SPEEDY RECOVERY
Record-breaking success paves the way for the Swiss watchmaking industry to greater heights.
2021 SAW A FASTER than expected recovery for Swiss watch exports. Performance was driven by very strong growth in the United States, alongside a steady upward trend in China, while numerous other markets continued to face sometimes significant difficulties. The return to pre-crisis levels as early as September and positive performance in the fourth quarter produced the best-ever annual results for the sector, at 22.3 billion francs, 2.7% higher than in 2019 (+31.2% compared with 2020) and a 0.2% improvement over the 2014 record.
While the pandemic continued to make its presence felt throughout the year, its consequences for the watch market proved less severe. Overall, luxury personal goods benefited from the sharp increase in demand in China and the United States, additional opportunities created by digitalisation, the use of savings accumulated during the various lockdowns and more significant restrictions on luxury experiences, particularly tourism-related activities. While travel retail suffered from the decline in tourism, an increase in domestic purchases, a switch to digital channels and the development of the duty-free market in Hainan offset losses to some extent.
Despite the encouraging results overall in 2021, stark discrepancies existed between the various actors in the luxury sector and in Swiss watchmaking. Growth was driven more by a set of brands than by product categories as in the past, while others were proving less successful and, in some cases, suffering significant declines. The same polarisation is being seen in markets and price segments, as evidenced by the decline in volumes.
Exports of wristwatches increased by 3.5% compared with 2019, to 21.2 billion francs. The number of items, however, continued to fall, to 15.7 million. This is a decline of 4.9 million (-23.8%) compared with 2019. Watches priced at less 500 francs fell sharply, accounting for over 95% of the decline in volumes, with a 25.1% drop in their export value. The decline in value for watches priced between 500 and 3,000 francs was significantly less marked, while watches priced at over 3,000 francs grew by 9.7%.
The United States (+27.8%) witnessed remarkable growth throughout the year and was once again the leading market for Swiss watch exports. China (+48.8%) came in just behind, thanks to continuing steady growth. Between them, these markets represented 27% of total value and accounted for most of the growth observed.
In spite of the still precarious health situation, luxury personal goods saw increased demand in 2022 with an excellent first six months in terms of value and volume. There was an increase of watch exports to most markets with the notable exception of China and Hong Kong. The downturn in macroeconomic, geopolitical and health conditions has by and large only had a limited impact on the sector’s results to date.
Swiss watch exports between January and June 2022 amounted to 11.9 billion francs, representing a growth of 11.9% compared with the first semester in 2021. While 70% of this increase stems from mechanical watches made of precious metals or steel, the other categories also contributed to the overall upward trend. The remarkable increase in exported watches should also be noted.
Forecasts for the Swiss watch industry in 2022 remain optimistic, despite a less favourable outlook overall and a higher degree of uncertainty. Watches will continue to benefit from a sustained demand and the appeal of the luxury market. However, the sector’s turnover will be impacted by several obstacles such as difficulties in the supply of raw materials and investments, the rising cost of energy and transportation, the lack of manpower and the strength of the Swiss franc.
Wristwatches accounted for more than 95% of watch exports in terms of value. They breached the 11 billion
franc mark (11.3 billion) for the first time in the first half of this year with an increase of 11.9%. The corresponding number of parts also rose to 7.2 million units (+3.2%). This means that an additional 225,000 watches crossed Swiss borders between January and June. Notwithstanding this welcome growth, the industry is at an all-time low, attaining less than half of the figures recorded ten years ago. Mechanical timepieces have enjoyed a significant upturn, despite a drop in volume (-3.3%).
Quartz watches recorded an even more notable upward trend, which led to an overall rise in volume thanks to an increase of 8.2%. Watches priced at over 3,000 francs (export price) accounted for most of the growth in terms of value (+15.5%). The 500-3,000 francs category (+6.0%) also contributed to this growth, while the 200-500 francs category (-19.1%) suffered a sharp drop. This category experienced a comparative decline in volume (-16.8%) visà-vis the trends of all the other categories, which saw a significant increase in their number of parts.
The majority of markets showed clear growth. Leading the way, the United States (+31.4%) was testament to the fact that demand is still high, and its market alone absorbed nearly 16% of Swiss watch exports. The US market benefited in particular from additional deliveries as a result of the difficulties affecting distribution in China. In Asia, the Chinese market (-26.3%, of which -43.3% in the second quarter) was significantly disrupted by the anti-Covid measures in April and May. However, with 1.1 billion francs in six months, China lies significantly above its pre-pandemic results (+19.3%). Hong Kong (-11.5%) was also down, showing no real change from previous years. All other Asian markets have achieved significant growth.
Markets in Europe showed an even more marked upturn, for example: the United Kingdom (+31.8%), Germany (+25.4%) and France (+36.5%). The only exception was Russia (-64.3% in the first half of the year and -98.3% since the start of the conflict), but this did not have a major impact on the overall result (-0.7%).
FROM WEST TO EAST
WITH SPRING IN GENEVA, AUTUMN IN HAINAN AND THEN SHANGHAI, WATCHES AND WONDERS IS CONSTANTLY ON THE MOVE, REFINING AND RENEWING ITS VISITOR EXPERIENCE IN THE PROCESS.
At the largest watchmaking summit ever held in Geneva, Watches and Wonders 2022, international launches of new watchmaking products demonstrated extraordinary creativity, while a vast digital offering, including panels and keynotes, generated fruitful discussions and hundreds of millions of views on social media. The “salon of many wonders” exceeded expectations and ended on the highest of notes.
By bringing the main players in the watchmaking industry together in one place, Watches and Wonders Geneva enables the industry to speak with one voice. For its first physical event under its new name, Watches and Wonders Geneva is set within a favourable context for the Swiss watchmaking industry. The 2022 salon produced strong results for the exhibiting maisons, and occasionally exceeded all expectations, with some brands selling out of their new pieces before the event concluded.
With nearly 22,000 unique visitors, including nearly 1,000 journalists who travelled to Geneva for the event, generating more than 30,000 overnight stays, this year's salon has ended on an extremely positive note. Thanks to the 38 exhibiting maisons, including 19 newcomers, the salon was buzzing during a week of extraordinary dynamism. On more than one occasion, the sheer joy of putting watches on their wrists and the pleasure of meeting again and chatting, almost made some guests late for their appointments. In total, there were 1,700 Touch
& Feel sessions for the press,