Doom and gloom among Switzerland’s major watchmakers looks, at first glance, overblown when you look at the final figures for global exports in 2024.
The total value of exports dropped by a mere 2.8%, from CHF 26.5 billion in 2023 to CHF 26 billion last year.
To put that 2024 figure into historical context, it is the second highest total export value in the 24 years for which WatchPro has figures from the Federation of the Swiss Watch Industry.
Look back 20 years, and total Swiss watch exports were worth a mere CHF 11.1 billion.
I am not suggesting the post-peak performance of 2024 should not be cause for concern, not least because the industry ended the year in a significantly worse state than it began, with December exports down by more than 5%, year-on-year.
Global distribution — and retail sales — of Swiss watches have been dramatically altered by forces well beyond the control of the country’s manufacturers.
The United States, buoyed by a debt-fuelled spending splurge by the Biden administration and the safe haven status of the US dollar, built on its status as the world’s largest market for Swiss watches and is now more than double the size of its closest rival, China.
America imported watches valued at CHF 4.3 billion, compared to China’s CHF 2 billion.
Japan overtook Hong Kong for the first time to take third place in the league table thanks to the weakness of the yen making it the cheapest major market in the world from which to buy expensive timepieces through authorised or grey market retailers.
Hong Kong, now under direct rule from Beijing, and mainland China, have not recovered with anything like the success of Western economies after covid restrictions, particularly when it comes to spending on luxuries.
A huge question for 2025 is whether the population of China and Hong Kong will return to the same level of conspicuous consumption as before the pandemic. The signals are not good, with communist officials setting a tone for a less brash approach.
The ongoing war in Ukraine is another geopolitical force that is distorting Swiss watch sales around the world.
Exports to Russia are either not recorded, or fall outside the top 30 that the Federation publishes. Since it only requires exports valued at CHF 90 million for the entire year to make the top 30, we can safely discount the country as a player of any significance.
But Russia’s wealthy elite have done their shopping elsewhere, with the United Arab Emirates, in particular, benefiting from tourists or people who have semi-permanently moved to the Gulf state. The UAE took exports worth CHF 1.3 billion last year, placing it in the top 10 of the global league table and nipping at the heels of France and Germany.
The global economy (particularly if you exclude the debt-ridden, big state nations of Western Europe) looks likely to grow relatively strongly this year as inflationary pressures recede and interest rates tick down. There could even be a peace dividend if wars in the Middle East and Ukraine end.
That would likely lower the gold price from its current record highs, which was blamed for significant price hikes at the start of this year, and hopefully bring an end to a relentless ratcheting up of prices by manufacturers who appear unable to stimulate demand for higher volumes.
If I had one piece of advice that every luxury watch brand should be conscious of this year, it would be from Jean-Claude Biver, who used to always tell me that the job of premium mechanical watchmakers is to stimulate irrational desire.
This is vitally important, because the worst thing anybody from Swatch Group, Richemont, LVMH or even Rolex, Patek Philippe and Audemars Piguet should assume is that the world is awash with potential customers who will sooner or later come to appreciate the historic significance and horological brilliance of yet another black-dialled steel Submariner, the cheapest of which now costs £8,100.
Geopolitics and macro economics will continue to weigh heavily on the performance of the Swiss watch industry, but the participants are not powerless to shape their destiny.
What will be needed is innovation, creativity and brilliance in design coupled with a business plan and pricing policy fit for these straightened times.