Interesting WG Pepsi GMTIIC Perspective

[bric]

Rolex is very very smart... the WG Pepsi will surely be in demand

[Starbucksboss]

Originally Posted by Steve260

I stopped in my local Rolex AD yesterday, and had a chance to spend a few minutes with the owner. During our conversation, I expressed my disappointment that the new Pepsi GMTIIC will only be available in white gold, at a retail price expected to be around $40k, and that would put it out of reach for most. If they had released it in steel in the $8k - $10k range, it would likely be a best seller. There is certainly not $30k of white gold in the new model, to justify such a high premium over the existing GMTIIC lineup.

My AD's response was interesting - like any (profitable) manufacturer, Rolex needs to plan production, within their capacity to produce, to maximize profitability. Since Rolex makes so many different models, optimizing production planning across the entire product line is a complex undertaking.

Combine that complexity with a (reasonable) assumption that lighter-colored two-color ceramic bezels may currently be somewhat more challenging/time consuming/lower yield/etc. to produce than black or darker two-tone ceramic bezels, and Rolex could be faced with a production planning choice:

1) Produce a higher quantity of Pepsi ceramic bezels for a steel watch with anticipated high demand and a lower price point, which could also necessitate reducing production for other models, or, (since Rolex sells out it's entire production each year anyway),

2) Produce a smaller quantity of Pepsi ceramic bezels, put them only on WG watches at a high price point to "control demand", and continue to maximize profitability across the entire product line. Certainly looks like that is what they decided to do.

My AD also indicated that the BLNR GMTIIC was still in short supply most places, a year after its' introduction.

Disappointing, but certainly not surprising! Of course, this is all conjecture...

In the meantime, I am glad I was able to get a BLNR GMTIIC a few months ago, since a WG Pepsi is not likely in my future!

Steve

Nonsense...it is nowhere a complex job for a retailer....it is in fact extreemly straight forward for a merchandiser / merchandise planner - ask a shoe retailer if merchandising a watch is complicated .If this is the reason then they are completely incompetant...I think not , its simply about what they concider is right in terms of elevating thier Brand as they see it...nothing technical about it.

[Steve260]

Originally Posted by Starbucksboss

Nonsense...it is nowhere a complex job for a retailer....it is in fact extreemly straight forward for a merchandiser / merchandise planner - ask a shoe retailer if merchandising a watch is complicated .If this is the reason then they are completely incompetant...I think not , its simply about what they concider is right in terms of elevating thier Brand as they see it...nothing technical about it.

Well, it may not be a complex job for a retailer, but for a production planner in an integrated material supply chain supporting dozens of product configurations, each of which can have multiple margin models depending on the overall production mix across all configurations, planning the yearly production can get pretty complex to figure out. I'm sure Rolex is very sophisticated in their production planning modeling, but (like most manufacturers), it is likely ultimately driven by only one thing: maximize profit. And Rolex is certainly very good at that!

[Starbucksboss]

Originally Posted by Steve260

Well, it may not be a complex job for a retailer, but for a production planner in an integrated material supply chain supporting dozens of product configurations, each of which can have multiple margin models depending on the overall production mix across all configurations, planning the yearly production can get pretty complex to figure out. I'm sure Rolex is very sophisticated in their production planning modeling, but (like most manufacturers), it is likely ultimately driven by only one thing: maximize profit. And Rolex is certainly very good at that!

Bit more straight forward...sales projections = open to buy. Gross margin wont change much from Rolex to retailer. Merchandizing watches is not that complex...clothing far more involved...this didn't figure in their decision to produce in White Gold...that was a marketing decision pure and simple.


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[skprd13]

Vincent
"We will never see a SS Pepsi Ceramic."

I agree!

[kmleffler]

Originally Posted by skprd13

Vincent
"We will never see a SS Pepsi Ceramic."

I agree!

X3 - at least not in my lifetime.

[DJF881]

Rolex is claiming their ability to make a red and blue ceramic bezel is a huge technological accomplishment. It's something they've been working on for years. I don't think they did all that R&D just to sell the new bezel exclusively on $40,000 WG watches.

They are putting it out in solid gold first, either to entice the purists who have been wanting a red and blue ceramic bezel for years to spend a shitload of money, or because the process by which they make the red and blue bezels isn't scaled up enough to satisfy the market for steel watches.

I'm sure there will be a ceramic "pepsi" GMT available within a couple of years, and I am sure Rolex will use the occasion to raise the price of its steel sports watches to around $11,000.

Fun fact: When the ceramic GMT launched in 2007, Rolex used it as an opportunity to jack the price up about 30%. The old GMT cost about $4500, and the new one cost $5950 at release.

[Steve260]

Originally Posted by DJF881

They are putting it out in solid gold first, either to entice the purists who have been wanting a red and blue ceramic bezel for years to spend a shitload of money, or because the process by which they make the red and blue bezels isn't scaled up enough to satisfy the market for steel watches.

I think you are right on track - if they can't yet scale the red/blue bezel manufacturing process up enough to meet the market for steel watches, then put it on WG only and make a ridiculous per-unit profit from those who buy it!

[submariner66]

Originally Posted by DJF881

Rolex is claiming their ability to make a red and blue ceramic bezel is a huge technological accomplishment. It's something they've been working on for years. I don't think they did all that R&D just to sell the new bezel exclusively on $40,000 WG watches.

They are putting it out in solid gold first, either to entice the purists who have been wanting a red and blue ceramic bezel for years to spend a shitload of money, or because the process by which they make the red and blue bezels isn't scaled up enough to satisfy the market for steel watches.

I'm sure there will be a ceramic "pepsi" GMT available within a couple of years, and I am sure Rolex will use the occasion to raise the price of its steel sports watches to around $11,000.

Fun fact: When the ceramic GMT launched in 2007, Rolex used it as an opportunity to jack the price up about 30%. The old GMT cost about $4500, and the new one cost $5950 at release.

Wow! 2007 was a big turning point then!?

[kilyung]

Apparently the Pepsi insert is slightly different. Sufficiently such that it is incompatible with the SS bezel. Sorry guys, looks like you'll have to get the WG GMT.

[theseira]

Originally Posted by kilyung

Apparently the Pepsi insert is slightly different. Sufficiently such that it is incompatible with the SS bezel. Sorry guys, looks like you'll have to get the WG GMT.

Yeah seems like it!

I was thinking about getting the sweet 718 but held off. I guess I will get the pepsi instead once the hype dies down of course.

[globalmedia33]

I really like the new Pepsi GMTIIC but my wallet did not allow me.

[The GMT Master]

From what I've heard from those who have been to Basel and spoken with Rolex directly, there are two big points. The first, as Mike has mentioned above, the Pepsi ceramic bezel is thicker compared to the current ceramic inserts - therefore, you will not be able to swap one from the WG model to a SS model. The second point is that it is a much more complex chemical process than the one used on the black/blue (which isn't exactly straightforward in the first place!). The figure being mentioned is that if the Pepsi insert was added to a steel model, it would add £2k onto the asking price. Would people pay £8000 for a steel GMT? I think it would be a very tough sell

Chris

[build4boost]

We all know Rolex does not make the same model/ color combo in SS and Precious metals. So... The Pepsi will always be in WG and never in SS.
I could care less because I don't like colored watches, but I understand why most people are up in arms about the iconic "pepsi" GMT being more exclusive since its in WG.