The Quiet Giants – How Seiko, Citizen, and Casio Each Cleared a Billion – Episode 82
Seiko, Citizen, and Casio each pulled in over a billion dollars in revenue last year — in most cases record-breaking, and all three landing neck and neck around $1.3 billion with healthy 9–14% net margins. That's remarkable on its own. It's stunning when you remember it happened in the same sub-$5,000 segment that's been punishing the Swiss. While Swatch Group struggles and the broader industry hunts for its footing, Japan's big three are quietly having their strongest year in decades.
We dig into why. The short version: they're counter-positioned to everything that's currently working against Swiss luxury. A weak yen against a punishingly strong franc, a value-and-reliability pitch instead of a luxury-and-heritage one, a technology focus (spring drive, solar, high-accuracy quartz, the entire G-Shock universe) at the exact moment tastes drift away from vintage reissues, and diversified distribution into markets like Latin America and India that the Swiss lean on far less. We also get into how different these three businesses actually are under the hood — Casio's pivot to watches as a majority of revenue, and Citizen's sprawling structure spanning La Joux-Perret, Miyota, Bulova, Frédéric Constant, Alpina, Arnold & Son, and Angelus — and why Seiko still doesn't get half the respect it deserves.
Before all that, we welcome Niton and the Niton Prima to Collective, and put a final cap on the AP x Swatch launch — the crowds, the resellers, the injuries, and Nick Hayek's remarkably flip BBC interview — a moment that revealed real cultural relevance for AP and a real crisis-management failure for Swatch.
Openwork is a weekly podcast about how the watch industry actually works. An unfiltered look behind the scenes — no press releases, no hype, and no sponsored takes. Hosted by Asher Rapkin and Gabe Reilly, co-founders of Collective Horology. Available on Apple Podcasts, Spotify, YouTube Music, or wherever you get your podcasts.
You can find us online at collectivehorology.com. To get in touch with suggestions, feedback or questions, email podcast@collectivehorology.com.
Seiko, Citizen, Casio. They are all doing over a billion dollars each in revenue. These
businesses operate on a scale that is just unimaginable. They are in every mall. They
are in every country. They are in every corner of the world. Everyone on, you know, you ask
anyone on the street anywhere in the world to name a watch brand. If it's not Rolex that
comes out of their mouth first, it would probably be Seiko next.
This is Openwork, a look inside the watch industry. It's a podcast from Collective
Horology, and I'm Gabe Reilly, co-founder of Collective.
And I'm Asher Apkin, co-founder of Collective.
Still here.
Still here.
Collective is an independent watch retailer based in Southern California. We carry a wide
range of independent brands, including Arm & Strom, Toledano & Chan, Niton, and more.
To learn more about us, to check out all of those brands and so much more, just visit
CollectiveHorology.com. Asher, who and what is Niton?
I want to give a warm welcome to the Niton Prima and the gentle folk behind the brand.
This is a watch and a maker that we became aware of with everybody else a few months
ago with the Niton Prima Launch Edition. This is a really beautiful jump hour, a chiming
jump hour. In fact, there's a number of fascinating elements to the design of this watch, which
we'll go in depth on in a video, I'm sure, in the coming days.
We spoke about this watch, I think, on our Watches in One Day recap.
We did. This watch features an ultra-modernist movement that is Geneva-sealed, very unusual
in modern independent watchmaking. Its dimensions are incredible. It is a beautifully wearing,
very svelte, curved case, precious metal jump hour that, in all honesty, I had a very
strong emotional reaction to when I went hands-on with it in Geneva with Gabe.
We are very proud to be part of a very small retail network. There's only two of us here
in the United States, three or four abroad. There will be just about 60 watches made every
year by the brand, at least at the moment, in two different metals, rose gold and platinum.
We are extremely proud to be able to offer this to collectors and listeners of Openwork
and collectors from Collective Horology. We'll have a lot more content on this coming up
in the near future, but welcome to Collective NITAN. We are happy to have you.
Yeah, watches that... These are my favorite kinds of watches in that the more time you
spend with them and the more you dig in... These are both very design-driven objects,
but the more time you spend with them, the more they reveal themselves, the more details
you pick up on, but they don't overwhelm you with those details. It works as a cohesive
whole. So these are just, as you like to say, very satisfying watches.
Now we're going to talk about the success of the Japanese watchmakers today, the big
Japanese brands, but before we do, I think we need to take a moment to share some final
thoughts here on the Swatch AP release. The last episode we did, we talked all about that.
We're not going to go into anywhere near that level of depth today, but we recorded before
the on-sale and obviously the on-sale and the store launch of these watches was absolutely
wild. I've got a few thoughts on that. I think the biggest thing for me is one of the things
we talked about was and kind of questioned was how culturally resonant is Audemars Piguet.
And I think one of the things we saw is there is much more cultural relevance for AP than
I ever would have guessed. I think it's easy to view it as a super horology brand, a brand
that's really known among people who are into watches, but this is a brand that clearly
has crossed over into mainstream culture and there was clearly pent up demand from mainstream
society around the world for this project.
Yeah. I mean, look, I think that that's true, but I think we have to look at that with two
other factually accurate realities. First, I think it's safe to say that this was an
unmitigated disaster from the perspective of the Swatch Group. This project, according
to reporting from Hodinkee, had been in the works prior to Ilaria Resta's tenure beginning,
which means years. So it's been years that this project's been in the works.
And they had trial runs with the Moon Swatch and the Scuba.
And for whatever reason, which, you know, I mean, we can speculate on, they decided
that the best way to do this was an in-person drop. Despite all of the evidence to the contrary
in terms of customer experience, albeit far less chaotic, but still quite significant
with the original Moon Swatch launch. The Swatch Group's decisions put people in danger.
Some people got hurt, like physically hurt. It's not OK. It's not OK. And I think it's
really important that we acknowledge that this is not an acceptable way to launch any
form of a product. And on top of that, I think it's really critical that we also acknowledge
that a lot of the people waiting in line were resellers. This has been corroborated by any
number of journalists, influencers, just folks online.
Yeah, if you take a look at the media interviews of people who are interviewed in line, many
of them seemed like they were there to make a point.
Is that cultural relevancy, I suppose, of a sort, for sure. But it blows a pretty big
hole in Ilaria Resta's claim that this is for the young horologist aspiring.
No, it was another moment for hype culture. The fact that it was a watch is maybe almost
incidental.
Yeah. So a real failure on behalf of the Swatch Group, and one that they haven't acknowledged,
by the way, when you look at their public communication, which I think is also fascinating.
Yeah, their public communication said nothing, nor has AP.
Well, we'll talk about that in one second, and then let's move on to a more important
actual watchmaking topic. But just to put a cap on this one, the Swatch Groups almost
went victim-shaming on this one. Like, we're closing this to keep everybody safe. Like,
oh my God, who could have ever imagined? You. You could have imagined.
Well, Nick Hayek was interviewed, I believe, on the BBC. Nick Hayek Jr. was interviewed
on the BBC about all of this, and this was covered by Screwdown Crown. Nick Hayek comes
across as incredibly flip about the whole thing, and overall described the launch as
a huge success, and said that essentially, like corporate speak always goes, that these
incidents were very isolated.
Yeah, it was nice that you just mentioned some stores that had crowds, incredible crowds,
and there were so much enthusiasm. But you know, out of 220 stores, there were 20 stores
that were affected, where there was an overcrowding like hell. By the way, Manchester will open
today. So it's about 10% of our stores that had certain issues. The rest went smooth because
the people are passionate, and that's what is happening. We see something, a phenomenon
that's based on a fantastic product, and a very positive, provocative message that we
have done. And you at BBC, you know how many bad messages you give every day over the last
months? This should be a positive message, and having crowds at the beginning of the
launch of a product should not be a bad news. It should be something that is good news.
I was thinking, this has now moved into an area of like crisis management instead of
brand building, but it seems that neither AP or Swatch are really interested in engaging
in crisis management.
Yeah, exactly. At least Swatch said something.
Crisis gaslighting.
Yeah, AP has just moved on to the next whatever they're going to do.
Not watchmaking's finest moment. That's for sure. Let's talk about a fine moment, and
that is the performance of the big three Japanese watch brands. And of course, we're talking
about Seiko, we're talking about Citizen, and Casio. All three of these businesses recently
released their financial year results for the last year. And I was shocked. I first saw
the Casio results, although I think they came out the most recent, but I saw the Casio
results. Then I was curious about Citizen and Seiko, and I looked them up. All three of
these businesses are seeing huge success and in most cases, record-breaking revenue, which
I find really interesting. We have talked so much about how the sub $5,000 segment of
the watch industry has really been struggling. The Swiss brands in particular, we've talked
plenty about Swatch's business and how it's really struggling because they're so concentrated
in that sub $5,000 segment. These guys are killing it. All of these businesses did over
a billion dollars in revenue last year. And what's fascinating is they're all about neck
and neck. Depending on how you do all the calculations and the currency, they're all
around like kind of $1.3 billion in revenue. Some are a little bit more profitable than
others, but they're all somewhere around like 9% to 14% in terms of their net revenue, their
profitability. So they're doing remarkably well at a time when the industry more broadly
is struggling to find its footing. And there's a lot of reasons why that I just think are
absolutely fascinating. But first of all, when we talk about some of the challenges and
competent management in the watch industry and among big watch companies and holding
groups, which these all are, these guys are absolutely killing it and they deserve some
credit. We don't talk a ton about the Japanese brands on the show. No, I mean, A, we're not
in business with the bigger ones. And then the independent Japanese brands operate almost
exclusively direct to consumer and have also been frankly quite successful. I mean, if
we look at everything from Asuaka or Hida or everything under Precision Watch out of
Japan, so that's stuff like Otsuka Low-Tech, you know, these brands are on subscription in
many cases. They're trading for above retail value. They're incredibly difficult to find.
They have lotteries. You know, these are really healthy, successful businesses.
Right. Across the board from micro or challenger brands to mainstream brands to luxury
brands like Grand Seiko, Andy Hoffman at Hodinkee did a great interview. It's one of the
better interviews he's done because of how transparent the CEO of the Seiko watch group is.
It was an interview they did at SIHH, at Watches and Wonders, really focused on
Creedor. Who was at Watches and Wonders? Yeah, they were there. They talk a lot about Creedor
and Grand Seiko, but I found the CEO of Seiko to be extremely direct and transparent, which
was very refreshing. You don't get that from watch CEOs, which is why I really enjoyed
that interview. So across the board, whether it's watches that are a few hundred dollars
from challenger brands or mainstream brands to luxury brands like Grand Seiko, Creedor growing,
these companies are doing remarkably well. Japan, watchmaking in Japan is doing remarkably well
at a time when the rest of the global industry is struggling to find its footing.
When you proposed this topic, I realized how much of a gap it's been in our conversation to exclude
these folks. I also realized that's not uncommon in a conversation just about the global watch
industry in general. We talk a lot about China as a production powerhouse as it relates both
to Chinese watches, but also of course to the supply chain for the greater international watch
market. But of course the Japanese have been making- And as a watch consumption. Oh, of course,
yes. But the Japanese market, of course, is not only a huge consumer of watches and has been for
a long time. For over a century, it's been a significant, also creative entity for watches
and clocks in general. The Seiko watch company, of course, being a significant and major leader
in global watch trends- Founded in 1881. Yeah. And of course, famously, Japan was the spark that
lit the fire of the quartz crisis and fundamentally changed the watch industry forever because of
that. One could even make an argument that the quartz crisis essentially created the luxury
watch industry as a result of the democratization of accuracy, which is, of course,
what the word Seiko means, if I'm not mistaken. I have no idea. I don't know, but sure. We'll fact
check that. The word Seiko, which does translate directly into English as exquisite precision and
craftsmanship. There's a lot in that. In Japanese, apparently, the name combines the word Seiko,
which translates to exquisite precision or craftsmanship with sha, which means house.
So it's literally the house of exquisite workmanship. They fit a lot into two syllables
there. Yeah, we talked too much. That's pretty remarkable. Yeah. What's interesting is Seiko
goes all the way back to 1881. Citizen was started, I think, in the 19-teens, but Casio
only got into, they're more of an electron or historically were more of an electronics company,
got into watchmaking in the 1970s, and now they've built a business, the scale of Seiko
and Citizen. In fact, some reporting I was looking at estimates that Casio is actually,
and it doesn't really surprise me with the success of G-Shock, Casio is maybe the number one brand in
terms of overall revenue. But again, for all intents and purposes, they're relatively tight.
I think the other thing about these three companies is Japanese corporate structure is
famously complicated, and these companies are usually in multiple industries. They're like
these conglomerates. So Seiko and the Seiko group overall, it comprises Seiko watches.
The ownership structure is very convoluted for Seiko. There's also the Seiko Epson company,
which owns a stake in Seiko. They make the quartz and spring drive movements for Seiko
watches and for Grand Seiko. It's fascinating. The micro artist studio for which Grand Seiko
and Credo are known is actually owned by the Seiko Epson company, not by the Seiko watch company.
In any event, they have these large corporate structures. Seiko mostly does watches.
Most watches are clearly produced in the cyan and magenta facility.
So Seiko, largely a watch company, but what's fascinating is when you look at Casio,
it's an electronics company across many different categories in consumer electronics and other
technologies. Watchmaking went from something that they had never done until the 1970s
to now over 50% of their business. Most of their revenue for Casio, it's not keyboards,
forget about keyboard cat or whatever else it might be, or calculators, it's watches.
Citizen as well. They make all sorts of stuff, medical devices, electric lathes,
all sorts of machining, tooling, and other components. Watchmaking actually for Citizen,
this might surprise people, just a few years ago, it was less than half of their revenue.
Now it's more than half of their revenue. So watches are not just booming for Japan,
watches are booming businesses. It's fascinating. You would think with these diversified businesses,
you'd think that over time watchmaking would become a less and less relevant part of their
business and a smaller share. It's growing and dominating these well-diversified companies,
which is remarkable. It is. And I think there's a couple of trends that we're seeing that are
helping that, some that are within the control and the power of these organizations and some
that are just opportunistic and beneficial, not the least of which being that they have the inverse
situation that the Swiss are currently facing when it comes to an exchange rate. The yen right now
against the U.S. dollar is significantly weaker than the Swiss franc, which is almost, at the time
of this recording, 27 to 28 percent higher than the U.S. dollar in a direct one-to-one trade.
So for every one U.S. dollar, you're getting about 75 cents worth of Swiss francs.
And it's essentially the inverse, if not better, the yen, which of course makes...
Which was punished for a very long time.
Yeah. But in this particular use case, it's actually incredibly valuable to these brands
because for tourists, for visitors, for just overall purchase of these watches, now retailers
and consumers are able to buy a lot more Seiko, Citizen and Casio products for less than what
they would have traditionally when the yen was stronger. And of course, when we compare that
against the double whammy of tariffs and FX, as we've talked about many times on this pod,
that the Swiss are facing, it makes the market significantly more appealing.
So that's actually fascinating when you look at the inversion of this, because we've talked about
the punishing nature of the current economic situation. But there are bizarre benefits to
both consumers and brands sometimes when we see the inverse of that happening, as it is in Japan.
Yeah. The other thing going on in Japan is the domestic market for these brands is incredibly
strong. I mean, a lot of these brands were frankly incubated in Japan before they became
global powerhouses. I mean, Seiko is a great example of that, certainly Grand Seiko as well.
But all of these brands have a very, very strong domestic market. And sometimes that can actually
be a risk for them or a headwind for them. In this case, the Japanese economy right now is doing
remarkably well. I mean, famously, it's been reported the Japanese stock market has been
growing, or I think it finally surpassed its highest in the 1980s due to a lot of economic
reforms that have happened in recent years. And this, of course, creates a wealth effect,
and this stimulates consumerism and all the good side of consumerism. But the domestic market in
Japan has been remarkably resilient, plus because of that currency arbitrage, you have people going
there to buy stuff. By the way, respect to Japanese swatch collectors, the only videos
that I saw of organized, polite, and respectful AP swatch purchases were from Osaka.
All right. I should have gone there. So yeah, the nature of these companies being based in Japan,
all of their sales ultimately being denominated in yen, their strong domestic market right now,
there's all these structural favors benefiting them right now. Now, of course, they don't really
have any control over that. And in good times like right now for them, that's great. It can also cut
the other way and has for, frankly, a very long time. The other thing going on here,
there's a number of things. But another thing is we've talked a ton about how this segment of the
market generally, and I know Grand Seiko, Creed Orphid under this, and I know even Citizen,
and frankly, even Casio. Casio makes precious metal G-shocks. But let's say the preponderance
of the Japanese watch market is in this $5,000 and below area. This is an area that has struggled
for the Swiss brands who really rely on luxury to sell their watches. All of these brands in this
segment, particularly in the Swiss corner of the segment, very much position themselves as luxury
and aspirational brands. And the brand is a big part of the selling proposition of these other
businesses. Seiko, Citizen, and Casio, on the other hand, have very workmanlike brands. They're
not flashy. They don't market themselves or position themselves generally as luxury objects.
They position themselves based on their value proposition, on their reliability, on their
quality. These are household names. In fact, some of these brands may even be more household names
to the average person off the street than a Swiss brand. But these are brands that are absolutely
counter-positioned to the Swiss brands in the same segment that are struggling. At a time when
the wind is coming out of the sails of luxury brands, people very much turn to, or at least
they have the benefit of, they haven't positioned themselves along the lines of luxury. They've
consistently positioned themselves as a value brand. I had this thought a couple of days ago
when I was looking at a very attractive new release from Longines, which is their new Hydro
Conquest Legends Diver. Did you see this? It's a handsome watch. Do you know how much that watch
costs? It's in the mid $4,000s. So that's going head to head with a Black Bay 58. What I found
interesting about that, as we were prepping for this pod, is they clearly are trying to push the
upper limits of Longines. Longines has always had slightly more expensive watches. They've
got gold watches. And I'm talking about modern Longines, not historical. But that's moving into
the price point where a Seamaster 300 used to sit. About a thousand bucks under where it sat for a
long time. But my point in this is just to say, clearly they're like, okay, we're going to try
to lift up Longines a little bit there with a mainline product because a Hydro Conquest,
very, very popular line for Longines. Very nice watch. And it's clicking up. Whereas Seiko
has always had multiple, like many striations to its line. Citizen group too, for sure. I mean,
there's everything from like a $150 eco drive all the way up to The Citizen for $8,500 and beyond.
And they don't make excuses for that, nor do they attempt to nudge up or out of it. So for example,
they just focus very heavily on the development of products for Seiko 5 in which they innovate
regularly, you know, for Prospex, for Prisaj, for, you know, obviously once you step into-
Make up another product line quick.
Exactly. Or when you step into like, you know, Grand Seiko, or of course Creedor,
or King Seiko now, of course, which has come back, you know, all of these different product
lines occupy, they certainly occupy. I'm going to pause. I recognize that people sometimes like
bristle when we say occupy a price point. So I want to specify-
Price segment.
Right. So what I'm saying when I say that is that there are certain products in certain
categories that are priced in a certain range under a brand. It's not a value judgment on that,
but it is an important, because we're a business podcast, way to look at the way a business is
organized. And Seiko feels very comfortable and Citizen feels very comfortable. And frankly,
for that matter, with G-Shock, MRG, MTG, and all of these various different versions-
You are a G-Shock.
I do like G-Shock. You know, does have these zones of pricing and product that they're very
comfortable with and they don't try to change or move up market.
Well, I don't think that's entirely true. Seiko in particular has been
criticized a lot in the last five years, maybe even 10 years for pushing prices up and up and up.
Yeah, but on certain models that are enthusiast focused. So let me give you an example.
Seiko 5, right? Which in my mind-
Still occupies that entry price point.
Yeah. Like to me, that's like, what was it? The SKX007?
I'm wearing an SKX right now.
Yeah, there you go. So like to me, like the SKX007 or the 005s or whatever those were,
the SKX basically was like, at least to me, kind of like the entry level Seiko diver,
you know, like you had to give it the shake-o-shake to get it started,
but they were always like fun watches. And I, there was a period of time where I had several
of those.
I've had this watch for like 15 years.
Yeah. And then when they retired that and they essentially introduced the Seiko 5,
which in my mind, and I guess it's open to debate with Seiko boys, but like,
in my mind kind of like replaced the SKX.
Blasphemy! It's not a substitute.
There you go. But it, you know, for sake of argument is kind of-
I think it replaced it to your point in from a price segment, not really a product segment.
Correct. Thank you. That's a good way to put it. But my point is, but it didn't-
It's probably more successful than the SKX was. I see those watches-
Well, there's more diversity in product.
Yeah. And I think they recognize like, let's make a cool entry level watch with fun colors
and interesting limited editions. They've done much more with it creatively than they ever did
with the SKX.
Yeah. So my point is, but they're doing all that around 500, 600 bucks.
Or less.
Or, and they're, and they're keeping it there.
Yeah.
Which I think is remarkable. So like, yeah, sure. Are there 62-
Yeah. I mean the 62- I mean, when people talk about like, oh geez,
these 62 MAS pieces are more expensive. I'm like, yeah, that's true. They certainly are.
And they are doing some things like bringing the movement class up on them and said,
I don't want to get off on too much of a tangent. But I think the main point is the 62 MAS products
are not for the mainstream. The 62 MAS products are for enthusiasts.
I don't know. When I go, when I go to retailers who carry Seiko, it's a great retailer down the
street here who has an amazing assortment of Seiko, Citizen, all sorts of stuff. Those watches
sell. The four and $5,000, 62. That's what I'm talking about.
No, no, no, not those reissues, but like the $1,000 or $1,400 reissues and things like that.
Yeah, yeah, yeah. I'm talking about the, when people-
I'm talking about the prospects versions, not the high-end.
Okay. Yeah. When people complain about, about pricing generally, that's what I'm saying.
But people complain about those too, because they're, they're anchored to your point,
to the SKX. And then they see, like the SKX was the Seiko dive watch for such a long time.
In the mind of enthusiasts, at least. Now the watch that's sort of taken its place is that,
is the six, I don't know what the product numbers or the reference numbers, but it's that 62 MAS
reissue. That's probably around 15 to $1,900. It could even be more than that. Like that's
kind of the benchmark now. And people complain about that. However, it seems to be working
for them. Seiko is making more money. They're making more, they're earning more money on that.
And this is probably what's pushing-
The SPB 143. So it's like a $1,200 or 62 MAS-ish watch.
But that's the previous reference. There's a new reference now.
They relaunched that. But in any event, these, these watches are exactly what's putting the
Swiss brands under pressure because now Seiko has moved into the territory that was staked
out from a price standpoint by Hamilton. The SPB 453, it's gone up a hundred dollars.
Okay. Ooh, a hundred dollars. All right. So not as expensive as I was imagining,
but the fact that I could imagine it there tells you what a good watch it is.
Now they've moved into the segment- It's a good looking watch.
That was occupied by Hamilton, by Longines, by Tissot, by these other brands. So they're very
much, it's like, well, of course Seiko is doing well when these other brands are struggling
because not completely, but to some extent they're eating the lunch of those other brands.
They're offering a stronger value proposition. They're not relying on luxury and branding.
They're letting the product speak for itself. And at times when luxury brands are struggling,
they're counter-positioned to that. The other thing, man, they do. I'm just
looking at this because honestly, I'm not as tuned into Seiko. I will say-
It's a compelling product. The difference between the 143
and the 453- Significant.
It is significant. So paying a hundred bucks more for a slimmer case profile,
new dial designs, like significant upgrades. It's not raising the price.
I'm telling you, man, you got to go down the street to the Seiko dealer, check this stuff out.
He's got a case full of them. The other thing they're counter-positioned to in many ways,
with some exceptions, like with the watch we're talking about here,
is a lot of the Swiss brands have been focused on heritage. And I think that was really since
the dawn of the Black Bay through the last few years. Heritage watches were what sold.
Sure.
They were commercially viable. And the Japanese brands have always focused more on technology.
You mentioned they disrupted the entire industry with quartz, but to this day, there's solar
quartz, high-accuracy quartz, spring drive, all of these technologies. The Japanese brands,
all of what G-Shock does, they define themselves more by technology than heritage. And so again,
at a time when the tastes are shifting and moving away from vintagery issues and heritage watches,
again, they're counter-positioned from a brand or product standpoint to do well.
So I think that has benefited them as well.
Hey, it's Gabe. Now, if for some reason you find yourself wondering what you can do to support
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Another important thing is their channel and geographic positioning, where these watches
are sold. We have talked tons, obviously, about the struggles of the watch industry in the United
States with tariffs and all sorts of trade shenanigans. We've talked about how China,
although it seems to be stabilizing, if not recovering, China has been a really dark spot
for or source of pain, specifically for the Swiss brands for the last five years or so,
as luxury sales in general there have really declined. The Japanese brands have very different
geographic distribution and strength. We talked about Japan, their home market really being the
backbone of their business, so Japan is doing well. But beyond that, if you look globally
at where these brands are distributed, they are much more diversified than the Swiss brands are.
So all of the Japanese brands sell particularly well in Latin America. This is not a part of
the world we talk a lot about as far as a driver of the watch industry, but they have very strong
distribution and sales into Latin America and India as well. We've talked a lot about how India
is really growing aggressively as a watch market. Who was there at first?
Do you know anything about free trade agreements between some of those regions in Japan?
I have no idea.
I'd be really curious about whether or not that's part of it. I mean, I don't know,
but that'd be just as a side note. If anyone knows who is an economist here, I'd be very curious.
Yeah, I don't know what those dynamics are. And then these brands are all reporting,
in terms of distribution, strong performance from their own direct sales and online sales.
This is something they've prioritized, and it's a growing segment for them. And obviously it's
a more profitable segment, and it's a segment that drives higher revenue for all the reasons
we've talked about. So they have a unique distribution model or geographic strengths
that a lot of the Swiss brands don't have that, again, are helping them. So China can be struggling,
but hey, Japan is doing well, and we're in other parts of the world that are more stable.
China or Europe or the U.S. are struggling. P.S., the U.S. is doing incredibly well
for all of these brands as well. Again, I can't recommend the Hodinke Business of Watches
interview with the CEO of Seiko Watches enough. He talks specifically about the strength of Grand
Seiko and the growth of Grand Seiko in the United States. I believe the U.S. is now their largest
market.
Really?
Which is, for years, it was Japan.
Exactly. But again, this is built on a strong foundation. Japan probably continues to be a
hugely important market for them, and they've built that foundation, and they've managed to
expand globally. So again, they're sort of counter-positioned. This is counter-positioning
at work. Whether it's brand, product, distribution, currency, all of these things are
creating this moment where these brands are well-positioned in exactly the areas that the
Swiss brands in their segment are struggling.
Yeah, it's fascinating. It's also interesting just to look at the amount of runway that each
of these companies has given themselves by virtue of their diversification of product and brand.
When you think about Seiko, like,
yeah, yes, that's a great point. They are not defining themselves by a price segment the way
the Swiss do. Seiko has given itself permission across price segments.
Correct. So there's a solution for everything, but it's all under the Seiko brand.
Mall watches are on decline? No problem. We have Grand Seiko or Prospex or whoever it might be.
Right. So you can rebalance.
The U.S. market is soft? No problem. Streetwear, Seiko 5, check out this cool new drop.
Yep. And the other thing-
Same with G-Shock.
The other thing a lot of people don't realize too is that certainly for Seiko and for some
elements of Citizen, I believe as well, and I would have to imagine for Casio by nature of
the modules they make, many of these are fully vertically integrated manufacturers.
They are.
You know? So when you talk about a Seiko, hell man, even a Seiko 5 is essentially a
fully in-house watch.
Yeah. So, and it truly is because in that case, I went down this rabbit hole,
the mechanical movements for Seiko are made by Seiko watches by another company called
Seiko Instruments Incorporated, I think it is SSI or SII.
A division of Sheinhardt Wood Company.
Yeah. And so they make just the mechanical movements for Seiko and Grand Seiko, but
Seiko Epson makes the quartz and the spring drive. So if you have a mechanical Seiko watch,
it is a truly fully in-house watch.
I think they, and they make cases and bracelets too, don't they?
Oh, they make it.
Yeah.
I mean, they grow, Seiko Epson grows their own crystals.
So they make their own, they make their own lubricants.
I mean, yeah, and screws and everything.
I mean, they truly are fully integrated.
So cool.
It is cool.
But that level of investment and knowledge gives you a lot of flexibility to be able to
pivot and manage economic challenges more effectively than if you are reliant on a long
supply chain. And we have talked about this too, again, on previous episodes of the pod,
where that can be a major pain point, which can drive prices up, can limit the creation
of product, can do all these issues. And to a degree, by controlling all of that,
these companies are somewhat immune to that, to those pushes. So they control their costs.
It is so interesting when you consider the parallels between these two industries,
because of course the end product results in the same thing, you know, watch or clock,
but the way in which these companies go about their business is so profoundly different.
And what I think is interesting too is, but they can still hang. And what I mean by that is
Grand Seiko and now Credor at Watches and Wonders fit in perfectly. They still, they present,
they are able to present at the same level, the product speaks for itself, and they can do this
at these profit margins, which Swiss companies would literally, you know,
throw themselves onto a bomb to get, you know, I mean, these are incredible.
Yeah, you may be thinking, oh, a 14% profit margin, ain't that great, but that's how that
to the swatch group, that's after all, that's after all your costs and that's on over a billion
dollars in revenue. And that's with everything going on in the world, it's pretty remarkable.
And yes, I know like LVMH or Richemont have larger margins, but that's driven primarily
by their jewelry businesses and not by their watch businesses. The watch businesses are barely
profitable if you go off of the latest earnings for those other companies. So it's pretty remarkable
that the Japanese brands have that level of performance. Couldn't agree more. Now there's
this famous meme. We've talked a lot about how they're counter positioned relative to the Swiss.
I want to talk about the other side of the market, which is micro brands and challenger brands.
There's this meme among watch enthusiasts. You hear this all the time. Seiko, let's take Seiko.
Seiko is dead. The micro brands are killing them and cleaning their clock. You know, Seiko dive
watches have gotten so expensive. They used to be kind of the poster child for, you know,
the entry level of watches and enthusiast watches and things like that. And now they've priced
themselves into oblivion and the micro brands offer so much more value and are so much more
creative and so much more interesting and just a better, smarter buy smash cut to micro brand
powered by Seiko movement. Well, okay, well, there's that deep there or citizen. There's that.
There's that deep irony, of course, but sure. I, I think that most of what's being said there is
true, except that the micro brands aren't going to take down Seiko and citizen and Casio. That's
not going to happen. Depending on the source, you look at the total market size for micro brand
watches. And I think this one is low. So anywhere from a hundred million dollars to a few hundred
million dollars for across every micro brand, every micro brand combined. And again, there,
there are some micro brands that are doing 10 million more or more in revenue, but it's a very
long tail. And what's fascinating is when you look at any one of these companies, Seiko, citizen,
Casio, they are all doing over a billion dollars each and revenue. So any one of these companies,
any one of them is bigger than the entire micro brand market combined. These businesses operate
on a scale that, that is just unimaginable. They are in every mall. They are in every country.
They are in every corner of the world. Everyone on the, you know, you ask anyone on the street,
anywhere in the world to name a watch brand. If it's not Rolex that comes out of their mouth first,
it would probably probably be Seiko next. They, these, these businesses are huge. Number two,
they're to your point, they're powering these micro brands. The micro brands rely on them,
not entirely, but Seiko movements and citizen movements, of course, go into so many micro
brand watches, whether they're mechanical or quartz movements. So, you know, it's, it's easy
to say that the, the micro brands are going to clean their clock and take them down, but it's
certainly showing those signs of that happening. Like here, we know that at one point or another,
everyone from, oh, here's a brand we've never mentioned on this pod, Invicta. Invicta uses
Seiko movements and citizen Tag Heuer has in the past, Unimatic, Veyr, Notice, Zillow,
San Martin. Well, that's a, that's kind of a sticky one. We'll leave that one alone for a
second. You know, and Martin will use any movement. Yeah. Orient, you know, which is
also owned by Epson. Yep. You know, like, and the list goes on and on and on and on.
So, you know, that argument to me is a little, is a little, is a little challenging because
we've talked about this, like in the context of like Etta movements, for example, or, you know,
Salida movement, certainly, but these are, these are in many cases, the engines of innovation that
empower these other companies to exist. And also I think important to note, Seiko employs thousands
upon thousands upon thousands of people. A micro brand could be in the case, you know, in the case
of a, some come once with, you know, one person. So by the way, there are probably people at Seiko
working on that micro brand in some capacity. So my point is like, you know, pricing is not the
only, is not the only interpretation of value, even though it's the easiest metric for it.
Well, and I think again, you have, we have to always separate out the enthusiast market from
the real world. Well, that's the other side too. Like the likelihood that, that, that, and I'll
give an example of a brand I really like, like Laurier, for example, lovely human beings behind
it, really cool watches. They use TMI movements, which are, it says time module ink, which is
essentially a, a, a white label of Seiko. Their watches are rad, but the likelihood that a random
human being who is not at all remotely connected to the watch industry would want a Laurier,
a Laurier, pardon me, versus a, you know, a, a Seiko is very low. So it's, it's not,
they're not from the same people. Enthusiast attention and share of wallet may be moving
away from a brand like Seiko and towards micro brands. But again, in the real world, out there
in the streets, man, these companies are still doing fine. In fact, they're, they're stronger
than, than ever, which I just think is, again, I'm, I was flabbergasted.
It's true. Most of the people arrested in line at Swatch were wearing Seikos.
You know, I bet there were, there were, that is not a fact that is not true.
I bet a lot of the people, there was probably disproportionate number of people wearing G
shocks. I mean, talk about, talk about like, you know, hype culture. I mean, there's certainly
been G shocks that have played into that as well. Although I don't think any G shock launch was as
much of a debacle as, as this, but there are definitely hype G shocks. Yeah, man, when people
lined up for the Bamford G shock in London, right. People were super cool about that, but anyway,
enough of that, but, but coming back to this. Yeah, I do. That's the other thing about Seiko,
which I think is fascinating. People are wearing Seiko movements on their wrists and many times
don't even realize that they are. Seiko is so pervasive in watch culture, you know, and so
prevent when I say watch culture, I'm not talking about enthusiasts. I mean, just like the culture
of the business and the industry, it is a critical component to it. And if I may be so bold, I don't
think it gets half the respect or credit that it, that it nearly deserves for building the kind of
company that it's built. You know, so many people would turn their nose up at a $500 Seiko and then
go around talking about what in-house watchmaking is. Yeah. You know, so that in and of itself,
I think is an incredibly important point. Now, obviously, obviously an NH 35 caliber is not the
same as like a super high grade Salida movement, like clearly, but those are, those exist at
different price points and for different products. And I think it's really important sometimes to
actually take a break and look at these companies and say, that's amazing. Let's talk about Citizen
for a second, because Citizen is a really interesting group too, right? Because in it,
you know, I think a lot of people think about Citizen and I thought about Citizen for a long
time as being defined by the eco drive, right? And like, and like a very accessible solar powered
quartz watch. But of course the Citizen group is a very diverse watchmaking enterprise. So let's
just look at that one because they've got the, they have a different approach than Seiko,
but they, and they've actually, they've actually got their hands pretty aggressively in the Swiss
market too. And they do that through a couple of different vectors. The first of course is
through their ownership of Le Jouperet. And so for those who don't know, why do you think
Le Jouperet is supplying a solar quartz movements to Tag Heuer? Yeah, well, there you go. But I mean,
Le Jouperet makes a number of great movements. We sell watches with Le Jouperet calipers. The G100
is a pervasive movement. It's very reliable. They are incredibly reliable. Yeah. And there are a lot
of Swiss brands that use this British brands. There's all sorts of brands that use LJP calipers,
but so you've got, so different than the Seiko group or Seiko family of companies,
the Citizen group does also not just create a significant amount of watches at multiple price
points for various different markets, but also supplies very clearly to high-end and mid-tier
brands in the more sort of European watch segment. And also is doing manufacturing in Switzerland.
Correct. The other thing is that they have their own high-end haute horology brands,
Angelus and Arnold & Son. And, you know, both of those brands have over the last several years,
really gotten their head on straight and are creating really great. I mean, look on like
hats off to both Angelus and Arnold & Son. Both of them have had extremely strong releases for
the last two years. And, you know, I think that they've taken, they've really paid attention to
the market and they're working really hard at it. But the major difference there is that when you
look at Grand Seiko, for example, like Japanese culture and the way that the product is represented
as a Japanese product is intrinsic to Grand Seiko, you know, right down to the rice paper in the boxes
of all of these. Whereas Citizen group does separate out their, what are more sort of like
European focused brands from their, from their more mainline watches. Like there isn't a whole
lot of that push or messaging around Arnold & Son, which of course has its origins in England,
many, you know, and Angelus, which, you know, both of these are very culturally separated.
So it's, it's a different strategy that that group has taken on, but it's fascinating when you
consider how they look at movement supply, right. They've rebranded that under or they purchased
really Le Jouperé versus, you know, TMI or Seiko Instrument Incorporation.
Well, Citizen also does through Miyota sell movements as well.
Absolutely. Good point. Thank you for pointing that out. And then of course, all of their,
their primary, primary Citizen branded products, as well as their high-end The Citizen products.
And then of course, we can't forget Frédéric Constant.
Oh my God. Or Alpina.
Correct.
Yeah.
You know, both of which are also owned by the Citizen group and benefit from the wealth
of industrial technology and knowledge that the company has.
Yeah. So that's a very different strategy.
Yeah. So interesting when you consider, you know, at the beginning of the conversation,
we talked about how-
Don't forget about Bulova.
Of course.
Yeah.
Right. So when you think about this and you look at the-
The very strong American identity.
A hundred percent, they do. In fact, I believe if I'm not mistaken,
that their US headquarters are in the Empire State Building, right?
They are now. Yes.
So-
Don't they have a boutique somewhere near there?
Yeah. They have a beautiful boutique up on Fifth Avenue.
Interesting.
Never been?
Yeah. If you go upstairs, they have a bunch of really cool-
You know, the Citizen factory outlet store is a couple of towns over from here.
Yeah. Sadly, they don't sell Frédéric Constant or Arnold & Son or Angelus.
Oh, you poked your head in there?
Yeah. And you don't. And interestingly, at the Citizen boutique in New York,
they do not have Angelus or Arnold & Son, which is fascinating.
So they cap out at the top there with-
Actually, they might have the Citizen pieces in there. I didn't see any when I was,
but maybe they do. But they definitely have Frédéric Constant in there.
Anyway, my point is, when you look at the structure and you consider, well,
these brands are head-to-head from a revenue standpoint,
from a profitability standpoint, but two profoundly different business models-
Yeah. It's a very different mix.
It's really, really important to separate it out.
Same with Casio, a much stronger focus on digital watches.
To put it mildly.
Yeah. So look, I think when these brands, these companies do well, that is good for the hobby.
Because again, to the average person on the street, a Citizen or a Seiko or a G-Shock
is just a good watch. And I'm wearing an SKX. This was not this watch here, but an SKX-
Although you did upgrade it with a Uncle Seiko bracelet, it looks like.
Shout out to Uncle Seiko. He's now Uncle Straps. Seiko, I think, went after him.
He got a cease and desist, I'm guessing. Uncle Straps. But yeah, shout out to-
He's also a couple of towns away from-
No, he moved. He moved. Yeah, yeah.
He was a few towns away in Fillmore, California, but I guess he's no longer-
The fireworks capital of SoCal.
If you want to buy his fireworks, you go to Fillmore. But it's a terrifying thought around
here. But look, a Seiko SKX was my first proper watch. And I suspect a Seiko 5 for a lot of people
will be their first proper watch, or maybe a Citizen or a Casio.
In fact, remember when we hired somebody to work at Collective who hadn't worked on watches,
what was the first thing that we gave them?
Seiko 5.
Told them to figure it out.
So this is great news, because let's go back, rewind,
all the way back to Ilaria Resta's theory of the case with the AP Swatch Collab, that this
was going to open the doors and be the gateway to the world of horology and watch collecting
that we need. Turns out that was a bit of a disaster. And the answer, the gateway, is already
here. It's hidden in plain sight. It's the Japanese brands. They have never done better.
They are selling more watches by revenue. Their businesses are extremely healthy.
They have products to offer everyone around the world across multiple price segments.
They're the watch brands who are top of mind and awareness for people.
These guys are the entry into watchmaking. And so for them to be doing well is the best
news we could possibly have for this hobby and for this industry.
Marc Thiessen You know,
listening to you say that poses a really interesting rhetorical question, which is,
whose responsibility is it to introduce somebody to watchmaking? And is it a presumptive question
to think that any one brand can or should introduce you to horology?
David I don't know.
Marc Thiessen You know, it's,
it is a fascinating thing, right? Like, I think sometimes, again, like price becomes such a big
factor here, right? In the sense that, yeah, okay, an SKX is an affordable watch, mechanically
speaking, you know, generally compared to... David If you're curious and you want to dabble,
it's there for the taking. Marc Thiessen
Yeah, you've got Swatches, you've got these guys, all sorts of other brands. But you know,
it also presumes that the only way in to watchmaking is by owning a watch. I'll give you
an example. I'm reminded of one of my favorite collectors and personalities in the watch world,
Times Roman AU. Roman is one of the most knowledgeable and hilarious people that I know
in the watch collecting world. And do you want to know what, I mean, he collects watches,
of course, he collects pocket watches, of course, but you want to know what he has a
massive collection of and how he's... And Roman, if I'm wrong about this, you can message me and
tell me, but I believe he really got into this and started a lot of this through collecting watch
books. And a lot of those were about A.L. Breguet, you know, about other masters of,
you know, modern watchmaking. I guess my point is...
David We're going to have to do an episode about the watch book industry.
Marc Thiessen
They're flying off the shelves, never been better.
David Get Mondani on the phone.
Marc Thiessen
But my point is, I think there's so many ways into this. And there's so many opportunities.
And one question for someone like AP is like, maybe that's not your lane. You know what I mean?
Like, forget about like all of the commentary and the rest of it. It's like you do make extremely
high end luxury watches, right? Mercedes doesn't have to teach you how to drive.
David Yeah.
Marc Thiessen
You know what I mean?
David Yeah. No, it's the old Jeff Bezos thing of like,
if it doesn't make the beer taste better, why are you doing it? Does the AP swatch
collaborate...
Have you seen Jeff Bezos recently, by the way?
David I don't want to get into it. But this is a famous
quote of his. They talk about it on the Acquired podcast all the time. And it's basically stick
to your knitting, right? Like that. Let's use that. Stick to your knitting. Does it really help AP
to make a plastic watch with swatch? Is that them sticking? Does it make an AP better?
Marc Thiessen
Forget about that for a second. Just come back to like the key point of like,
if the stated purpose was to introduce people to watchmaking, is this even their job?
David Yeah.
Marc Thiessen
And I think...
David Or to just challenge it a bit
more on another level, it's like, isn't it presumptuous to say for AP to say it's our role?
We're uniquely positioned to open up the eyes of the world to watchmaking in a way that
no one could have done without us. Here we are coming in on our white horse to save the day.
The rest of the industry can thank us later for popularizing watchmaking. These other guys are
already selling over a billion dollars of watches each and popularizing watchmaking every day and
only getting stronger. Is the entry or the gateway to watches somehow closing off or getting smaller
or under threat when these guys are just going gangbusters? No.
David Dude, you sound like me.
So all this to say...
Marc Thiessen
Is that a compliment or an insult?
David Depends on the day.
Look, all this to say, the greatest respect for these businesses and what they've accomplished,
the innovation that they continue to show, the respect for consumers and the quality of these
products. And I'm going to end with one little anecdote. You and I have had the opportunity over
the years to meet lots of different brands. One of the most courteous and lovely people that we've
ever met in watchmaking is Rusty from Seiko and now Grand Seiko. And he's worked there for decades
upon decades on all manner of different products. He's a senior guy there now.
Marc Thiessen
He's in their sales organization.
David Yeah. And it's not just Rusty, right? I mean,
there's a lot of people.
Marc Thiessen
Joe Kirk.
David Joe Kirk, absolutely amazing person. And a good example of how Seiko hires, right? Enthusiast
before he was hired by them and legendary knowledge base.
Marc Thiessen
And a successful salesperson as well at the Seiko store.
So these are people who believe in what they're doing, who hire good people, who are thoughtful,
open-minded, curious. Before Collective had even released a watch ever as a collaboration,
Rusty took a meeting with us, was kind and respectful, and other brands were just like,
okay, you have a nice day now. And I get that.
David It's really amazing.
Marc Thiessen
Yeah. And look, and by the way, for the record, I get that. That's not,
you know, nobody had any time for a bunch of guys.
David Guys like us are a dime a dozen.
Marc Thiessen
Exactly. But my point is the level of courtesy and kindness and open-mindedness and curiosity
that came from them really, I think, opened my eyes. And even though we've never done a project
with Seiko, we don't carry Seiko or Grand Seiko or anything like that, everyone we know who does,
admires and likes the people that they work with. We ran into a Grand Seiko sales manager.
David Oh my God, that's right.
You know, when you're having a drink at the Grand Jew.
David At the Grand Jew Club, that's what it does.
Marc Thiessen
Yeah. And he could not have been a more lovely person. And I, you know,
same thing with the guy-
David And genuinely interested in watches.
Marc Thiessen
The staff in the New York Grand Seiko boutique are fantastic.
David Anytime you go to a Seiko boutique or Grand
Seiko boutique, you'll have a nice time. The salespeople there are informed. They're respectful.
They are not predatory. They're not salivating at the mouth to sell you something. They don't
follow you around the store like a lost puppy dog. It's a pleasant experience.
Marc Thiessen
Shout out to Weston at the New York Grand Seiko boutique, who is an incredibly knowledgeable.
David He was there when that boutique
was just a hole in the wall.
Marc Thiessen
Yeah, but that's the point, isn't it? And if I'm not mistaken, I believe-
David But was it just a Seiko boutique originally?
Marc Thiessen
They sort of jammed everything in there. But if I'm not mistaken, he moved from a
Richemont brand over there and then really dedicated himself and grew it. These are the
kinds of people that they bring in. So-
David You know, it's funny. Whenever I go to a watch boutique of any kind,
go in there and I tell the salesperson, I know Asher, they're like, oh, I know Asher.
Marc Thiessen
Yeah.
David You go pretty much anywhere in the world.
Marc Thiessen
Followed immediately by, get out. And it has nothing to do with
Collective or the podcast. This has been going on for years before Collective was even a thing.
In fact, all of the salespeople who work at Collective, you are a customer of.
David Before they ever worked here. So yeah,
shout out to the army of watch boutique staff around the world who know Asher.
Marc Thiessen
And thanks for tolerating me. Shall we leave it there?
David We will leave it there. Thanks,
of course, for listening. Openwork is a production of Collective Horology. You can find us
online at collectivehorology.com. You won't find any Japanese watches there.
Marc Thiessen
That's a bummer.
David We got to fix that.
Marc Thiessen
But hey, if you have thoughts on that or anything else, you can always email
podcast at collectivehorology.com.
Do not use that. I will not use that. Then you have my word. All right.