The Swiss watch industry is booming. So far, neither the Ukraine war and the associated energy crisis, nor the fears of hyperinflation and recession have affected the industry. Business is in full swing, especially in the USA.
Not so many Swiss watches were exported abroad as in 2022 when calculated in francs before. According to the data recently published by the Swiss Watch Association, watch exports broke the previous year’s record eleven months later. They reached CHF 22.8 billion, an increase of 12 percent; It was 22.3 billion for the whole of 2021.
Every sixth watch goes to the USA
The demand for Swiss watches is particularly high in the USA. Between January and November, watches worth CHF 3.58 billion were shipped to the USA. This was almost 28 percent more than the previous year. This means that about every six sentries leave Switzerland for the USA.
“The demand and growth potential in the US is huge,” Nick Hayek, 68, president of watch company Swatch, said in a recent interview with Bloomberg TV. Hayek believes that US consumers will continue to buy products that radiate “emotion and joy.”
“The younger generation in particular recognized the great prestige, tradition and know-how that went into Swiss watches,” says ZKB luxury goods specialist Patrik Schwendimann, trying to explain the success of the industry in the US. Not only luxury watches are sold here, but also watches from lower price segments.
Moonswatch flying high
First of all, with Moonswatch launched nearly nine months ago, Swatch is again attracting a younger audience for its products. In recent years, smartwatches like the Apple Watch or fitness trackers have been competing with cheaper watches for wrist space. The eleven Moonswatch models are based on the design of the Swatch brand Omega’s cult watch Speedmaster Moonwatch, priced at just 250 francs each.
People still line up in front of Swatch stores around the world for the coveted and rarely found Moonswatch. When asked by AWP, a spokesperson for the group said that the demand is so great that Swatch needs to continuously increase its production capacities. However, Swatch does not give specific figures for individual brands and models.
Corona measures reduce Chinese sales
After months of growth, the US has overtaken China as the most important market for Swiss watches. Watch exports to China fell 13 percent from January to November, to CHF 2.4 billion, due to the corona measures. Exports to Hong Kong, the former Eldorado of the luxury goods and watchmaking industry, also fell (from -10 percent to 1.8 billion). Meanwhile, China has relaxed its strict corona rules.
Other Asian markets are now catching up, such as Japan (+19 percent to 1.6 billion) or Singapore (26 percent to 1.5 billion). And Europe continues to recover from the Corona collapse in 2020. This is particularly evident in the UK, Germany and France, where Swiss watch exports increased by a fifth or more during the year. Europe should also benefit from the travel passion of US tourists.
However, experts predict that growth in the luxury goods business will slow in the new year. Schwendimann assumes that Swiss watch exports will also slow down sharply due to the slowdown in the US economy. But in the long run, he believes the US market offers more growth opportunities.
uncertain future
Vontobel analyst Jean-Philippe Bertschy also expects growth to normalize, especially in the US. For the coming year, however, he expects a low to mid-single-digit percentage increase in watch exports. Price increases are likely to play an important role and China could become a support depending on the Corona situation.
When it comes to the Chinese market recovery, industry representatives are still skeptical of a study conducted by consulting firm Deloitte at the end of the summer. Just over half of those surveyed expected growth in China. Not even a third were optimistic about business in Hong Kong.
Watch Association (FH) President Jean-Daniel Pasche is also cautious. “We expect the positive trend to continue in an uncertain environment,” he said in an interview with Keystone-SDA. While business in Russia, which accounted for about 1 percent of export volume before the war, has virtually come to a standstill, Pasche hopes for a recovery in China, for example. The New Year’s Eve festival, which is also important for the watch industry, starts here on January 22. (SDA/shq)