How the ‘Big Four’ are Redefining Luxury: The 2023 Swiss Watch Market Report
The Swiss watch industry, known for its impeccable craftsmanship and prestigious brands, has long been the epitome of luxury and exclusivity. As we take a closer look into the latest Morgan Stanley report, it’s clear that the market is increasingly dominated by the ‘Big Four’: Rolex, Patek Philippe, Audemars Piguet, and Richard Mille. This select group has not only maintained its high status but has also expanded its market share significantly, solidifying its position in the upper echelons of the watchmaking hierarchy.
In an industry marked by fierce competition and a demanding clientele, the ‘Big Four’ have managed to increase their combined market share by a striking 200 basis points, now accounting for 43.9% of the market. This is a remarkable feat, especially when compared to their pre-Covid combined market share of 36.9%. Their success can be attributed to a blend of strategic innovation, brand image and desirability, and the watches still being difficult to attain; thus, driving up the secondary market values.
Rolex stands out as a giant in the industry. The brand has crossed the CHF 10 billion sales mark, a first for any Swiss watch brand. With a 30.3% retail market share, Rolex’s dominance is unparalleled, dwarfing even the most prominent names in other luxury sectors, like Louis Vuitton’s ~19% share in the luxury handbag market. The secret behind Rolex’s supremacy is multifaceted, including consistent quality, a timeless aesthetic, and an unrivalled reputation that transcends generations.
The report also highlights the entrance of Vacheron Constantin into the exclusive ‘Billionaires Club’, joining the ranks of brands that have surpassed the CHF 1 billion sales threshold. Yet, with a 2.7% market share, it remains in the shadow of Patek Philippe, which enjoys a 5.6% share. This illustrates not only the competitive nature of the high-end watch market but also the significant gap that still exists between the very top brands and other luxury watchmakers.
Richemont, a conglomerate known for its portfolio of specialist watchmakers, shows a mixed performance among its brands. While Vacheron Constantin, A. Lange & Söhne, and Van Cleef & Arpels have seen market share gains, IWC has struggled with a 13% sales decline, attributed to pricing strategies that may not have aligned well with consumer expectations and value propositions offered by direct competitors.
Cartier, another jewel in Richemont’s crown, has slightly underperformed in jewellery but has outperformed in watches, gaining market share and overtaking Omega. This indicates a strategic success in the brand continuing to engage with influencers and showcases the brand’s strength in watchmaking.
As we unpack these figures, it becomes evident that the watch industry is experiencing a concentration of sales among a select few brands. Rolex, Cartier, Omega, and Patek Philippe alone make up over 50% of total Swiss watch industry sales. This is a testament to the formidable brand equity and market influence these names wield. The trend continues with the top 13 brands accounting for 75% of sales and the top 25 brands for 90%, showing that while there are many players in the field, only a few hold significant sway.
The dominance of these brands is not just a reflection of their business acumen but also an indication of the changing landscape of luxury goods, where heritage, brand storytelling, and exclusivity continue to drive consumer choices.
In conclusion, as the ‘Big Four’ and other leading brands continue to rule the roost in the Swiss watch industry, an innovative platform, Altr (altr.trade), emerges to cater to collectors and enthusiasts of these luxury timepieces. Altr’s new lending platform is a ground-breaking initiative that allows collectors to raise liquidity against their digitized luxury assets, which currently include watches and cars. This platform is not just a boon for collectors looking to leverage their assets but also offers lenders an attractive opportunity to earn good annual yields. By providing liquidity to the platform through loans secured against luxury collectibles, lenders can benefit from the robustness of the luxury goods market, reflecting a savvy integration of finance and the timeless allure of luxury watches. This symbiotic ecosystem presents an exciting avenue for growth and investment, fuelling the passions of collectors and offering opportunities for investors alike.
