an estimated US$3 billion in sales and Omega, just behind, with approximately US$2.7 billion. More numbers will make even clearer just how exceptional Rolex is. In 2022, Swiss watch exports soared to a record US$27 billion, and Rolex’s part in that all-time high is 29.2 percent. That’s up 1.5 percent from the year before, a year that broke the 2014 Swiss watch exports record.
For Rolex to drop to second place, the two closest competitors right now need to do more than three times better, and Rolex needs to stop growing. “If you put on a crown, somebody will try to take your head,” novelist Lazlo Ferran once wrote, but the “Crown’s” adversaries are so much smaller, they can’t even reach the head. But will the undisputed number 1 of Swiss watchmaking ever slide down the rankings and become significantly smaller? What would it take for the “Crown” to topple?
A faux pas without consequence
Bad products can ruin a brand. But is Rolex even capable of making bad products? Well, the last Cellini collection that got axed and replaced by the Perpetual 1908 was hardly an overwhelming success. Also, controversial novelties like the 2022 “Lefty” GMT-Master II and the 2023 Day-Date “Emoji” were greeted with skepticism, caused quite a stir, and provoked heated debates. Brand experts believe that no brand is strong enough to carry a product that doesn’t embody its core attributes. Well, in the case of the Lefty and the Emoji, it shows the experimental and playful DNA of Rolex. It also shows that being in first place all the time doesn’t necessarily mean you become uninspired and predictable.
Going out of style also doesn’t seem to be a thing that could happen to Rolex. Yes, there’s an overload of Rolex watches on Instagram, for instance, and they’re not always worn by the most inspirational people or for the “right” reasons. The fact that Rolex watches are now traded and treated like commodities doesn’t sit well with watch purists, but that group is not the motor behind the brand’s steady rise. It’s people who think “Rolex” when they think “Swiss luxury watch,” “status,” “symbol of success,” etcetera, etcetera.
New Coke and “New Pepsi”
None of the watches the brand has launched so far were comparable to New Coke, the “improved” Coca-Cola that no one asked for. Back in the 1980s, Coca-Cola got scared of Pepsi, so the brand changed its recipe in 1985. But New Coke was met with great adversity and therefore got renamed Coke II in 1990. It was eventually discontinued in 2002.
Just like Coca-Cola, Rolex also updates its products without consulting the public. The “Pepsi” now has a ceramic bezel instead of an aluminum one. I don’t think that’s an aesthetic improvement, but it certainly makes sense from a technological and evolutionary standpoint. The material won’t scratch easily, and the colors stay true. But we must not forget that the first GMT-Master II 126710BLRO models in 2018 had bezels that were more purple and pink than the Pepsi blue and red. Rolex had a hard time mastering the colors, but the brand got the hang of it, and after a while, “real Pepsi” bezels instead of “New Pepsi” bezels came off the production line.
Steve McQueen’s Rolex Submariner, a watch with questionable provenance — Image: Phillips
Questionable provenance
An oddball like a GMT-Master II with a crown on the “wrong” side or a “New Pepsi” bezel doesn’t hurt the brand, but there are other dangers in the shape of watches that can damage its reputation. Vintage watches that come up for auction that are of doubtful origin are like ticking time bombs that can cause not just a stir but also reputational damage — the recently discovered Speedmaster CK2915 fraud case is a good example.
Rolex Milgauss 6541, a watch with unquestionable provenance — Image: Phillips
In 2018, when Phillips announced the auctioning of a vintage Rolex Submariner once owned by Steve McQueen, it had watch aficionados worldwide on their toes. Since Paul Newman’s Daytona sold for more than US$10 million, Steve McQueen’s “Sub” would certainly do very well too. But the provenance of the announced watch proved to be very questionable. There was a stunt driver involved. There was also a house fire and the threat of legal action from the McQueen family estate. The watch was questioned online by experts. Because of all that, Phillips decided to not go through with the auction of the watch. Better safe than sorry. Rolex, of course, had nothing to do with the controversy. But being at the center of negative attention is not very pleasant. Still, I don’t think anyone at Rolex lost sleep over Steve McQueen’s Sub.
Tiger Woods
People doing damage
Since we’re on the topic of legendary people, even living legends can’t hurt the brand in the process of hurting themselves. Stating that golfer Tiger Woods is the GOAT is not very controversial. But Woods — who got his first watch sponsorship with Tudor back in 1997, signed with TAG Heuer in 2002, and moved to Rolex in 2011 — was at the center of controversy quite often. There was an infidelity scandal, a divorce that cost him US$750 million, a drunk-driving incident, and allegations of using performance-enhancing drugs to name a few. Did any of this affect Rolex? Not at all. We live in an era where controversy leads to canceling easily and swiftly, and high-profile figures lose sponsorship deals from brands who don’t want to take the heat and the negative publicity. For Rolex, though, it seems that controversy is like water off a duck’s back.
The “Crown” is building yet another “castle”
To fortify the Crown’s position, the brand has invested something like US$1 billion in a new production site in Bulle, a town in the western canton of Fribourg between Lausanne and Bern. The future site will be populated by 2,000 new employees. This new manufacture will also allow Rolex to increase its production numbers to well over one million watches per year. That won’t happen overnight, though. The inauguration of the brand’s fifth production site is scheduled for 2029. And to be honest, even if Rolex manages to produce 1.2 million watches at the end of 2029, it still won’t be enough to satisfy market demands.
Doing what it does best
In the new production facility, Rolex will continue to do what it does best — doing things the Rolex way. To me, it seems like that way is looking forward, staying focused on your values, and not allowing yourself to be distracted by other brands — brands you can’t even see in the rearview mirror — and the whims of the people. The late Dominique Tadion, who worked for more than 20 years at Rolex in the communication department, once told me during Baselworld that Rolex could sell way more diamond watches than it made, but it wouldn’t do so because all that bling would negatively impact the brand.
Will Rolex ever not be number 1? — Only a perfect storm could make it so
If Rolex decided to stop producing icons like the Submariner, GMT-Master II, Day-Date, and Daytona — there’s never enough of them to go around anyway — to put watches like the Perpetual 1908 in the spotlight, it would be a terrible move. But I believe that it could only turn truly disastrous if all the Rolex Testimonees (its ambassadors/spokespeople) get canceled simultaneously because of outrageously scandalous behavior — think Micheal Bublé admitting to lip-syncing his whole career — and the world plummets into an unprecedented recession at the same time. It will take a perfect storm to bring down the Crown. So even if the forecast for the next few years is less sunny than the last two, the sunlight will shine on Rolex, making it look as untouchable as ever.
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