Hublot to dial up watch prices on rising inflation

The luxury watch industry is facing high input costs as commodity prices rise and supply chain issues persist

Hublot's Big Bang Unico Sapphire timepiece. The Swiss watchmaker is raising the prices of all of its timepieces due to increasing raw material costs. Photo: Hublot

Hublot’s Big Bang watch, worn by Usain Bolt and Jay-Z, will soon come with an even bigger price tag.

The Swiss watchmaker is increasing prices for all of its timepieces, Hublot chief executive Ricardo Guadalupe said. Rising raw material costs for gold and diamonds will lead to price increases of 3 per cent to 4 per cent in April or May, he said.

Hublot’s products sell for about 20,000 francs ($21,500) on average.

“Almost all our suppliers are increasing prices,” Mr Guadalupe said, noting that costs for steel and titanium are also rising. Diamond suppliers have hiked prices by 10 per cent to 15 per cent, he said.

Hublot’s move shows how even the luxury industry is facing inflation amid rising commodity prices and supply chain issues caused by the Covid-19 pandemic.

At the same time, deep-pocketed consumers who crimped on spending during lockdowns are now snapping up high-end goods, including Swiss timepieces, driving a surge in demand.

“The main problem is the production and the supply chain,” Mr Guadalupe said.

Almost all of Hublot’s high-end Swiss watch rivals are expected to boost prices.

“We have to do it anyway, and since everybody is doing it, it is acceptable,” he said.

Speaking in a Bloomberg Television interview last month, Dior chief executive Pietro Beccari said the couture brand will have to increase prices to match rising input costs, following in the footsteps of rivals.

“It is true that desirable products have a certain price,” Bernard Arnault, who heads LVMH, the owner of Hublot, said during Thursday’s presentation of the company’s annual results.

The French billionaire said the group will be “reasonable” and “respect” its customers on price increases.

But he acknowledged some of the group’s products have special allure, citing a Nautilus watch model launched by Tiffany with Patek Philippe with 170 pieces. Its retail price of $52,635 was widely surpassed when one sold at a charity auction for more than $6.5 million last month.

Chanel has been making headlines recently for raising the prices of some of its best-selling bags, increases which have far outpaced inflation rates over the past two years.

A rebound in demand made 2021 a record sales year, Hublot’s chief executive said. He expects production will increase by high single digits in 2022.

“We have more of a production problem today than a sales issue,” he said.

Stocks of Hublot watches were reduced by 30 per cent to 40 per cent in 2021 at its boutiques and retailers, according to Mr Guadalupe.

“The last three months have been unbelievable from the sell-out point of view,” he said.

The value of Swiss watch exports rebounded to record levels in 2021, amid strong sales to the US and a surge in demand for watches priced above 5,000 francs. Hublot’s entry-level watches cost about 6,000 francs.

Hublot, which has a marketing relationship with tennis star Novak Djokovic, said there has been no change in that after he was forced to leave Australia and unable to compete in the Australian Open since he was not vaccinated.

“For the time being, we support our ambassador,” Mr Guadalupe said.

The company has been in contact with the Serbian athlete after his departure from Australia and is waiting for him to make a statement regarding his playing future.