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Content - Swiss watch exports rebound in 2017

  • February 02, 2018

Swiss watch exports rebound in 2017

Tokyo (SCCIJ) - Growth has returned sooner than expected to Swiss watch industry exports which improved steadily in the course of 2017. This was only partly a result of the depreciation of the Swiss currency during the year because volume grew both in real and nominal terms. Growth in Asian countries, which represent about one-half of Swiss watch exports, was twice as strong as the global average. Demand in China increased, whereas exports to Japan saw a small downturn. “A growing number of markets returned to growth, but several of them are still lagging behind”, the Federation of the Swiss Watch Industry said. But 2018 may see a similar growth trend as 2017, it added.

Swiss Made sign on Swiss watch

Strong second half of 2017

The situation of Swiss watch industry exports improved steadily in the course of 2017. After declining for two years and reaching a new threshold, demand gradually picked up again. On the distribution side, a presumably tighter stock level was another factor conducive to recovery. A growing number of markets returned to growth, but several of them are still lagging behind.  

In the end, Swiss watch industry exports fell just short of the CHF 20 billion mark. They posted a result of CHF 19.9 billion, up 2.7% against 2016. The trend stabilized in the first half (+0.3%), while the second saw substantial growth (+4.9%), especially during the holiday season period.  

The forecasts made last year were confirmed a few months earlier than expected and the industry’s dynamic is looking good for the future. Development of digital communication and distribution channels and the types of consumption favored by the millennials will be priorities in 2018. In this context, watch industry export growth is likely to be comparable to that observed in 2017, the Federation of the Swiss Watch Industry (FHS) said.  

Wristwatch numbers decline

The recovery in demand for Swiss timepieces, according to the industry's export statistics, is concentrated mainly on watches in higher price ranges, while the decline in sales of watches in the price range of around CHF 500 has now continued for three years.  

Wristwatch exports dictated the general trend. Their value reached CHF 18.8 billion, equivalent to 2.9% growth on 2016. For its part, the number of pieces continued to fall. 1.1 million fewer timepieces were exported (-4.3%) with a total of 24.3 million pieces. This was the lowest figure since the 2009 crisis.  

The decline in volumes was influenced by quartz watches which posted a fall of 7.4%. On the other hand, mechanical timepieces grew in terms of both value (+4.6%) and number of pieces (+3.9%).  

These divergent trends are also observed between the principal price segments. Watches priced at less than CHF 200 (export price) declined by 8.5% in volume and 11.6% in value, while the other ranges achieved growth of between 3% and 5% in value terms.

Asia as growth driver of 2017

Asia was with 4.8% growth the driver in 2017 thanks to a very good second half. Europe (+2.6%) saw more modest growth and slowed slightly, but remained an important player in the recovery. The United States failed to follow that same trend and depressed the figure for the whole American continent (-2.7%).   

Most of the Far Eastern markets reported growth in 2017. Despite a very good fourth quarter, Japan (-2.6%), the fifth largest market for Swiss watch exports, ended on a moderate downturn. Recovering since the spring, Hong Kong (+6.0%) ended the year with strong growth. China (+18.8%) had been the first to recover and posted the strongest advance of all these countries. Singapore (+8.5%) and South Korea (+5.6%) maintained a pleasing trajectory.   

Strength of Swatch Group 

Supported by an excellent Christmas business, the Swatch Group returned to the road of success in 2017. The leading Swiss watchmaker increased net sales by more than 5% to almost CHF 8 billion in the year under review, after sales stagnated at CHF 3.7 billion in the first six months.   

The Swatch Group is traditionally strongly represented in the upper price segment with brands such as Omega, Rado, Blancpain and Longines. But the company from Biel, Switzerland, sells with brands such as Swatch, Flik Flak, Calvin Klein and Mido also a wide range of lower-priced watches.   

For 2018, the Swatch Group expects "another very positive growth" for the year just started. In addition, further growth would utilize the capacities of all production areas.   

The brand Omega, as an official timekeeper of the XXIII Winter Games from 9 to 25 February in PyeongChang, South Korea, would deliver daily results and all the athletes’ data, and therefore be present in all the media, the Swatch Group predicted.   

 

Text: SCCIJ with material of FHS.Swiss and Swatch Group; Photo: Wikipedia CC BY-SA 3.0

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