Swiss watch industry’s top 50 brands for 2023
A breakdown of Morgan Stanley and LuxeConsult's "Seventh Annual Swiss Watcher"
Morgan Stanley and LuxeConsult have just published their latest annual report on the Swiss watch industry… Unsurprisingly, nearly every interesting chart in the report has the following note: “This chart cannot be reproduced without Morgan Stanley's express authorization” - oh well! The purpose of this post is to save you the hassle of reading the entire 43 page report - hopefully you find it useful.
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Executive summary
In 2023, Swiss exports of watches amounted to CHF 25.5 billion, marking a 7.7% increase compared to 2022 and a substantial 24.5% increase compared to 2019, as reported by the Federation Horlogere Suisse (FHS). The wholesale market worldwide stood at approximately CHF 25 billion, representing about 45% of the global watch market in value and 1.8% in volume (900 million watches sold). At the retail level, the total value reached around CHF 50 billion (ex VAT), implying a typical multiplier of 1.6x of wholesale sales. (Side note: don’t ask me how this is 1.6x and not 2x, nor what the 1.8% represents … I am just the messenger!)
In terms of industry volumes, 16.9 million units were exported in 2023, up 7.2% from 2022, with 10.6 million quartz and 6.3 million mechanical watches. Despite this growth, the total number of units has declined by 35% since the 2008 recession and 43% since the peak in 2011. Notably, nearly all of the industry’s growth in units (1.1 million additional) is attributable to the success of the Swatch brand, particularly the MoonSwatch.
In value terms, the market has seen modest growth since 2008 (from CHF 15.9 billion to CHF 25.5 billion), with higher-priced brands like Rolex, Patek Philippe, and Audemars Piguet driving growth, while entry-level and mid-range Swiss watches have contracted. The appreciation of the Swiss franc against major currencies has also influenced market dynamics.
The US market accounted for 15.6% of total exports in 2023, up from 10% in 2012, with Swiss watch exports growing by 7%. Brands over exposed to the US, such as Rolex and Breitling, have benefited from this growth. However, despite recent growth, the US market remains underpenetrated compared to other key geographies.
In Greater China, Swiss watch exports increased by 15% in 2023, following a decline in 2022. That said, the cumulative growth rate between 2018 and 2023 has been modest, despite significant local spending by Chinese nationals. Sales of fashion and leather goods luxury items in Greater China outpaced Swiss watch sales in 2023, reflecting shifting consumer preferences. The appeal of Swiss watches to Chinese nationals remains a key factor to monitor, as China is expected to drive growth in the Luxury Goods sector in the future.
Key findings and takeaways from the industry analysis include:
Polarisation and Premiumisation: The Swiss watch industry continued to witness increased polarisation, with larger brands such as Rolex, Patek Philippe, Audemars Piguet, and Richard Mille gaining further market share. These brands, often privately owned, exhibited strong desirability and premiumisation trends, with lengthening waiting lists and increased market dominance.
Swatch Group Performance: Brands under the Swatch Group, particularly Swatch and Tissot, performed exceptionally well, driving significant volume and sales growth. Swatch saw a remarkable increase in sales (63%) and volume, accounting for a substantial portion of industry growth. Tissot’s success, driven by the PRX line, also contributed to the group’s strong performance.
Market Share Dynamics: Privately owned brands, including the ‘Big 4’ (more on this later), continued to gain market share, while listed companies such as Richemont, LVMH, and Swatch Group faced challenges. Despite the success of individual brands within these groups, overall market share declined for some, indicating a shift in industry dynamics.
Entry Price Range and Smartwatch Impact: The entry-level segment faced challenges from smartwatches and other factors, with approximately 80 million smartwatches sold worldwide in 2023. However, brands like Swatch and Tissot defended this price segment against competitors, including fashion brands and micro-brands.
Emergence of Independent Brands: The year marked significant growth for independent watch brands, with three (F.P. Journe, H. Moser & Cie, and Greubel Forsey) making it into the top 50 rankings. While their economic impact remains relatively small, their creative initiatives have influenced institutional brands and attracted wealthy watch collectors.
Retail Market Dynamics: Rolex emerged as the dominant Swiss watch brand, surpassing the CHF 10 billion sales threshold and claiming a 30.3% retail market share. Vacheron Constantin entered the ‘Billionaires Club’, achieving over CHF 1 billion in sales. Notably, premium watches with retail prices exceeding CHF 25,000 drove significant growth and value in Swiss watch exports.
Overall, the report concludes that 2023 showcased the resilience and evolution of the Swiss watch industry, with notable performances from established brands, successful defense against emerging challenges, and the emergence of new players shaping market dynamics.