More than 1 billion watches are produced and marketed on an annual basis, catering to consumers and users all over the world with different types of higher-end, lower-end and intermediate-range wristwatch brands. The watchmaking industry is a highly volatile sector characterised by frequent industry shifts and the balance of power changes. While watchmaking is a multi-dollar business, the industry itself is dominated by only a handful of players.
The landscape of the luxury watch industry is ruled by Swiss watches, and Switzerland enjoys a near-monopoly position in the world of luxury and designer wristwatches. While China is the world’s most prolific watch manufacturer in terms of volume, 99% of them are all inexpensive watches catering to the masses. In the luxury segment, Swiss-made watches reign supreme, with only a handful of watch conglomerates and wristwatch manufacturing giants dominating the world of watches.
The global watchmaking industry has been all about top-notch innovations, continuous evolutions and the latest designs that inspire watch enthusiasts all over the world to spend thousands on luxury and designer watches. Today, the demand for Swiss-made luxury wristwatch brands exceeds that of every other watch brands in the world, an indication of the supremacy of a few main watch manufacturers and conglomerates. These top luxury watch brands compete with each other neck-to-neck in terms of fashionable designs, technological innovations, specifications and watchmaking mechanisms.
While most Swiss watch brands were more or less independent in the past, due to various financial and practical reasons, they were acquired by or merged with major corporations over the years, thus giving birth to watch conglomerates or watchmaking corporate groups. With the exception of a few original Swiss designer wristwatch brands, which mostly cater to the high-end or intermediate-range luxury market, the majority of watchmakers are part of large corporate groups.
Watchmaking conglomerates are companies that own, license and manage the business of manufacturing, marketing and distributing watches. A watch manufacturing conglomerate, in essence, can be a holding company managing several smaller watch brands or companies under its umbrella banner. There are mainly twenty or so watch making conglomerates that control the global supply of watches. They include big names like Swatch Group, Richemont, LVMH, Citizen, Seiko, Titan and Fossil.
The Swatch Group
The most dominant of these corporate manufacturers is, of course, the world-renowned Swatch Group, which currently owns and manufacturers no less than 18 wristwatch brands. Besides operating the largest number of commercial wristwatch brands in the world, the Swatch Group also happens to own and operate the ETA and Valjoux – the largest Swiss watch movement manufacturers. The influence and authority of the Swatch Group in the watchmaking industry can be gauged from the fact that over 80% of all watch movements manufactured in Switzerland fall in the ETA movement group, all of which is owned by the Swatch Group! Almost all of the Swiss wristwatch brands incorporate the ETA movement in their timepieces, regardless of whether they are owned by the Swatch Group or not.
As much as that is true, there is nonetheless other major watchmaking conglomerates in the world that manufacture their own designer and luxury wristwatch brands and command considerable market share.
The Richemont Group
The Richemont Conglomerate owns and operates several companies dealing in luxury goods, including watches, jewelry items, and premium accessories. Based outside Switzerland for a change, this luxury goods holding company owns several high-end brands including IWC, Jaeger-LeCoutre, Panerai, Piaget, Baume Mercier, Montblanc, Roger Dubius and Cartier. The Richemont Group also happens to manufacture and own the Vacheron Constantin wristwatches, one of the three most expensive and prestigious wristwatch brands in the world.
A South African business magnate Johan Rupert founded Compagnie Financiere Richemont SA as a holding company serving the luxury goods market back in 1988. By 2012, Richemont SA was reputed to be the sixth-largest conglomerate by market capitalization according to the Swiss Market Index. Baume and Mercier by Richemont is a luxury manufacturer of sports chronographs. With a highly contemporary and modern look and feel, Baume & Mercier manufactures and markets a full spectrum of authentic and original timepieces with intricate attention to detail. The company is famous for its fine Swiss craftsmanship and its high-quality sporty appearance.
Cartier, on the other hand, is a classic luxury jewelry and watch brand by Richemont that is renowned all over the world. Cartier’s wristwatches stand for delicacy fused with state-of-the-art watchmaking technology and high-quality parts and gears. Perhaps the most innovative addition to Richemont Group’s subsidiaries is the International Watch Company or IWC. Founded in 1868, IWC has successfully combined its signature Swiss craftsmanship with the modern American watchmaking techniques. IWC incorporates the American engineering processes in the creation of its fine wristwatches, which distinctly appeal to American consumers.
Named after the tallest mountain in all of Europe, the Montblanc’s stylized white six-pointed star with rounded edges is seen as one of the most recognizable brand symbols in the world of luxury.
The LVMH Group is a luxury goods conglomerate based in Paris, France, formed in 1987 with the merger between Louis Vuitton Fashion House and Moët Hennessy. The LVMH Group holds 60 different subsidiaries and each has a limited number of luxury and prestigious brands under them. Each of the brands operating under LVMH Group has a long tradition and legacy of producing high quality, specialty and distinguished products under its corporate umbrella.
Considered as the one of the most innovative and dynamic watches, the LVMH timepieces are known for their high quality watch making. The watch brands under the LVMH watches include big names such as Bulgari, Chaumet, Hublot, Zenith and TAG Heuer. Each has its own set of qualities and uniqueness about it. For instance, Chaumet has its origins with the jeweler of Napoleonic Empresses. Joseph Chaumet later founded the Jewelry House in Vendome in the year 1907, which also housed a prestigious collection of Chaumet watches. Hublot, on the other hand, is a relatively new brand under the LVMH watches umbrella. Hublot became an instant success when it was first introduced in 1980.
Rolex Watch Company
The Rolex Watch Group is arguably the world’s most powerful and influential manufacturers of luxury wristwatches, manufacturing more than 2,000 watches per day! Rolex Watch Company have been operating for more than a century and has an impressive history of innovative watch designs that are popular both inside and outside Switzerland.
Currently based in Geneva, Rolex SA is a Swiss luxury watch company founded by two wristwatch visionaries Alfred Davis and Hans Wilsdorf. The company was originally named Wilsdorf and Davis after the founders and was registered in London in the year 1905. The group was renamed the Rolex Watch Company Limited in 1915 and moved its operational base and headquarters to Switzerland after the First World War. Today, Rolex caters to the upscale wristwatch market with a wide range of watch models including Rolex Oysters, Rolex Cellini, Yatch-Master 42, Sea-Dweller and many other popular models. Also, the Rolex Watch Company manufactures watches for high-end niche markets, including the Rolex Daytona targeted at racers and the Rolex Submariner for swimmers.
Rolex watches are known for the use of the finest raw materials and are assembled with meticulous attention to detail. Everything component and part – bezels, straps, dials, bracelets and materials - is designed, developed and manufactured in-house. The company produces a wide range of professional and classic watches that generate annual sales in excess of $7 billion for the conglomerate. The prestigious Rolex brand competes with several luxury watch brands in the world such as Omega, Patek Philippe and Panerai. The company, on behalf of the Rolex and Tudor brands, sponsors and supports many sports events around the world including racing, golf, tennis and yachting.
Some of the global trends are accelerating the growth of the global watch market, including the increasing brand awareness, a growing Western influence as well as the consumers’ need for exclusivity and style. All these factors favor the current structure of the global watch industry, which is dominated by the watchmaking giants and conglomerates. On the other hand, the watch industry is also faced with a number of challenges, the biggest of which is the rapidly evolving consumer demand and buying patterns. When a consumer purchases a timepiece, there is a lot of emotion involved.
Watchmaking conglomerates, although they control the majority of fortunes in the industry, are also responsible for setting new trends, introducing technological innovations and maintaining, in some cases expanding, the overall demand for luxury and designer watches. These large groups and holding companies are the very engines that drive the entire global watchmaking industry, and together they are able to maintain a steady demand for designer luxury watches around the globe.
On the other end of the mainstream wristwatch market, are the small niches that are enjoyed by micro brands. Micro brand watches are limited edition timepieces that are only available in very small, exclusive collections. These small-scale boutique watch companies are quite the opposite of the large conglomerates controlling the demand and supply in the global watchmaking the industry. Micro brand is used as a blanket term for the small, independent watch brands that successfully operate and create a diverse group of consumers, that love watches and also praise good value for the money invested in a timepiece. Micro brands are becoming increasingly popular with watch collectors and hobbyists who are looking for exclusive luxury-tier watches.
The reason for the popularity of micro brand watches among the watch enthusiast community and niche segments are their usually unique designs, fresh and exciting aesthetics as well as attractive prices owing to the elimination of the middlemen. Micro brand watches are often a breath of fresh air as they can be quite different in design to the mainstream offerings by well-known established brands. These small-person companies are challenging the traditional setup of the watchmaking industry and taking on the big names through their small, exclusive collections.
The contemporary luxury watch manufacturing landscape is shared by these chic microbrands with the industry’s well-known established brands. The watch industry’s times are changing rapidly, and micro brands and independent watchmakers are making inroads in the market once enjoyed exclusively by the Swiss monopoly. While the ‘made in Switzerland’ label is still considered the hallmark of quality and artistic innovation, elegant micro brand timepieces are breaking through the fabric of an industry which has always been dominated by a handful of watchmaking giants.