Big, Better, Best: How The Top Five Swiss Brands Dominated Half The Market In 2022

In Swiss watch circles, “unprecedented” has perhaps been the most liberally used term, especially in the context of export numbers and market performances over the past two years. In early 2020, the Federation of the Swiss Watch Industry (FH) reported an ‘unprecedented’ collapse in exports with an 81 percent drop year-on-year. While most brands struggled to survive the after-effects of the pandemic, privately-owned companies like Rolex, Audemars Piguet and Patek Philippe revived the industry and pulled it through its biggest economic crisis since World War II.

By the end of 2020, the decline in exports had started to slow down. The Rolex Group (Tudor and Rolex) had shone through as the world’s largest watchmaking company with 26.8% market share, while Patek Philippe, Richard Mille and Audemars Piguet outperformed everyone else at the higher end of the watch spectrum.

According to Morgan Stanley’s latest annual report on the luxury watch industry, these four brands have now consolidated their positions as market leaders with a combined share of 41.7% , a good 36.7% up since 2019. Co-authored by LuxeConsult, the report predicts that the luxury watch space will only get more polarized this year with Rolex, Cartier, Omega, AP and Patek Philippe – the top five brands by revenue – accounting for 50% of the total sales.

The Star Performers

As per Morgan Stanley’s latest report card on the top 10 brands by revenue, all contestants from 2021, except Longines, performed exceptionally well last year. While Longines dropped down two ranks with a significant decline in revenue from CHF 1.5 billion in 2021 to CHF 1.2 billion in 2022, its sister brand, Tissot, completely fell off the charts. The report attributes this downfall to the brands’ over dependence on the Chinese market. In its annual report released in January, Swatch Group stated that its watch sales would have at least 25% up if not for China, where traditionally Longines and Omega have been the leading players.

 

No prizes for guessing the winner. Commanding over 29% of the market share, Rolex continues to be the invincible superstar of the luxury watch business. Despite the increase in its retail prices twice last year, the brand received a phenomenal response for its watches in both primary and secondary markets. With reported sales worth CHF 9.3 billion, Rolex recorded a rise of 21% last year as compared to 2021.

According to Morgan Stanley, the average selling price for Rolex is CHF 11,500, which means the largest volumes occur in its core collections in steel and steel and gold. The relentless demand for its key models like the GMT, Submariner, Explorer or the Daytona have created a desirability for Rolex that stands unmatched. With Jean-Frédéric Dufour at its helm since 2014, Rolex has built an impressive range of products and an aggressive market strategy, which is consistent in communication and focused on the company’s key values. 

Maintaining its position as the second largest brand by revenue, Cartier reported a turnover of CHF 2.75 billion, up 15% in 2022. As per Morgan Stanley’s estimates, only six of the 350 brands in Switzerland had posted a turnover exceeding CHF 1 billion in 2020 and Cartier was one of them. In 2021, it overtook Omega for the first time in years. The credit for Cartier’s recent rise as one of the most covetable luxury watch brands goes to its dynamic CEO Cyrille Vigneron, who has been focussing on popularizing Cartier’s vintage designs with a younger audience. Right from the Tank Cintrée to the Asymétrique, the Santos de Cartier and the Crash, there have been refreshing retakes on the brand’s icons through special editions and compelling advertising campaigns.

Swatch Group’s flagship brand, Omega, remains in the third place with sales up by 12% as compared to 2021. Thanks to the MoonSwatch hype last year, the Omega Speedmaster too got a huge boost in its overall sales. Soon after the wildly successful launch of the MoonSwatch in March 2022, Swatch Group CEO Nick Hayek told Bloomberg that the sales of all Speedmaster models, which retails for about USD 7000, had gone up by more than 50%. According to Morgan Stanley, Omega makes up two-thirds of the Swatch Group’s operational profits and commands a greater market share (7.7 %) than Cartier (7%).

Among the other growth drivers, Patek Philippe and Richard Mille jumped up a rank each on Morgan Stanley’s list. Promising to release more “modestly priced watches besides the million-dollar timepieces, Patek Philippe’s chairman, Thierry Stern, is determined to continue the brand’s legacy as an independent watchmaker. In a recent interview to Bloomberg, Stern also mentioned he won't enter the secondary market like Rolex. “I see in the past two months, the market is a little bit slower than before," he told Bloomberg but if we go by Morgan Stanley’s analysis, the brand would most likely continue its exceptional performance this year as well.

Besides Cartier and IWC, Vacheron Constantin is the third Richemont brand to make its way to the top ten in 2022. Given its outstanding performance in recent years, there are chances that it would soon join the billion-franc club along with Breitling – another heavyweight, which has recorded a revenue growth of 25% last year. As per Morgan Stanley, Breitling’s key to success has been its potential to expand in the Chinese market.

The report gives a special mention to Hermès, which has been on a steady growth trajectory in recent years. “Over the past two years, the sales momentum has picked up: sales in CHF were up +14.7%, up +1.3% and up +71% in 2019,2020 and 2021 respectively. This marks a clear outperformance vs. the Swiss watch industry over this period,” states Morgan Stanley. In 2022, the brand recorded a terrific revenue growth of 43% and its sales overtook Chopard’s, which is also a watch and jewelry brand.

A Stellar Performance By Audemars Piguet

Firmly standing at number 4, Audemars Piguet recorded one of its most outstanding years in 2022. Thanks to an amazing range of 50th anniversary specials last year, which accounted for over 90% of its sales, AP crossed the CHF 2 billion mark for the first time. 

According to Morgan Stanley and LuxeConsult, the company has tripled its sales in the last decade and this extraordinary show of strength wouldn’t have been possible without the vision of François-Henry Bennahmias, the brand’s CEO who will be leaving the brand this year. From driving an aggressive sales strategy that led AP to reach over CHF 1 billion for the first time in 2018 to establishing it as the fourth largest watch brand by sales in Switzerland in 2021, to expanding the manufacturing facility with massive investments, Bennahmias has etched his own legacy at the brand. It will be interesting to see what turn the brand would take with Bennahmias successor on board.

High Value, Low Volumes: The Trending Story of Swiss Exports

The luxury watch industry’s rebound post pandemic is nothing short of a miracle, given the fact that the exports are already at an all time high. According to the most recent report by the Federation of the Swiss Watch Industry (FH), exports in February 2023 rose to 2.2 billion francs driven by a sustained growth across all the major markets.

Though the high value of exports sounds like great news, it’s only the high-end segment that’s actually driving the numbers here. Last year, the industry exported around 15.8 million watches, which was almost 50% lower than what they were doing in 2000. However, back then, it was largely the quartz watches that were in high demand as compared to recent years when mechanical watches have taken the lead. As per FH, around 40% watch exports in 2022 were expensive mechanical watches. This has been the trend for a couple of years now and it seems the demand for quartz watches won't pick up anytime soon. 

As per Morgan Stanley, only about 25,000 watches priced above CHF 100,000 were exported in 2022 but these pieces accounted for 12.5% of the total export value. Between 2019 and 2022, the average export value of a Swiss watch went up from around CHF 900 to CHF 1500.

Exports to the United States have almost doubled (up 95%) since 2020 to a value of CHF 3.9 billion, according to the Federation of the Swiss Watch Industry (FH). “Swiss watch exports rose to 24.8 billion francs in 2022, exceeding their 2021 performance by 11.4%. Wristwatches represented over 95% of export value and generated 23.7 billion francs, 11.6% more than in 2021. North and South America achieved the highest level of growth (+23.9%) and accounted for 19% of Swiss watch exports in 2022. Asia (+4.4%) was held back by the decline in its two leading markets. After five years above 50%, it represented less than half (49%) of global exports. Asia was split between the decline in China (-13.6%) and Hong Kong (-10.5%) on the one hand, and the steady growth in other markets, such as Japan (+19.5%), Singapore (+26.4%), the United Arab Emirates (+12.7%) and Taiwan (+15.0%) on the other,” states FH.

MoonSwatch To The Rescue

One of the most high profile releases of the century, the MoonSwatch proved to be a big savior for the entry-level segment of Swiss watchmaking. The Swatch Group obviously benefited the most from this unique collaboration between two of its key brands. According to Morgan Stanley this launch helped the Group regain the top position as one of the main volume-generators for the Swiss watch industry. Around 950,000 units of the MoonSwatch were exported last year. Swatch enjoyed a 90% rise in sales to CHF 406 million in 2022, contributing to around one fifth of the total watches produced by its parent company last year.

Outlook For 2023

With China now opening up and Hong Kong getting back on its feet, the luxury watch industry can certainly hope for another ‘unprecedented’ year of growth in 2023. As per Morgan Stanley, one can expect a 3-4% rise in value but the dominant players would be the same as last year – the big brands with large market shares.