Falling Swiss watch exports will sour the mood at Watches and Wonders

The state-backed Federation of Swiss Watch Industry (FHH) is putting a brave face on it, but the last set of export figures before the country’s Watches and Wonders Geneva showcase to the world is a warning shot that manufacturers will need to throttle back on production this year or risk oversupply that could trigger stock dumping and discounting across the grey market.

Swiss watch exports fell by 3.8% in February, the first decline for more than two years. FHH says manufacturers suffered from an unfavourable base effect against a strong first quarter in 2023, but exports to Mainland China and Hong Kong were far weaker than hoped.

February’s exports to China dropped by 25.4% and to Hong Kong by 19% (and there was no unfavourable base effect for either market after a weak start to 2023).

Thankfully, American is still firing, with February exports rising by 5.5%.

Western Europe was also steady with a small decline of 2.1% for exports to the UK compensated by a 6.1% rise for France; a transfer of business that will be seized upon by opponents of the Tourist Tax.

The United Arab Emirates is threatening to overtake the UK for Swiss watch exports. Its consumption rose by 8.9% in February to a value of CHF 122 million; nipping at the heals of the UK which imported Swiss watches worth CHF 132 million.

India is a market to watch, with exports to the country in February rising 33%, year-on-year, and that is before a new trade agreement between Switzerland and the Subcontinental giant comes into force.

Apart from watches with an export price lower than CHF 200, which remained at their February 2023 level thanks largely to the enduring popularity of Swatch’s MoonSwatch, the main price ranges all saw a decline.

This was particularly marked between CHF 500 to CHF 3,000, with a drop in export value of 14%. Watches priced at over CHF 3,000 francs, which account for almost 80% of export turnover, saw their total value fall by 1.8%.