An Overview of the State of the Swiss Watch Business in 2021

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Rolex Oyster Perpetual Cosmograph Daytona. Picture: Rolex

The Federation of the Swiss Watch Trade (FH) experiences that 2021 was a file 12 months for the commerce, with Swiss watchmakers registering CHF22.3 billion in export worth, which is a brand new file. This file was established in 2014 on the again of CHF22.25 billion value of exports; the FH bases its experiences on the export worth of the watches, not gross sales to finish clients.

Whereas this may increasingly look like astonishingly excellent news, and we are going to break it right down to some key efficiency notes from some teams and independents, it masks some key information. Chief amongst that is the continued downward development by way of quantity, with solely 15.7 million timepieces exported. This can be a decline of 4.9 million in contrast with 2019, and is essentially due to an enormous drop within the export of watches underneath CHF500. Unusually, the biggest watchmaking group of all, the Swatch Group reported development (versus 2020) in all segments, excessive and low, though this can be because of greater gross sales within the above CHF500 class inside the varied manufacturers. 

Tissot PRX Powermatic 80Picture: Tissot

The FH report highlights our personal concern about under-realised potential in all classes of watches underneath CHF3,000. To have a look at one thing particular between CHF500 and CHF3,000, the instance of the Tissot PRX is telling. Experiences from all around the world point out that the mannequin, each quartz and computerized, is extremely sought-after however it’s alone in drawing this form of curiosity (in its personal worth class).

It is usually value noting that Tissot had been underneath stress (reportedly from shareholders) to ship the form of watch that might problem smartwatches in recent times, and it has alleviated that stress by working round it. Nonetheless, Swiss watchmakers will nonetheless have to search out a solution to the smartwatch — and meaning taking the combat to Apple in fact. To be honest right here, the Japanese giants have additionally but to search out the fitting product programming to counter the smartwatch.

Picture: TAG Heuer

Transferring on, Audemars Piguet made waves by staying constant all through the pandemic, resulting in revenues of CHF1.6 billion in 2021 (in contrast with CHF1.2 billion in 2019). The Le Brassus agency is thought for reaching greater gross sales figures by focussing on improved worth somewhat than on elevated manufacturing, and has beforehand attributed its development to this technique. Improved worth right here means promoting a watch in gold versus metal, or pricing metal watches on the stage of gold, after which upping the value of gold fashions as nicely. As soon as once more, watch manufacturers exhibit that the trail to success lies in transferring up the worth chain, somewhat than growing quantity. 

parmigiani fleurierTonda PF Chronograph in rose gold and Tonda PF Annual Calendar in metal. Picture: CHING@GREENPLASTICSOLDIERS

Returning to the main teams, Richemont posted a 20 per cent improve in gross sales (over 2019 figures) throughout all watchmaking manufacturers in 2021 (April-December). Swatch Group, then again, reported that web gross sales for the calendar 12 months 2021 remained down versus 2019 to the tune of seven.4 per cent. The Group didn’t reveal efficiency by model nor by worth class so it’s inconceivable to know if the unfavourable result’s right down to the aforementioned drop within the lower cost segments. Swatch Group anticipates double-digit development for this 12 months general so maybe there’s a plan that builds on the success of the PRX.

As for LVMH, the world’s largest luxurious conglomerate, 2021 was a banner 12 months, due to the inclusion of Tiffany & Co. outcomes for the primary time. Even with out the model — which is now the group’s largest jewelry asset — LVMH beat its 2019 efficiency by 9 per cent. If one contains Tiffany & Co., income greater than doubled, hitting near €9 billion.

patek philippe tiffany and coPicture: Patek Philippe

Maybe essentially the most attention-grabbing little bit of commerce information not too long ago got here from one other conglomerate, Kering. The group introduced it was divesting from the 2 high quality watchmaking manufacturers it owns, Ulysse Nardin and Girard-Perregaux, with the administration crew of these manufacturers taking them unbiased. Patrick Pruniaux, CEO of each Ulysse Nardin and Girard-Perregaux, will thus stay within the hotseat, and has offered the primary particulars of this growth to Hodinkee, courtesy of an unique interview. This is perhaps a key growth, due to all the eye showered on the main unbiased watchmaking manufacturers. Though he doesn’t explicitly say so, the potential for Ulysse Nardin and Girard-Perregaux as manufacturers working exterior the prerogatives of a publicly traded group is powerful. 

On that observe, Rolex (and Tudor), Patek Philippe, Chopard, Franck Muller, Richard Mille and Breitling launch figures in their very own trend (that’s to say in no way, in some circumstances). Some are chasing development whereas others are solely involved with pursuing internally constant values. Whereas we await the Morgan Stanley annual report on the watch business (out in March this 12 months), we observe that the 2021 report already had the Wilsdorf Basis (proprietor of Rolex and Tudor) beating each different main group, with some 26.8 per cent of retail market share in 2020.

Patek Philippe Ref. 5905, 2021Picture: Patek Philippe

Whereas not fully correct, one can use that market share alongside with the FH information to estimate mixed income for Rolex and Tudor in 2021. The explanation that is removed from correct is that the FH measures export worth, not precise gross sales of watches to finish clients, and the market share report considerations solely Rolex. Presumably then, Rolex and Tudor have earned greater than CHF5.98 billion in 2021, or greater than the CHF7.3 billion posted by Swatch Group (with an estimated market share of 25.2 per cent). If anybody would verify it, the second risk could be really noteworthy. 

cartier tankPicture: Cartier

Anyway, anecdotal experiences about demand for Rolex watches particularly inform us that we must always anticipate excellent numbers from the model, though provide disruptions could also be considerably liable for the present crunch. The RealReal modestly experiences that pre-owned 126610LN references are value 260 per cent of the beneficial retail worth. Spectacular capital appreciation apart, this determine additionally signifies that the watch is troublesome to purchase new from authorised sellers — and that anybody who by some means manages to take action has purchased one thing value excess of the sticker worth. 

We are going to little doubt return to those information and figures as soon as the brand new Morgan Stanley report is out, however we observe with curiosity that The RealReal experiences robust collector curiosity in shopping for (pre-owned) Cartier and Franck Muller watches.

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