Observations from the 2020 Swiss Watch Industry Report
The Independents continued to fare well despite the challenges from pandemic
Earlier this month an annual research report on Swiss watch industry by Morgan Stanley and LuxeConsult was published. While it is hard for watch enthusiasts to get hold of the complete report, the key data points and graphics were reported in a few watch media including Watchpro, Monochrome, and SJX. The founder of LuxeConsult Mr. Oliver Müller also posted an article (in French) to offer information and insights.
The report listed the estimated revenues of top 50 swiss watch brands in 2020. The big news is that Rolex’s market share grew to 25% of the total to become the undisputed king. All of these information and data are just fascinating and very useful to watch lovers and collectors. For example, a data point that was not mentioned in any of the media articles was the inclusion of F.P. Journe in the top 50 brands based on revenue of CHF 26M in 2020. I include some of the tables and diagrams from this report to the Appendix of this article for record keeping and ease of reference.
Based on the data and information in the report, we may derive some additional insights that may be relevant to watch collectors. A trend in recent years is the polarization of the industry with more expensive watches expanding in sales while lower end watches suffer from inroads by the smart watches. It would be useful to look at the top brands with the highest average selling prices to understand who have been driving this trend. In the table below, it is not surprising to see that Richard Mille is at the #1 position with average price of CHF183K, followed by F.P. Journe in the #2 position with average price of CHF69K. It is quite interesting to see that the average prices of watches from Lange, Patek, and AP are in a tight range around CHF35K.
The 2020 data showed that Swiss watchmakers incurred lower production volumes due to mandatory factory shutdown during the pandemic. The lower production inevitably translated into greater scarcity for the popular models and higher prices in the secondary market. If you managed to get a new timepiece from Lange or Journe in 2020 (and 2021 up to now), consider yourself extremely lucky.
There is a color-coded table in the research report (see below Figure 9) showing the top 20 brands in 2017, 2018, 2019 and 2020. It is quite informative to see which brands were in the rise and which were in the decline, as measured by relative market shares. We may create 3 tables to examine the status more clearly. In the table with expanding market shares, we see none of the brands from the major watch conglomerates. The independent watchmakers were definitely doing better in expanding the market shares. It is worth mentioning that Tudor was one of very few brands who actually saw revenue increase in 2020 due to their strong product positioning.
In mid-2018, Mr. William Massena gave a fascinating and thought-provoking lecture on the “Swiss Watch Industry 20 Years into the 21st Century” at the Horological Society of New York. I watched the YouTube videos three times and I learned something new each time. One main takeaway from the talk was that the independents including Rolex, AP, Patek and Richard Mille were winning over the big groups, while LVMH was doing better than other watch groups. It looks like that the status of the Swiss watch industry continued from 2017 to now based this latest industry report, namely the independents continued to fare well. In addition to the top independents, we saw that Breitling was making great stride and F.P. Journe had moved into the top 50.
As watch enthusiasts and collectors, we sincerely wish the watch industry to recover from the pandemic quickly and continue to flourish going forward. We’d love to see the brands innovate and produce new masterpieces. Therefore, it is in our best interest to keep ourselves informed on the industry status and the performance of the brands. With Watches and Wonders 2021 coming in April, it looks like shaping up a great year ahead of us. It is a good time to be a watch lover indeed.
Appendix