Swatch is seeking a Royal Pop from Audemars Piguet hype

THE watch world is losing its collective mind over the Royal Pop, a collaboration between Swatch Group, best known for its brightly coloured plastic timepieces, and Audemars Piguet, one of the world’s most successful upmarket horologists.

After a week of fevered speculation, the two companies revealed that they are joining forces on a US$400 pocket watch that blends Swatch’s “Pop” line from the 1980s with Audemars’ iconic Royal Oak wristwatch.

Swatch could do with a lift. Four years ago, its MoonSwatch, which leaned on the look and heritage of sister brand Omega’s Speedmaster Moonwatch, became a global phenomenon, selling around three million timepieces in 2022 to 2023.

With Swatch’s operating profit more than halving last year after a 75 per cent decline in 2024, and the board under pressure from activist fund Greenwood Investors, the company needs a repeat performance.

After the MoonSwatch in 2022 and a budget-friendly reinterpretation of Blancpain’s Fifty Fathoms diving watch a year later, the Royal Pop is Swatch’s first tie-up with a rival company.

A similar trajectory to its first successful combo could generate sales of more than one billion Swiss francs (S$1.6 billion) and, assuming a 50/50 profit split with Audemars, 390 million francs of operating profit, analysts at RBC Capital Markets estimated.

Queues began forming in the week of May 11 at Swatch stores. The one-off model, in eight colours and two designs, will be available at selected boutiques.

But the company’s shares, which have risen about 36 per cent in the last year on hopes of a market revival led by China, fell as much as 8 per cent on Wednesday (May 13) amid disappointment about the collaboration.

The Royal Pop is not a wristwatch but a versatile timepiece that can transform into a pendant, desk clock or bag charm, playing into the popularity of affordable novelties such as Trader Joe’s tote bags.

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Audemars may have been more comfortable with a pocket watch riffing off the Royal Oak’s design cues, but demand is likely to be more constrained than it would be for a typical wristwatch.

Indeed, it is hard to see what Audemars gets out of it the partnership. CEO Ilaria Resta told Bloomberg News that the tie-up was a “megaphone” to ignite interest in mechanical watches.

The company will donate all sale proceeds to an initiative to perpetuate watchmaking expertise, particularly among the younger generation.

The collaboration could entice youthful customers too, something that the broader luxury industry is grappling with.

Many who will never afford a Royal Oak, which starts at about US$30,000, can tap into Audemars’ brand allure and crucially, as Oliver Mueller, founder of industry adviser LuxeConsult, told me, without resorting to dupes or fakes.

Some will eventually go on to afford the real deal, and may fondly remember their first contact with the brand.

Maximising Swiss watch’s exposure

Perhaps maximising exposure for Swiss watches is also why Audemars selected the Royal Oak for the mash-up, because in many ways the choice is mystifying.

With its distinctive octagonal case created by famed watch designer Gerald Genta in the early 1970s, and widely credited with being the first luxury steel sports watch, it needs no profile raising.

Models change hands for more than their retail price – if they are indeed available.

Another Audemars style, the Code 11.59, is a sporty dress watch that is not so hot. A better move would have been to blend this with a Swatch to increase its visibility. Perhaps this will come in the future.

Releases of the Royal Pop – and any future collaborations – should be strictly curtailed. While that limits volume, it benefits brand heat. Louis Vuitton Moet Hennessy’s (LVMH) Tag Heuer has smartly relaunched its 1980’s Formula 1 watch in mostly limited colourways, for example.

While the Royal Pop is risky for Audemars, there is far more riding on the partnership for Swatch. The company’s Omega line has been losing market share to Rolex, said analysts at Morgan Stanley and LuxeConsult, although Swatch disputes their estimates.

At the same time, smartwatches are eating into mid-market brands, such as Longines and Tissot. Swatch generated about 23 per cent of its sales in China in 2025, where a full recovery is yet to materialise.

Meanwhile, US activist Steven Wood’s Greenwood Investments is seeking to shake up the company’s corporate governance.

The Hayek family, which owns about 25 per cent of the equity and 44 per cent of the voting rights, has blocked his election to the board for a second time.

But Wood increased his support from so-called bearer shareholders, effectively minority investors who are mainly institutions, to 80.4 per cent from 62 per cent in 2025. He has already begun legal proceedings following last year’s vote.

Swatch should really be a private company. While it has some strong brands alongside the core Swatch watch business, including Omega, Breguet and jeweller Harry Winston, they are not living up to their full potential.

Others in the portfolio, such as Rado and Hamilton, should be pruned. Swatch CEO Nick Hayek, whose late father founded the company, has said that it would be “nice” to delist. But he has also long been wary of taking on debt to fund a buyout.

A private equity deal for the 10.5 billion franc company would be another possibility, but a buyer would have to be willing to work with the family.

Alternatively, LVMH or Cartier-owner Cie Financiere Richemont could swoop in. However, they are in disposal, rather than acquisition, mode right now. And would they want to take on Swatch’s large manufacturing base?

There is no easy answer to Swatch’s struggles. Perhaps the best route is to simply trade its way out of its troubles, at least until China recovers. But a Royal Pop of hype would certainly help. BLOOMBERG