LUXURY WATCH INDUSTRY CURRENT MARKET

• Switzerland is the world leading produce of luxury watches with a current market size of $20.2 billion in exported watches.
• The second biggest producer of luxury watches is the US with a market size of $4.8 billion.
• The most valuable luxury watch brand in the world is considered to be Rolex with a market size of 7.4 billion Swiss Francs in 2016.
• The boom in the global luxury watch industry and other luxury goods started in the 1990s.
• The leading brands in the global luxury watch market today, by market share, are Rolex at 18 percent, Omega at 8 percent, Breitling at 6 percent, Hublot at 3 percent, TAGHeuer at 3 percent, Longlines at 3 percent, IWC at 3 percent, Cartier at 3 percent, Audemar Piguet at 2 percent, and Patek Philippe at 2 percent.
• Smaller manufacturers hold the remaining 49 percent of the market.

LUXURY WATCH INDUSTRY PAST MARKET

• In 2005, the luxury watch and jewelry industry reached a market size of $58.4 billion in the US, raising to $62.2 billion in 2006.
• The luxury watch industry, although it grew from 2005's results, still found challenges in 2006. This because 51 percent of 18 to 24 year old consumers and 48 percent of 25 to 34 year old consumers used their cellphones to tell the time instead of using analog watches.
• However, there was a comeback through an industry focus on promoting the luxury that owning one of these watches represents. In 2017, 70 percent of millenials own analog watches.
• The global luxury watch industry had a market size of $46,349.13 million in 2018, it is expected to reach $47,646.9 million this year and continue to grow to $53,211.7 million by 2023.
• Additionally, the global personal luxury goods market has demonstrated a stable constant growth tendency for many years, starting with €147 billion in 2009 and continuing to €260 billion in 2018.
• The personal luxury goods industry is composed of luxurious fashion, watches, jewelry, luggage, cosmetics, fragrances, and handbags.
• Before 2009, the personal luxury goods industry still maintained an upward market tendency, beginning with a €77 billion market size in 1995 and growing to €167 billion in 2008.
• In some sources, 2009 is considered to be the worst year for growth, but that year still showed an upward trend.
• The luxury watch industry reached a market size of €24 billion in 2008, €20 billion in 2009 and €23 billion in 2010.

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OVERALL MARKET SIZE FOR LUXURY WATCHES

• In 2018, the global luxury watch market was valued at $46.35 billion. It is forecast to reach a value of $53.2 billion by 2023.
• Most of the demand is for quartz watches.
•  Women’s luxury watches dominated the global luxury watch market, giving Cartier a boost in sales.
• Rising demand for premium quality luxury watches in developing areas such as the Asia Pacific region is projected to generate new opportunities in the global luxury watch market.
•  Switzerland dominated the market and enjoys a position of monopoly. Rolex is the most valuable watch brand of Switzerland.
• Swiss watch exports are steadily growing in its five biggest markets: Hong Kong, USA, China, Japan and the UK.
• Young people are paying attention to watches and Millennials appreciate and believe in investing in high end watches, with a preference for quartz watches.

THE US MARKET

• The US ranked second as a leading watch importing country based on import value at $4.8 billion in 2017.
• After two years of declining sales to the United States, Swiss watchmakers enjoyed their best year since 2015 in 2018 with imports on track to reach $2.2 billion. 
• Watch sales for the first half of 2018 were up 8 percent for the first time in three years.
• For watches above $25,000 the growth is up 20 percent.
• Half of the 12 largest watch brands do not have their own transactional website, including the world largest privately-owned businesses, Rolex, Patek Philippe and Audemars Piguet.
• U.S. sales for watches above $1,000 are up 13.5 percent in value, year-to-date.
• Watches priced $5,000 and up accounted for nearly half the sales of the entire U.S. watch market by value.
• For 2019, through June, retail sales of watches priced $10,000 and up rose 16 percent.
• Rolex and Patek Philippe together now hold a 70 percent share of the U.S. market for watches priced $10,000 and up.

PRE OWNED LUXURY WATCHS

• Largely driven by the millennial generation, unique and vintage products are enjoying a revival, including watches.
• Bain & Co puts the value of the preowned personal luxury goods market in 2018 at $25 billion, attributing 80 percent of it, or $20 billion, as watches and jewelry.
• It is estimated that watches account for $17 billion out of that $20 billion.
• Kepler Cheuvreux estimates that global sales of preowned premium timepieces generate $5 billion.
• According to the financial consultancy firm, this segment is expanding by approximately 5 percent annually and will either match or overtake the new watches category within five years.
• Europe (at 32 percent) and the Americas (at 31 percent) still account for almost two-thirds of global sales.
• The Founder of Bob’s Watches, the leading online retailer of Rolex watches, stated that he estimates that eBay alone does almost $1 billion a year in secondhand Rolex watches. He also stated that his company was on track to make $45 million in sales in 2018.
• Rolex and Patek Philippe hold their value better in the secondary market than other brands. Omega Speedmaster, Audemars Piguet Royal Oak, Breitling Navitimer, and Vacheron Constantin are also popular.
• The popular secondary market for luxury watches Chronext had $60 million in transaction volume in 2017.
• A Rolex Daytona owned by Paul Newman has shattered the world record for the highest price ever paid for a wristwatch at $15.5 million.
• In July 2018, a stainless Submariner sold at Christie’s, fetching over $1 million.
• It is estimated that higher end pieces are holding better value than they did in 2008.

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MARKET SIZE FOR LUXURY WATCHES

• According to statistics from Statista, in 2018 the global luxury watch market was valued at approximately $46.35 billion, the revenue of the market amounts to $44,881 million in 2019, and was forecast to reach a value of $53.2 billion by 2023.
• There has been a growing demand for luxury watches and also preowned luxury watches.
•  Swiss-made luxury watches dominate the global watch market supported by superior technology.
• Some key vendors for luxury watches are Rolex, LVMG, Giorgio Armani and The Swatch Group.
• According to data, the early part of 2018 saw the luxury watch market’s largest growth in almost five years, with Hong Kong and Mainland China leading the comeback.
• The Global Luxury Watch Market anticipated to flourish at a CAGR of 2.98% during the forecast period i.e. 2018 – 2023. Further, the market is expected to reach to a valuation of $53,211.7 million by the end of 2023.

US MARKET SIZE

• The United States has the largest watches and jewelry market with a revenue of $27,786.38 million.
• Swiss luxury-watch sales in the U.S. is Switzerland's second largest export market, jumped substantially in the first half of 2018 versus the same period in 2017, U.S. sales for watches above $1,000 are up 13.5% in value year-to-date.
• The Federation of the Swiss Watch Industry (FH) said exports to the United States jumped 9.1% to CHF 1.08 billion.

TREND FORECAST FOR LUXURY WATCHES

•  A.T. Kerney states that future consumers are still interested in buying luxury watches, although they have different values than previous generations.
• Data shows that more than 50% of future customers prefer to shop in multi brand stores to make sure they can compare products and receive unbiased advice, for both online and brick-and-mortar stores.
•  Smart watches are not likely to pose a real threat to luxury watchmakers, consumers are willing to pay no more than $1,500 on a smart watch, which means that market will remain mass-market or entry-level luxury.
• Consumers are rapidly turning towards vintage, connoisseur pieces, 50% of future consumers would consider buying preowned pieces, or new pieces sold by an unauthorized dealer if an item’s quality and authenticity is proven.

OVERVIEW

•  High-end/luxury watches are designer watches that are created with luxury and true craftsmanship and the quality can last a lifetime. Most of these luxury watches are sold thousands up to millions of dollars where some purchase them for investment.
• Some of the luxury watch brands include the popular Rolex where its timepieces can be worth as much as $650,000 and IWC Schaffhausen with price range maxed at $750,000.
• The million dollar brands include Patek Philippe where prices can be as high as $1 million, while Piaget's most expensive watch is priced up to $3 million.

LUXURY WATCHES: APPRECIATION/DEPRECIATION

• It has been known that people buy luxury watches as a reflection of their status symbol and personal taste, also it shows the affluence of the wearer.
• But the current trends show that these luxury watches are now deemed as an investment for some, however, discerning a potential of every luxury watch is a complex study.
• Typically, when one buys a luxury watch, its depreciation will start at the time the buyer stepped out of the store.
• However, the increase and decrease in value of luxury watches over time will depend on many factors such as exclusivity, availability, brand recognition, demand, and its current condition.

STATISTICS SHOWING DEPRECIATION/APPRECIATION OF LUXURY WATCHES

•  Rolex Daytona was originally a slow-selling watch when it was first released in the 1960s to 1980s. However, it became a hit because of the celebrity Paul Newman. The most in-demand are the vintage, modern, automatic, and steel models.
• A regular priced Rolex Daytona that was bought in 1970 costs $150,000 is currently expecting to fetch at hefty prices of $200,000 to $400,000. Together with an auction fee, it will have a total cost of $950,000. The trend shows that the value of Daytona will continue to grow and thrive.
• In 2018, a 1969 Paul Newman Daytona was listed as one of the most expensive watches sold by Christie with a price of $732,500.

• Because Patek Philippe is known for producing watches in low quantities, even the already expensive Perpetual Calendar Chronograph still has room for appreciation.
• Patek Philippe Perpetual Calendar Chronograph was released in 1940 and currently priced at CHF 73,000 ($73,545), but averaging the price at six-digit amount in auction. Additionally, it is also one of those rare watches that has been sold for millions in an auction.
• In 2007, Patek Philippe Perpetual Calendar Chronograph was sold at CHF 2,513,000 ($2.531 million) by Christie's and in 2018, Perpetual Calendar Chronograph was ranked #1 as the most expensive watch that has been sold at a price of $3,234,905.

ADDITIONAL FINDINGS

• Another example is the Audemars Piguet Royal Oak which is the so-called "Jumbo" where it became very expensive. The price appreciation or depreciation does not apply if it is purchased brand new and sell it right afterward.
• The Royal Oak is considered as the flagship product of Audemars Piguet, and the most collectible is "Jumbo".
• The appreciation will be considered if the product was bought earlier years, like 5 years ago. A Royal Oak purchased at $10,000 at that time can be sold at $16,000 at present.
• Based on the NY Times article, an Audemars Piguet Royal Oak at $23,000 bought by a collector 3 years ago, now has a value of $30,000 due to strong demand.

• An example of a luxury watch model that has depreciated is the IWC Big Pilot, which 7 years ago costs for approximately $40,000. It was valued as such to become a historical watch and was expected to appreciate in the succeeding years because it initially released only 500 units.
• However, the company eventually launched different editions of Big Pilot that its exclusivity was gone.
• The $40,000 watch bought 7 years ago is currently valued at almost half of the original price, which is 50% depreciation in the span of 7 years.

•  Patek Philippe Nautilus was first launched in 1976. This simple steel watch is considered as one of the most coveted watches even its current price in the pre-owned market doubles from its original price.
• This is because the company only produced Nautilus in low quantity and so the demand for this watch continued to flourish. Higher price for Nautilus is expected to continue in the future.
• At the beginning of 2018, Patek Philippe increased the price of Nautilus by 20%. What used to be the price of CHF 22,000 ($22,177) is now going for CHF 40,000 ($40,320).
• Even the pre-owned dealers were getting numerous phone calls inquiring for Nautilus and even offered prices that are above the retail price.

• According to a report, a Rolex Submariner's most dramatic depreciation occurs within 1 year, but depreciation slows after the watch reaches its 10-year threshold.
• A brand new Rolex Submariner will depreciate at approximately 10.6% after one year. After 10 years, it will depreciate at 27%.
• But current trends show that due to a shortage of Rolex Submariner, the demand for vintage and modern pieces is expecting to grow.
• Based on NY Times article, Watchbox, a pre-owned trader, received 9 offers that bids for Submariner with offers that range between $9,000 to $13,000.

• A regular Omega Speedmaster Professional costs £3,520 ($4,472), where the most dramatic depreciation occurs in 1 year at 18%, and at 23% in 5 years. However, between 5 and 20 years, the value will reverse slightly and depreciation will be at 16%.
• The Omega Speedmaster Professional was the same watches worn by astronauts Neil Armstrong and Buzz Aldrin and became popular only after the lunar landing. This particular timepiece was dubbed "Moonwatch". While there are other variations of Moonwatches, the one associated with moon landing are the ones that appreciate in value.
• The iconic status and value on history are what makes this watch a collectible item.

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