The Leading Market Research in the Luxury Watch Industry. Since 2004.

HAUTE HORLOGERIE PREVIEW JANUARY 2014

The Leading Market Research in the Luxury Watch Industry. Since 2004.

2014 HAUTE HORLOGERIE PREVIEW.

©  Digital  Luxury  Group,  DLG  SA,  2014 2

§  10th Edition

§  18 Haute Horlogerie Brands

§  20 Markets

§  1 billion searches analyzed using DLG’s proprietary semantic analysis technology DemandTracker™ (see Appendix)

§  Published in partnership with Europa Star and the gracious support of the Fondation de la Haute Horlogerie

§  Full version of report, covering 60+ brands, available at Baselworld

2014 Haute Horlogerie Preview

The Leading Market Research in the Luxury Watch Industry. Since 2004.

18 HAUTE HORLOGERIE BRANDS.

©  Digital  Luxury  Group,  DLG  SA,  2014 3

Note:  Other  brands  exhibiting  at  the  Salon  International  de  la  Haute  Horlogerie  such  as  Cartier,  IWC,  Panerai,  and  Piaget,  have  not  been  analyzed  in  this  year’s  preview  research  as  this  is  dedicated  to  the  Haute  Horlogerie  category  only.  Full  results  of  the  report  covering  the  5  categories  will  be  released  at  Baselworld.    References  to  last  year’s  market  evolutions  may  vary  due  to  an  upgrade  to  our  proprietary  technology  tool,  which  was  applied  retroactively  on  the  data.    See  Appendix  for  more  information.

The Leading Market Research in the Luxury Watch Industry. Since 2004.

20 GLOBAL MARKETS ANALYZED.

©  Digital  Luxury  Group,  DLG  SA,  2014 4

The Leading Market Research in the Luxury Watch Industry. Since 2004.

Key Insights on the Haute Horlogerie Market in 2013

©  Digital  Luxury  Group,  DLG  SA,  2014 5

The Leading Market Research in the Luxury Watch Industry. Since 2004.

China

U.S.A.

U.K.

Japan

France Italy

Germany

Russia

Switzerland

Singapore Thailand

India

Spain

Hong Kong Brazil

-40%

-20%

0%

20%

40%

60%

80%

0% 5% 10% 15% 20% 25% 30% 35% 40%

©  Digital  Luxury  Group,  DLG  SA,  2014 6

Haute Horlogerie Search Market Share and Growth Rate in 2013

§  Haute  Horlogerie  brands  continue  to  grow  rapidly  (+12%) §  BRIC  markets  retain  high  growth  rates  (Brazil  +7%,  Russia  +15%,  India  +20%) §  Mainland  China  on  its  own  consists  of  34%  market  share,  increasing  by  +58%  vs.  2012 §  UK  and  US  rebound  after  slow-­‐‑down  the  previous  year.

Jan  –  Nov  2013

Y/Y

Gro

wth

Rat

e

2013 Global Search Market Share

The Leading Market Research in the Luxury Watch Industry. Since 2004.

28.13%

13.87% 13.03% 12.29%

6.29% 5.92% 4.17% 3.92% 3.25% 2.58% 1.91% 1.30% 1.17% 0.78% 0.67% 0.34% 0.27% 0.11%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

©  Digital  Luxury  Group,  DLG  SA,  2014 7

The Most Popular Haute Horlogerie brands in 2013

§  Patek  Philippe  leads  the  Haute  Horlogerie  segment,  by  a  landslide  with  over  ¼  market  share.  

Jan  –  Nov  2013

Hau

te H

orlo

geri

e Se

arch

Mar

ket S

hare

The Leading Market Research in the Luxury Watch Industry. Since 2004.

-22.15% -17.00% -10.54% -5.47% -3.41% -3.38% -2.72% +0.60% +1.00%

+12.22% +15.61%

+19.73% +20.17% +20.61%

+21.37% +21.58%

+33.93% +38.79%

+40.17%

-30.00% -20.00% -10.00% +0.00% +10.00% +20.00% +30.00% +40.00% +50.00%

Bovet Franck Muller

De Bethune Audemars Piguet

Parmigiani Girard-Perregaux

Richard Mille Roger Dubuis

Breguet Average

Greubel Forsey Jaeger-LeCoultre

Jaquet Droz Blancpain

Patek Philippe A. Lange & Söhne

Vacheron Constantin Ulysse Nardin

Glashütte Original

©  Digital  Luxury  Group,  DLG  SA,  2014 8

§  Glashüce  Original  is  the  fastest  growing  Haute  Horlogerie  brand  while  Vacheron  Constantin  shows  the  strongest  evolution  within  the  bigger  brands.  Last  year’s  rising  star  Richard  Mille,  showing  signs  of  slowdown.      

Growth Rates of Haute Horlogerie Brands in 2013 vs. 2012

Jan  –  Nov  2013 Y/Y Evolution of Global Brand Interest

The Leading Market Research in the Luxury Watch Industry. Since 2004.

©  Digital  Luxury  Group,  DLG  SA,  2014 9

2013 2012   Brand Models Total

1 1 = Audemars Piguet Royal Oak 13.37%

2 2 = Audemars Piguet Royal Oak Offshore 8.87%

3 4 æ Jaeger-Lecoultre Master 8.04%

4 3 è Jaeger-Lecoultre Reverso 7.87%

5 6 æ Patek Philippe Nautilus 5.90%

6 5 è Patek Philippe Calatrava 5.45%

7 7 = Blancpain Fifty Fathoms 2.80%

8 11 æ Ulysse Nardin Marine Collection 2.74%

9 9 = Breguet Type Xx / Type Xxi 2.01%

10 8 è Franck Muller Crazy Hours 1.87%

SUB-TOTAL 58.92%

OTHERS 41.08%

TOTAL 100.00% Royal Oak Audemars Piguet

§  Audemars  Piguet’s  Royal  Oak  reinforces  its  leadership  as  the  #1  Haute  Horlogerie  model

#1 Haute Horlogerie Model [13.37% market share]

Top 10 Most Sought-After Haute Horlogerie Collections in 2013

Jan  –  Nov  2013

The Leading Market Research in the Luxury Watch Industry. Since 2004.

©  Digital  Luxury  Group,  DLG  SA,  2014 10

Reverso Jaeger-LeCoultre

Sky Moon Tourbillon Patek Philippe

§  Royal  Oak  +  Royal  Oak  Offshore  lead  in  14  markets,  however  in  the  remaining  6  markets  (FR,  TH,  JP,  RU,  TW,  CN)  local  preferences  arise.

France’s #1 [18.74% market share]

Russia’s #1 [8.94% market share]

China’s #1 [8.42% market share]

Global Haute Horlogerie Watch Preferences Differ

Jan  –  Nov  2013

Overseas Vacheron Constantin

The Leading Market Research in the Luxury Watch Industry. Since 2004.

A. Lange & Sohne

Audemars Piguet

Blancpain

Bovet

Breguet

De Bethune

Franck Muller

Girard-Perregaux Greubel Forsey

Jaeger-LeCoultre

Jaquet Droz

Parmigiani

Richard Mille

Roger Dubuis

Ulysse Nardin

Vacheron Constantin

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000

©  Digital  Luxury  Group,  DLG  SA,  2014 11

The Growing Impact of Social Media [Benchmarking Facebook Community Size & Post Engagement Rate for Haute Horlogerie Brands]

§  Facebook  confirmed  as  a  strategic  communication  channel,  1,568  K  total  fans,  up  130%  vs.  2012   §  Improved  brand  social  efforts  in  2013  as  average  engagement  rate  increases  to  1.31%  vs.  1.24%  in  

2012    

Jan  –  Dec  2013

Eng

agem

ent R

ate

(Jan

-Dec

20

13)

Number of Facebook Fans (at end of Dec 2013)

Average Engagement

Rate: 1.31%

The Leading Market Research in the Luxury Watch Industry. Since 2004.

§  35  million  total  brand  post  views,  decreased  by  -­‐‑17%  from  2012. §  Glashüce  Original  and  Vacheron  Constantin,  which  had  strongest  year-­‐‑to-­‐‑year  evolution  also  

showed  strongest  rise  in  interest  in  Forums.  

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

Purist pro Time Zone Iwatch 365

©  Digital  Luxury  Group,  DLG  SA,  2014 12

Online Watch Forums Show Slight Slowdown [Top 10 Most Popular Haute Horlogerie Brands on Selected Watch Forums]

Jan  –  Dec  2013

Num

ber

of B

rand

Pos

t Vie

ws

Jan

– D

ec 2

013

-4.48% -9.69% -29.96% -43.79% +48.67% +53.36% -44.47% +5.73% -42.47% -43.12%

The Leading Market Research in the Luxury Watch Industry. Since 2004.

About Digital Luxury Group Digital Luxury Group (DLG) is the digital partner of forward-thinking luxury brands. With offices in Geneva, New York and Shanghai, DLG combines leading brand intelligence with bespoke digital marketing services. From creation to implementation, we empower brand strategies with our proprietary data and research. Since 2004, DLG has been publishing the WorldWatchReport™  a baseline market study for the watchmaking industry in partnership with Europa Star and with the precious support of the Fondation de la Haute Horlogerie.

Contact: Tamar KOIFMAN International Client

Development Director +41 22 702 07 60

tkoifman@digital-luxury.com

©  Digital  Luxury  Group,  DLG  SA,  2014 13

WHO ARE WE?

Visit our website to get detailed information: www.worldwatchreport.com or www.digital-luxury.com

The Leading Market Research in the Luxury Watch Industry. Since 2004.

Search Queries Extracted from search engines, the search queries collected in the WorldWatchReport™ encompass a large semantic field of 17k+ keywords related to the brands including synonyms, plurals and misspellings.

Languages Search queries are tracked in all major languages according to each key market: Portuguese, Russian, simplified and traditional Chinese, Taiwanese, Japanese, French, Italian, Spanish, German, Thai and Arabic.

Search Engines Based on Google, Bing, Yandex in Russia and Baidu in China, the WorldWatchReport  ™ covers an average of 85% search market share globally.

Data Collection and Analysis Public and professional tools are used to automate search volume collection, thanks to Digital Luxury Group’s strong partnerships with search engines. Once collected, this data is filtered, analyzed and translated into 14 intentions (brands, models, replicas, etc.) using exclusive Digital Luxury Group’s proprietary semantic analysis technology.

Brand Grouping Thanks to the contribution and feedback from several watchmaking industry experts from the media, brands and retailers, the following criteria have been taken into consideration to define 5 coherent watch brand categories: - Brand positioning (market and target audience) - Offer (average entry price of key collections) - Volume (similar volume of online demand) -  Competitive environment Harmonization As multi products brands, such as Cartier, Chopard or Bulgari, may generate significantly more search volume than watch-only brands, data is harmonized to identify watch-only demand and exclude demand for other products (for ex. “Cartier jewelry”, “Tag Heuer mobile phone”, etc.). Similar corrections have been made for brands whose names could be associated with other products, such as Montblanc, Omega or Zenith.

Social Media engagement rate The engagement rate is a qualitative indicator measuring the level of interactivity between a brand and its community on each Social Media platform. Its calculation is based on the average number of feedback (“Likes” and “Comments”) per individual post published by the brand (“Status Updates”), divided by the number of Fans on date of publication. Brand Forums Popularity on Forums is a quantitative measurement calculated as the total number of views of each post published on the dedicated sections of brands in TimeZone, PuristsPro and iWatch365 from January 1st to Dec 31st, 2012.

©  Digital  Luxury  Group,  DLG  SA,  2014 14

METHODOLOGY.