Breitling – Andreas Holzmueller & Luke Chapman (Partners Group)

“Partners Group spent 12 months as minority owners before acquiring control. Luke Chapman described this as a very unique inside-out diligence process, wishing every time they took controlling stake they could spend 12 months with the team in advance. During this period, they were genuinely surprised by the quality of the strategic agenda and the pace at which Breitling implements things.”— Luke Chapman

Strategy & Decision Making · Operations & Execution · Business & Entrepreneurship

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12 months inside access beats any outside diligence

“When Partners Group made the minority investment in Breitling in 2021, it was a challenging time to underwrite. The company had just come out of COVID with a lot of noise in the numbers: closed markets, closed stores, and then the bounce back. Through long-term thematic work they had been doing for years, they were able to get comfort around the sustainable revenue base and ultimately pay the winning valuation.”— Andreas Holzmueller

Strategy & Decision Making · Business & Entrepreneurship

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Minority stake as option on future control

“Breitling's brand repositioning under Georges Kern involved shifting from a very macho, aviation and automotive focus to positioning the brand much more broadly to consumers who maybe weren't aviation enthusiasts but still had an interest. The wings were removed from the logo, controversial for a brand with that history. The boutique design became an industrial loft feel with exposed brick, mezzanine with a bar, possibly a surfboard and motorcycle in the store.”— Luke Chapman and Andreas Holzmueller

Business & Entrepreneurship · Creativity & Innovation · Psychology & Behavior

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Logo, space, story: three levers of brand shift

“On the smartwatch threat, Partners Group spent significant time understanding what role the Apple Watch plays in the mindset of a consumer of a luxury watch. Apple sells 80 million smartwatch units per year; the Swiss watch industry sells 16 million units. The market had completely changed. They surveyed consumers and found that amongst luxury watch communities in the above $5,000 price category, the smartwatch is actually a very complimentary product.”— Luke Chapman

Strategy & Decision Making · Psychology & Behavior · Technology & Engineering

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Different jobs to be done: utility vs status

“Partners Group's thematic investing refers to identifying pockets of strong secular growth and doing real in-depth research on these market niches over years with disproportionate resources, teams working only on these themes, building networks with executives and advisors. This process can go on for years until they ultimately make an investment. It's very much about understanding the environment you're investing in, in detail.”— Andreas Holzmueller

Strategy & Decision Making · Business & Entrepreneurship

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Years of research before single investment

“Partners Group conducted a big survey of luxury consumers and talked to wholesale dealers trying to understand why consumers were buying Breitling. The main topic: how sustainable and what is the quality of the growth. The findings were very clear that there was a consumer finding that this product suddenly resonated with them and the brand message suddenly resonated.”— Luke Chapman

Strategy & Decision Making · Psychology & Behavior

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Consumer evidence over expert opinion

“Luke Chapman on investment decision-making in brands: finding a way to rationalize and build conviction when you've got many strong opinions in an industry with many enthusiasts. They had to distill all the information, the view from the channel, the view of the consumer, and come to an investment decision while assessing that you may not be right on some points. That's the nature of investing in brands: the range of outcomes is broader than in certain other sectors.”— Luke Chapman

Strategy & Decision Making · Psychology & Behavior

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Fewer ways wrong than right: decision heuristic

“The US luxury watch market presents a substantial penetration opportunity. Despite having five times the population of the UK, the US consumer spends only 20% of what the UK consumer spends on watches.”— Luke Chapman

Business & Entrepreneurship · Economics & Markets

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Personal stories unlock market penetration