In 2015, for the first time, watches priced at over CHF 15,000 (over CHF 35,000 retail price) constituted the biggest export category in terms of value. Analysis.

Swiss watch exports can be divided into four main price categories, each of which contributes around one- quarter of the total value, which was between CHF 4.5 and CHF 5.5 billion in 2015. The categories are as follows: watches under CHF 2,000; between CHF 2,000 and CHF 5,000; between CHF 5,000 and CHF 15,000; and finally watches over CHF 15,000. This latter category, which represents watches with a retail value of more than CHF 35,000, was in 3rd place back in 2008. In 2015 it became the leading category of Swiss watch exports.

The resilience of luxury exports in times of crisis was confirmed in 2015. The category of watches over CHF 15,000, which had held up particularly well during the 2009 crisis, has experienced exceptional growth since then, reaching a record in 2014 of CHF 5.62 billion.

• In 2015, the downturn in this category was significantly less than in the other categories, recording a decline of just 2.11%.
• If we were to eliminate this category from our analysis, the 2015 export situation would have recorded a drop of 4.33% rather than 3.77%. After excluding timepieces worth more than CHF 30,000 (CHF 75,000 retail price) from the total, this figure would have been 4.8%.

 OVER CHF 30,000 CATEGORY GREW BY 2.8% IN 2015

• The relative good health of this category is driven by extreme luxury. The CHF 15,000–30,000 category actually fell more than 7.4% in value, while the over-CHF 30,000 grew by over 2.8%.
• Exports of this category reached almost CHF 3 billion, nearly 15% of total Swiss watch exports in 2015. This trend has been repeated every year since 2012.

 VALUE RISES, QUANTITY FALLS

While this category experienced the smallest fall in value in 2015, the situation in terms of quantity is the opposite.

• Volume fell a record 5.38%, compared with, at the other extreme, a drop of just 1.57% for watches under CHF 2,000.
• It is worth noting that this decline represents just 10,000 units, compared with more than 400,000 units in the lowest category.
• Watches over CHF 15,000 represent just 0.6% of total export volume, with 166,000 units in 2015, compared with more than 26 million units for the lowest category, watches under CHF 2,000.
• Like the evolution in value, the evolution in volume confirms that the over-CHF 30,000 category performed better than the CHF 15,000–CHF 30,000 category, although growth appears to be slowing.
• In 2015, 500 fewer watches over CHF 30,000 were exported compared with 2014, as opposed to 9,000 fewer in the CHF 15,000–30,000 category.
• After doubling between 2009 and 2013, the volume of exports valued at over CHF 30,000 appears to have stabilised at around 40,000 units. • This is perhaps a weak indication that the market may have reached a plateau with its target clientele.

 EVEN THE EXTREMES ARE MODERATING

In 2015, watches over CHF 15,000 were the only category to see an increase in their average price, which was CHF 48,522.

• This increase nevertheless remains consistent with previous years, and has the effect of moderating the temporary 10% dip we saw in 2013.
• Here too, the average price in this category is strongly influenced by the more expensive pieces, as demonstrated by the surge in watches valued at over CHF 30,000, which reached an average price of CHF 79,059.
• This is slightly higher than 2014, though still below the record of CHF 80,673 we saw in 2010.
• The average price of watches between CHF 15,000 and CHF 30,000 dropped, however, by 0.64% to CHF 19,909, slightly below the historic record of CHF 20,039, which was set in 2014.

 PRINCIPAL EXPORT MARKETS OUTPERFORM IN EXTREME LUXURY AND MITIGATE THE SLUMP IN HONG KONG

• Geographically speaking, the fall of nearly 25% in exports to Hong Kong was largely mitigated by the other key markets.
• In 2015 Hong Kong nevertheless still represented 18.3% of watch exports over CHF 15,000, compared with 23.8% in 2014.
• While the world’s top 15 watch importers recorded an overall decline in imports of 4.8% in 2015, across all categories, compared with just 2.19% in all the other countries, the over-CHF 15,000 category experienced exactly the opposite phenomenon, with a decline of just 0.8% in these countries, compared with an 8% drop in all the others.
• This once again shows the resilience of high-end watches in the main export markets.
• Thus, of the top 15 export destinations for the category of watches over CHF 15,000, which alone represent 83.5% of their total value, only three experienced a downturn: Hong Kong, the United Arab Emirates and Spain.
• The USA, which is the second-placed market in this cate- gory, grew by 2.7% while Europe outperformed, with a rise of 38.1% in the United Kingdom, 6.1% in France, 8.2% in Italy and 1.6% in Germany.
• In Asia, Singapore recorded growth of 5.5%, Japan 13.5%, Taiwan 5.8%, South Korea 22.4% and even China grew by 30.3%.
• In the Middle East, Qatar and Saudi Arabia rose by 23.4% and 23.8% respectively.
• Conversely, the United Arab Emirates, which these days can be seen mainly as a re-export platform, declined by 7.6%, Spain by 2.1% and Hong Kong by 24.8%.
• Looking at watches over CHF 30,000, growth reached record levels in these same countries, with +10.3% in the USA, +44.4% in the UK, +10.5% in France, +13% in Italy, +3.7% in Germany, +13.1% in Singapore, +15.3% in Japan, +14.7% in Taiwan, +24.7% in South Korea, +54.3% in Saudi Arabia and +67.42% in China, despite the anti-corruption measures that have been widely implemented in the country.

 OUTLOOK

As every year, these figures do not take into account inter-market re-exports, or re-exports from the Swiss and Liechtenstein markets, whose importance remains directly proportional to the volume of tourists, largely from Asia, who travel there, and probably even in 2015 helped to make them one of the top five world markets for Swiss watchmaking.
Also, the re-exportation system continues to produce a significant bias, as can be seen from the evolution of exports to the UAE, where many brands have set up Asian export hubs. Nevertheless, this study remains one of the only sources of reliable data on the evolution of a market whose development is always dependent on that of the extreme luxury sector, whether in a period of growth, or slowdown, or widespread crisis such as we saw in 2009, and that which our economies have been dealing with since 2015.
At a time when the Swiss watch industry appears to be faced with another difficult choice between volume and exclusivity, the figures in our study cannot provide any definitive answers; they nevertheless offer a clear insight into the major trends in the current markets, and the increasingly deep rift between two diametrically opposed but strongly growing sectors: mass market and ultra-luxury.

As an adjunct to the official statistics of the Federation of the Swiss Watch Industry, which considers almost two-thirds of the total export value in one chunk – the notorious ‘over CHF 3,000’ category – Opus Magnum has for several years, in cooperation with the Swiss Customs Service, endeavoured to analyse these export figures in a way that is more representative of the evolution and structure of the market.
This has led to the identification of four main price categories, each representing around 25% of export value, along with seven further sub-categories in the ‘over CHF 3,000’ segment to supplement the values defined by the FH. This has made it possible to paint a far more granular and representative picture of how the market, which for a number of years has been characterised by an increasingly important luxury sector, is evolving.

For further details, please contact the authors of this study: [email protected]

Source: Europa Star February/March 2016 Magazine Issue