The Swiss watch industry turned in another strong performance in August, extending its streak of consecutive increases in exports to 16 months. Watch exports rose 5.5% in value compared to August 2017 to CHF 1.50 billion ($1.48 billion), according to data released by the Federation of the Swiss Watch Industry (FH).
A dozen of Switzerland’s top 30 markets had double-digit jumps in August, and two – tiny Kuwait and Oman – had rare triple-digit increases (119% and 154%, respectively).
The U.S. market was not among the double-or-triple-digit performers in August. Nevertheless, in a sign of America’s importance to the Swiss — and lingering concern about it — the FH took note of the fact that the United States market recovered its footing after a wobbly (-0.7%) July. “The United States bounced back to +9.0% after a quieter month of July, confirming the sustained recovery observed since the start of the year,” the FH said in a statement.
The U.S. is Switzerland’s second largest market after Hong Kong. Full-year Swiss watch exports here have not risen since 2014. August’s rebound clearly is a relief to the Swiss, who are increasingly confident that the U.S. is back. Through eight months of the year, exports to the U.S. are up 7.8% to CHF 1.41 billion ($1.36 billion).
That recovery, however, is not benefitting all Swiss watch brands here. As we noted in a review of January-June Swiss watch sales in the U.S., NPD Group research indicates that retail sales of luxury watches were strongest in the $5,000 and up price segment, and that top brands are increasing their market share at the expense of less well-known brands.
Already popular brands selling watches over $5,000 have showed the strongest results.
Small Markets Up Big
While the American market is finally picking up, it is behind the pace of recovery in Swiss exports globally. Year-to-date Swiss watch exports are up 9.5% worldwide to CHF 13.83 billion ($13.38 billion). (FH data represents wholesale, not retail, sales. It tracks the value of watches shipped from Switzerland to watch company subsidiaries and agents around the world.) Through August, Switzerland’s other top markets are growing at a faster pace than the Unites States: #1 Hong Kong is up 28%; #3 mainland China is up 12%; #4 Japan is up 14%. (See table.)
The FH data shows a broad global increase in exports in 2018: of Switzerland’s top 30 markets, which account for 92% of exports, all but six are ahead of 2017. (The soft six are the U.K., Italy, Spain, Taiwan, Austria, and Belgium.) Switzerland’s smaller markets are performing unusually well. Of the bottom 15 markets in Switzerland’s Top 30 ranking, 11 are up by double-digits through August. The top 10 global “hot spots,” markets with the biggest increases over 2017, include seven from the bottom half of the export rankings. (See table.) In general, the Far Eastern region is strongest in 2018, up 20.4% in value. The European Union markets are weakest, down 3.2% in value year-to-date.
It’s mechanical watches that are making the current recovery possible.
As usual, mechanical watches are driving the growth. Exports of mechanicals are up 9.0% in both units and value year-to-date. Swiss quartz watch exports continue to decline in units, down 2.0% so far this year. They are up 6.3% in value, however. Watches in the lower priced market segment had a “significant downturn” in August, the FH said. Watches with wholesale prices below CHF 500 declined 9% in units and 10.2% in value.