When it came time to balance the books for the 2020 financial year, Morgan Stanley poduced a fascinating report using figures provided by the Fédération de l’industrie Horlogère Suisse, detailing last year’s top performers. Making up the podium, we have Rolex, Omega and Cartier in 1st, 2nd and 3rd place, respectively.
In general, global exports in the world of watches fell by 21.8% last year, almost entirely due to the pandemic. However, when compared to other sectors, especially those of tourism or nightlife, this decrease was actually rather contained.
Let’s take a closer look at the Top 3 spots, as well as assessing the situation for those left out.
Rolex, Omega and Cartier take the podium when it comes to revenue generated from sales in 2020. Rolex actually seemed to thrive during the global pandemic last year, with their turnover increasing by a very impressive +3.37%. They are one of only 3 brands to have achieved this: Audemars Piguet’s numbers also went up (+0.5%), aided by a final push with the AP x Marvel collab, and so did Patek Philippe’s (+0.2%).
Performing worse compared to last year were the big conglomerates: Swatch‘s sales fell by -2.7%, those of Richemont by -1.1% , and those of LVMH by -0.81%.
Here’s a little fun fact: Rolex’s 4.4 billion CHF revenue accounts for 24.9% (26.8% if you include Tudor) of the entire watch industry, whilst producing 810,000 timepieces last year. Truly a different breed.
Far behind, in second place, we have Omega, which claimed its 8.8% slice of the market. They made 1.758 billion CHF in revenue last year, manufacturing 500,000 pieces. Cartier takes the bronze medal with 6.7%, accounting for 1.6 billion CHF with 490,000 pieces produced.
What about the conglomerates and the big watch groups? How’d they do?
Key Figures for the Swatch Group, Richemont & LVMH
The Swatch Group covers 25.2% of the market. So, similar to Rolex, no? Indeed not: don’t forget that Omega is part of the Swatch Group. If you take them out of the equation, their next best brands are Longines, which accounts for 6.2%, generating 1.14 billion CHF of revenue (1.5 milion pieces), Tissot with 3.1% and finally, Breguet taking 1.2%.
A similar situation is observed for the Richemont Group (18.2% of the market), whose star performer is Cartier, which alone accounts for 40.7% of the revenue generated by the conglomerate. The next closest best sellers of the group are IWC (2.7%), Jaeger-LeCoultre (2.1%), Panerai (1.6%) and Vacheron Constantin (1.5%).
Taking fourth place we have LVMH, accounting for 7.2% of the market. Their top performers are Tag Heuer (3%), and Hublot (2,3%).
Under most contexts, the term “Independent Watchmaker” normally refers to a small watchmaking company (not part of any groups) that was set up from the late 90s/early 2000s onwards. However, for the purpose of this article, any watchmaker that is not part of a larger group will be considered an independent watchmaker.
Patek Philippe, for example, has a 5.8% share of the market, earning 1.16 billion CHF in revenue last year. This guaranteed them the 5th spot after Rolex, Omega, Cartier, e Longines. Although fifth place sounds mediocre, remember that they did it with just 53,000 pieces: quality over quantity.
Audemars Piguet had a similar performance: they account for 4.3% of the market, bringing in 1.12 billion CHF whilst producing 40,000 pieces.
The fact that Patek Philippe made 40 milion CHF more revenue whilst only producing 13,000 more pieces would suggest that AP’s average price per timepiece is higher than that of Patek. In a nutshell, this can be explained by Patek’s focus on sports models over complications. It should be noted that this is something which they are now trying to reverse.
Another (truly) independent watchmaker is Richard Mille, who has a 2.5% claim on the entire market. Their business model of taking out the middle man (distributors/ADs), in similar fashion to AP, increases their profit margin and allows them to further render their clientele “selective”.
Which is more advantageous? What is the most important factor? Form over function? Movement or aesthetics? Have a wider hold on the market or maintain exclusivity? Does one eliminate the possibility of the other? These are the million dollar questions.
By looking at the numbers, the answer is both: greater revenue and more exclusive. So the numbers don’t really give us the answer. So, what do people like?
If we focus on the Big 3 (Rolex, Patek Philippe and Audemars Piguet), one thing that has sold really well in the past couple of years is the luxury sports watch. AP is known almost entirely for their Royal Oak (even though I’m a huge fan of the CODE 11.59); Patek Philippe’s bestsellers are the Nautilus and Aquanaut; and Rolex always makes a killing with anything that has an Oyster bracelet. But it only becomes beloved if it’s painted with an aura of luxury, something that few can possess.
On the other hand, I think the large conglomerates have learned what not to do. In recent years, especially with the surge in the Eastern market, reducing wristwatches to “an item for everybody” and, consequentially, pricing them over-competitively (i.e. low-balling), has not paid off.
Self-identity also feeds into this concept of exclusivity. So, rather than looking to see what’s selling right now and copying that, perhaps people should go back to basics and to the values which made these brands successful in the first place
-Translated by Patrick R.
