The Luxury Watch Industry In 2023: Resilient Growth Fueled by High-End Strength
5 min read
2023 made for a paradoxical year in the luxury watch industry. The macro-climate remained challenging, yet Swiss exports steadily increased while Christie’s luxury sales hit new records on booming Asian demand. Consumers turned selective, with robust growth at the highest ends even as mid-tier watches declined.
Swiss Watches: Precious Metals Shine
As per the Federation of the Swiss Watch Industry (FH), monthly exports reached an all-time high in November 2023 at CHF 2.496 billion, capping off 11 months of 7.7% year-on-year growth comparable to 2022’s banner performance.
Within wristwatches, precious metal and bimetallic watches led value growth at +5.2% and +10.7% respectively as affluent consumers favored more expensive materials. Steel watches declined -4.1% in value but still comprise over 50% volume share. Showing the flight to high-end watches above CHF 3,000 increased +5% while sub-CHF 500 watches dropped -5.1%.
On the export front, the United States maintained its pole position with a 16.2% share and 0.9% growth. China declined -3.7% but still commands an 8.2% share thanks to buoyant domestic sales. Growth markets like the UK (+16.7%), Japan (+11.9%), Singapore (+1.1%), and the UAE (+9.5%) reinforced Swiss watchmakers’ global foothold.
Christie’s Smashes Luxury Records
While the art auction market contracted 25% in 2023, Christie’s luxury sales including watches, jewelry, wine, and handbags achieved record results with over $1 billion in global turnover. This represents 53% growth compared to 2019 pre-pandemic levels.
Handbags assumed the mantle of top entry category for new buyers as Christie’s expanded its authentication capabilities and digital sales presence. Watches retained market leadership in Asia with the highest-ever annual sales total of HK$683 million (US$88 million), building on robust domestic demand.
Notable highlights include the sale of a Patek Philippe Ref. 2523J watch for HK$ 66.6 million (US$8.5 million), setting a record for that reference. And in Geneva, the "Bleu Royal" diamond sold for CHF 39.5 million (US$44 million), the priciest jewelry lot sold at auction globally in 2023. Even amidst the art market contraction, Christie's success demonstrates continued appetite at the highest luxury echelons.
India Riding The Affluence Wave
India's luxury watch market is projected to grow at a brisk pace of 21.50% CAGR during 2023-2028. This uptrend is fueled by the expanding middle-class population with higher purchasing power and a desire for premium branding that conveys status and refined tastes. Christie's data already validates this, showing a 30% increase in new buyers from mainland China across global watch sales in 2023.
The growth of the Indian economy and the rise of affluent consumers has led to surging demand for luxury timepieces. Moreover, the expansion of luxury retail outlets and the influx of international brands into Indian metro cities has dramatically improved accessibility over the last decade. This holds especially true for fledgling high net worth individuals (HNIs) beyond just tier 1 cities like Delhi and Mumbai.
Alongside retail penetration, heightening awareness and appreciation of Swiss craftsmanship, exclusivity, and quality finesse are propelling aspirational purchases. Younger demographics are tuning into luxury's allure, with Christie's registering a 65% surge in Gen Z buyers entering via marked-up handbag purchases before gravitating towards watches.
Industry projections underscore this luxury resurgence - India's luxury market is expected to triple to $30 billion by 2030. The number of millionaires could rise by 69% between 2022-2027 per Credit Suisse. As the world's fastest-growing economy, India represents fertile ground for luxury brands. Whether targeting ultra-high net worth individuals seeking high complications or younger demographics looking for accessible luxury, the potential is sky-high.
Moreover, brands localizing marketing strategies to align with regional traditions and aesthetics have enjoyed positive traction. Recent initiatives include local brand ambassadors, bespoke designs infused with Indian motifs, and limited editions paying homage to Indian art forms. Watchmakers are also recognizing opportunities around customized engraving and religious symbols on dial motifs.
Outlook for 2024: High-End Momentum to Continue
For Swiss watchmaking royalty and niche independent brands alike, India checks all the boxes - an enormous population base, promising economic fundamentals, receptiveness to luxury, and most crucially, an increasingly conducive environment for global entrants to flourish. The stage is set for traditional titans and forward-thinking players to tap into this multi-billion dollar opportunity in the making. The time is now for luxury watchmakers to ride India's ascending affluence wave.
Swiss watchmakers expect moderating but still positive mid-single-digit growth for 2024, provided economic pitfalls are navigated. China’s reopening may counterbalance slowing consumption elsewhere.
The industry still faces risks from high inflation, rates, and recession worries. But the flight to high-ends shown in 2023 reinforces luxury timepieces’ enduring appeal as an emotive purchase grounded in heritage and craftsmanship. As long as consumers retain some discretionary spending bandwidth, the industry’s long-term prognosis stays positive.
