Global Swiss watch exports (wristwatches) reached a value of CHF 20.5 billion (£17.2 billion) during 2019, up 2.6% relative to 2018. Applying a retail mark up and adding sales generated in Switzerland results in global retail sales of Swiss watches of approximately CHF 50.7 billion (£42.6 billion) (Source: Morgan Stanley Research). During the first half of 2020, Swiss watch exports have declined, reflecting the COVID-19 related closure of both production facilities in Switzerland and retail distribution globally.
The luxury end of the market, on which the Group is focused, has outperformed in recent years. In particular, exports of luxury watches with a price of over CHF 3,000 (c. £2,400) rose 7.3% during 2019 and now represent 69.1% of total global Swiss Watch exports (vs. 65.2% two years ago). Note the basis of pricing relating to Swiss Watch data is a mixture of intercompany, wholesale and distributor pricing.
The luxury market for Swiss watches is resilient and driven by long term price increases and volume growth. The industry is characterised by a structural imbalance between supply and demand, reflecting the faster rate of increase in demand relative to production. In addition, global Swiss luxury watch sales are concentrated amongst a relatively small number of key brands which actively manage and control the distribution of their products, primarily through third party retailers, in order to preserve exclusivity and enhance brand positioning.
The luxury Swiss watch industry is highly concentrated amongst the top brands, led by Rolex, which is the leading brand globally and in both the US and the UK. The Group’s sales mix is aligned with the market with the top seven brands representing 73.9% of Group revenue. These top seven brands are the same across both the UK and the US markets:
- Patek Philippe
- Audemars Piguet
- TAG Heuer
Geographically, Asia is the largest market for Swiss watch exports, accounting for 53.2% of the total, followed by Europe at 30.0% and America at 14.7%. The UK and the US, the Group’s two markets, represent the fifth and second largest markets for Swiss watch exports, respectively.