ENTRY-LEVEL
“We will continue to see a decline”

“As we have already seen in recent quarters, the lowend will continue to see a decline but the mid-end is impacted, especially quartz watches. Smartwatches, like the Apple watch, are increasingly turning into health monitoring devices and therefore offer an additional benefit, which is not the case for Swiss watches in the affordable sector.”

"Smartwatches offer an additional benefit, which is not the case for Swiss watches in the affordable sector.”

POLARISATION
“Limited production, but also long-term focus”

“One of the main reasons for this polarisation is the limited production of brands like Patek Philippe (62,000 units per year) and Audemars Piguet (40,000 units) or even Richard Mille (4,600 units). But even the largest Swiss watch brand, Rolex, belongs to the category of ‘sought-after’ watches, despite its high production volume (est. 0.9mn). Its success is also explained by marketing and its very long-term focus.”

René Weber, Analyst at Vontobel Bank

DISTRIBUTION
“Large watch retailers will become even more important”

“There is a big difference between brands and their distribution strategy; the no. 1 (Rolex) and the no. 4 brand (Patek Philippe) focus on selective watch retailers, whereas other brands have a mix of own stores and third-party stores. In the watch retailing industry, we have seen a strong consolidation with Bucherer becoming the no. 1 in the world through its acquisition of Tourneau in the USA, but also the UK retailer Watches of Switzerland expanding through acquisitions. Brands will continue to reduce the number of points of sale, but the large watch retailers will become even more important in the future as brands will focus more on professional retailers. E-commerce will grow but it will continue to be a small part of the high-end watch industry. After having seen a strong expansion in monobrand stores, we do not expect many more openings as most brands now have a global network.”

"India makes up just 0.7% of Swiss watch exports, compared to 8.1% for Mainland China or even 1.3% for Thailand."

OPPORTUNITIES
“A big problem remains countries with high import taxes” “We believe there is still some potential in the world, but of course it cannot be compared to the Chinese impact we have seen in the last few years. However, there are countries which have a very small exposure to Swiss watches, which are also impacted by luxury and import taxes. For example, India makes up just 0.7% of Swiss watch exports, compared to 8.1% for Mainland China or even 1.3% for Thailand. The Philippines and Indonesia remain also very small. In Latin America, we see high import duties in Brazil and Argentina; for example, Brazil represents just 0.1% of Swiss watch exports, whereas Mexico in comparison has 1%. A change in the tax regulation is necessary for these markets to get a higher share.”

HIGH-END
“It already accounts for 89% of the Swiss watch industry”

“We believe that brands like Rolex, Omega, Cartier and Patek Philippe will continue to be a “product” which people are dreaming about. The Swiss watch industry will continue to innovate and therefore we also expect further growth for the Swiss watch industry. In terms of value, the upper- and high-end segment (export value CHF >500) already accounts for 89% of the total Swiss watch industry!”