The Swiss Watch industry is always a bit of a cyclical one. It is also one that is often very difficult to get real data on. Trying to figure out which sells more watches, Rolex vs Omega, for instance, can be especially tricky.

So I was especially pleased when someone popped something into my inbox. It is a piece of research from analysts at Credit Suisse, a Swiss bank, on trends in the Swiss Watch Industry.

The basically went around for a couple of months doing a survey of luxury retailers, asking them a bunch of questions around which watches are selling well. The results are pretty impressive for the biggest names in Swiss watches. Rolex is doing incredibly well, Omega is also on a roll. So are Cartier and Tissot.

Here’s the result of one of their surveys on which brands are selling well:

The chart clearly shows how brands such as Dior and Ebel are not performing at all well in the market.

They also looked at which price segment of watches is performing best and found that without any doubt, the best performing segment is for high end watches, which it categorises as costing more than $5000 each.

The results would seem to be good news for the biggest groups. They say that the investment implications are that these trends favour Swatch Group and Richemont. They say:

Swatch Group remains our preferred idea in the hard luxury space thanks to best-in-class supply chain capabilities, diversification across price points and strong momentum for Omega, Longines and Tissot. Richemont’s main brands are also performing well – we will hear from the company (i.e. interim results) on November 11.

Please bear in mind that this report is a few months old (so don’t go and start buying shares just because this blog had a post on how great the industry is). Also note that I’m here to provide news and interesting facts on the industry, not investment advice. With that little disclaimer out the way, I thought I’d also share another piece of outdated stockbroker research that someone has given me. This time it is from Nomura, a Japanese bank. In a report titled: Watches: why we like telling the time (August 31, 2011), they say:

We continue to be bullish on the watch industry long term due to: 1) regulatory changes: that should help alleviate longer term bottlenecks and increase capacity utilisation rates; 2) China potential: still just scratching the surface; 3) US: premiumise the category and increase distribution control, which should help increase transparency of stock levels in the channels and elevate pricing power.

Luxury Swiss Watch Brands Are Performing Best: Credit Suisse Says

After a record year in 2008 the Swiss watch industry faced serious headwinds from the global economic crisis in 2009. Yet there are signs of a change in fortune for Swiss watch makers. In November 2009, watch makers reported their best month so far for the year with sales of 1.4 billion Swiss francs. That was, however, still down about 10% on the year before but a huge improvement over some months earlier in the year where sales where down by 40 percent to 50 percent.
The turnaround, though, is happening at the cheaper end of the market. Figures released by the Swiss Watch Federation showed that sales of platinum watches were down by about 26% (by value) and gold watch sales were down by 19%. The biggest gain was in Swiss watches costing between 200 Swiss francs and 500 Swiss francs.  These include many military style watches. Sales of these sorts of watches was up by about 20%. That will help the lower end of the market and the mass producers of quartz watches such as Swatch. A lot of the growth in demand came from China, where sales of Swiss watches increased by 36%. Major developed markets such as Germany, France and America all recorded drops.

The industry and Swiss government aren’t sitting around waiting for things to improve but are being proactive. In November the Swiss Federal Council announced its Swissness project to promote Swiss-made watches and other Swiss products. This introduces stricter rules over how much Swiss content there must be in a product such as a watch for it to call itself Swiss. Under the new rules, 60 percent of the value of a watch must come from Switzerland for it to claim to be a Swiss-made watch, which should help reassure buyers of watches that they really are Swiss made, as opposed to be mostly made in Asia and then just given a last polish in a Swiss assembly shop. The move has been a contentious one, even within the industry, as a number of Swiss watch makers have complained they would not be able to compete and might go out of business if they weren’t allowed to call their watches Swiss, even though much of their content and value comes from elsewhere. Yet the industry as a whole, probably rightly, feels that the rules should be tightened and that firms will create more jobs in Switzerland as a result. The brand value of being able to say a that a particular model is a Swiss-made watch must surely be worth more than the small number of low-skilled jobs Switzerland might be able to hang onto by having loose standards and selling what are in fact, if not in law, replica Swiss watches.

Swiss Watch Industry Shows New Signs of Life