Luxury watchmaker TAG Heuer launched its first luxury mobile phone, the Meridiist, at a time when luxury phone makers began pulling back. The Louis Vuitton subsidiary looks at the market differently. In an interview with Emirates Business, Steve Amstutz, General Manager, TAG Heuer Luxury Mobile Phone Business Unit, said the luxury mobile phone segment – those priced $5,000 (Dh18,365) and above – will see a five-fold increase in 10 years.

"In the last two years, 100,000 phones are being sold every year. Over the next 10 years we should be looking at an industry, which would weigh between $2 billion and $3bn," he said.

To capture the growing market, the Louis Vuitton subsidiary is putting Russia, the Middle East and North Asia, in that order, in the epicentre of its strategy. It has sold 1,000 units in this region including its most expensive unit costing Dh175,000 and is planning to boost sales by having 15 to 20 outlets by the year end.

"In Europe or in the US, it's not yet in the mind of everyone. Even the richest people there do not easily make such a purchase," said Amstutz. "Whereas, in the Middle East, Arabs like to stand out and make a statement as Russians or Asians do."


You launched the Meridiist brand in March this year at a time when luxury phone makers began pulling back. Bang & Olufsen decided to trim its costs and get out of non-profitable ventures while Motorola decided to pull back its luxury line. How was the customer uptake?

Quite interesting, we're not able to supply phones the market requires. The demand is so high. We are second to Vertu, which created this category 10 years ago. Vertu has been developing this business strongly in the Middle East. Tag Heuer has managed to get 10 per cent of the market share in just one year. That's an amazing performance.

How much supply and demand imbalance have you seen?

We've been doing soft launches for less than a year. We have seen a lot of demand and weren't able to expand distribution.

I mean the production rates versus the sales?

We estimate that worldwide, in the last two years – which is slightly flattened or decreased – 100,000 phones worth more than $5000 are being sold every year. This should be multiplied by five times over the next 10 years. So we should be looking at an industry, which should weigh between $2bn and $3bn. Tag Heuer aims to reach that target and is currently reaching 10 per cent of this market share.

What's the target going forward?

To increase the business year after year. There are two ways to grow a business – either the size of the market grows or your market share increases. We are growing despite the downturn.

Who are the biggest buyers of the luxury phone?

In our worldwide pie, our priorities include the Russians first and then the CIS countries, followed by the Middle East and North Asia – Hong Kong and China. These are the three epicentres of luxury mobile phones priced $5000 and above. In Europe or in the US it's not yet in the mind of everyone; not even the richest people there easily make such a purchase. But in the Middle East, Arabs like to stand out or make a statement as Russians or Asians do. Wearing a mobile phone such as Tag Heuer Meridiist phone is a status symbol.

How many high networth individuals are there in the Middle East and what per cent of that sector will probably buy the phone?

We target 0.5 to one per cent of the population.

But don't you think wealthy people have begun to rationalise expenses?

It is true that the rich have lost some of their wealth in the past months. However, even at the worst times there are some who can enjoy a quality lifestyle. These people need to be rewarded and they need to reward the people they love. Some people who buy a $20,000 watch may opt to buy a $10,000 watch but they still buy a $10,000 watch. We don't sell phones, we sell experience.

How many outlets will you open in the Middle East?

In Dubai we have five points of sales; two are our own boutiques and other three multibrand stores. We'll have less than 10 point of sales in Dubai by the year end. In Abu Dhabi we are looking at one or two within a month. We are expanding in Dubai, Bahrain, Oman, Kuwait, all grouped in Q3 and Q4 this year.

What will be the total number of stores in the GCC by the year end?

About 15 to 20 stores the year end.


PROFILE: Steve Amstutz GM, TAG Heuer Luxury Mobile Phone Business Unit

Amstutz began his career at the Swatch Group – first with ETA company and then with Tissot brand as New Products Manager. He joined TAG Heuer International in 2000 as Trade Marketing Director.

In 2002, Amstutz was transferred to TAG Heuer North America as Director of Trade Marketing and soon became the West Coast Regional Sales Director. He was later appointed Vice-President of Eastern Zone Sales. He holds an engineering degree and an MBA from the University of Neuchâtel.

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