Good times: Luxury watchmakers face soaring demand
Times have been so good for luxury watchmakers that they are running behind demand, forcing some to delay the release of new collections and others to invest more in production capacity.
After the pandemic severely hit the global economy in 2020, the sector enjoyed a spectacular recovery last year and started 2022 with a bang, though Russia's war in Ukraine created new uncertainties.
Watches were the best performing business for French luxury group Hermes, with sales soaring by 73 percent last year.
"We had an extraordinary year in the watches business," Hermes vice president Guillaume de Seynes told AFP at Watches and Wonders in Geneva this week, one of the industry's biggest annual showcases.
"We can feel a very strong dynamic for watchmaking everywhere in the world," he said, adding that there was hot demand for a men's watch model last year.
"We could have even sold more if we had been able to make more," de Seynes said, noting that watchmakers face a "demand phenomenon that exceeds production capacity."
His priority for 2022 is to invest in production.
- Solid year -
The Oris brand also had "a very strong year", said its chief executive, Rolf Studer.
Oris watches range between 1,800 and 7,200 Swiss francs ($1,928 and $7,710 or 1,767 euros and 7,064 euros).
The company had to delay the launch of a new collection in the higher price range because it did not produce enough watch movements -- their internal mechanisms -- in its workshops.
The watch was supposed to come out last summer but it is only launching now.
"We planned too conservatively," Studer said.
"So we decided to keep the movements for the watches that were already out instead of launching new models and not be able to supply existing models already on the market," he added.
Swiss watch exports rebounded last year, rising by 31.2 percent after a 21.8-percent contraction in 2020, when countries closed borders and went into strict Covid lockdowns.
Exports have not only exceeded pre-pandemic levels, they beat their 2014 record, too.
They went up by almost 16 percent in the first two months of this year, according to industry data, though the recovery has been seen only in watches worth more than 3,000 Swiss francs.
- Wait list -
The sector is now bracing for the fallout from the war in Ukraine and sanctions on Russia, which has a sizeable rich client base.
But the industry can rely on long wait lists for higher-end timepieces.
"Since we didn't have enough watches for other markets, we will sell those that won't be delivered to Russia elsewhere," Edouard Meylan, CEO of H. Moser & Cie., told AFP.
All of his 2022 production is already pre-sold to retailers and partly pre-paid by final customers.
H. Moser only makes 2,000 watches per year at an average price of 45,000 Swiss francs. The watchmaker is even rejecting orders for timepieces that require a more than two-year wait.
"There's uncertainty that can be created in other markets, particularly financial markets," Meylan said.
"But we would have to have a big crash for an independent brand like ours to be affected," he added.