The Rising Cost of Mechanical Watches: Why mechanical watches are getting more and more expensive?

Major watch brands are producing increasingly expensive watches.

This is the conclusion drawn based on the export data of Switzerland in recent years. In FHH's review report for 2022, the number of watches with exports exceeding 3000 Swiss francs increased by 16% year-on-year, and since 2019, the average export value of Swiss watches has increased by over 50%, from 993 Swiss francs to nearly 1500 Swiss francs.

Watches are getting more and more expensive - Patek Philippe just announced that it would stop production of 5711, and then came a platinum 5811; Rolex also brightly colored series like Explorer, adding precious metal elements. The unit price of watches made of precious metals and inlaid with various diamonds is constantly increasing, but the total export volume is decreasing. According to the FHH report, the total export volume of Swiss watches in 2022 was 15.8 million, slightly higher than the historical low of 13.8 million in 2020, but only about half of the total export volume of Apple Watch in 2015 (28 million).

The export quantity of high-value watches is growing. The export quantity of watches with low value (less than 3000 Swiss francs) and lower value (less than 500 Swiss francs) has been declining since 2015. If the MoonSwatch launched by Omega and Swatch in recent years had not contributed millions of exports, the export quantity of the whole Swiss-system tournament made watch industry would be less. It has to be said that MoonSwitch is one of the few highlights in the entry-level Swiss-system tournament watch industry since the launch of Apple Watch.

In short, the birth of Apple Watch has really affected the Swiss-system tournament watch industry.

An executive of the Earl believes that the Apple Watch has increased consumers' awareness of wearing; Jean Claude Biver, a godfather, also changed his attitude. At first, he thought that the Apple Watch was a "crisis" in the Swiss-system tournament watch industry. Now, he even said that the Swiss-system tournament watch industry should pay Apple for every watch sold.

It is easy to understand that Apple Watch did not kill the Swiss-system tournament watch industry. It just took away the cake of smart watch brands like Fossil. Swiss-system tournament watch industry also took this as a reminder to develop into the high-end field, which means, "I can sell more expensive. Apple is comfortable to surround people, cultivate their sense of wear, and when these people want to buy higher value watches, my opportunity will come". Morgan Stanley also recognized this. In a recent report, Apple Watch no longer poses a threat to the Swiss-system tournament watch industry due to the industry's renewed focus on high-end products.

Both mainstream brands and independent watchmakers are constantly raising customer prices. When Rexhep released CC1 in 2018, it was priced at approximately $60000. However, with last year's second-generation product, the price soared to $135000, more than doubling. Most people may be intimidated by such a price, but some industry insiders believe it is reasonable or even set it low. A young watchmaker in his thirties, who debuted as a million dollar product, is just a three pin watch that "most people" wouldn't have imagined.

Back at Biver, he also launched the brand of the same name. The product is a Tourbillon worth $500000. "Most people" also can't understand it, but the old man is the legendary godfather. After years of hard work in the industry, the rich list on hand is worth much, so he doesn't have to worry about selling it!

Speaking of the legend of Biver, we can't escape his story that "almost alone saved the traditional watchmaking industry in the Quartz crisis". In 1983, when he took over the faltering Baopo in the throes of the Quartz crisis, he refocused on the expensive and luxurious attributes of traditional watchmaking, in sharp contrast to those fresh and accurate quartz watches, which also gave birth to a classic slogan: since 1735, Baopo has never launched a quartz watch, and will never do so again.

The transformation of Pomper illustrates how watches have evolved into true luxury goods over the past few decades.

Taking Rolex as an example, in the 1950s and 1960s, the brand focused on quality, accuracy, etc. Its promotional strategy at that time was more focused on achieving differentiated marketing through high-quality selling points such as waterproof oyster shaped watch cases and small errors. After all, it's still a high-end tool watch.

Early Rolex ads used quality and performance as differentiators

But when the quartz watch appeared, Rolex couldn’t justify its promotion of accuracy. It had to tell stories and lifestyles, so you will find that Rolex’s advertisements have a new expression: If you are going to participate in business negotiations, you will wear a watch. Rolex. This is the usual means of luxury goods. The same is true of Patek Philippe's phrase "no one can own Patek Philippe, it is just kept for the next generation".

In the 1980s, Rolex began to emphasize lifestyle

Of course, not only has the promotion strategy changed, but also the quality and skills are constantly improving. Acrylic is replaced with sapphire, aluminum rings are replaced with ceramic rings, and various materials and complex functions are emerging... The corresponding phenomenon is the continuous rise in prices. After considering inflation, the price of a Rolex Submariner today is six times that of the 1950s.

Not only Rolex, but also its younger brother Tudor, will gradually increase their prices in the future. Otherwise, in recent years, they will not start to engage in METAS certification, with one more certification and one more reason for price increase.

Another important reason for the price increase is the pressure of the supply chain. It is difficult and expensive to obtain raw materials. Sylvain Berneron, a senior manager of Breitling SA, said that before the epidemic, the delivery time of raw gold bars was generally two to four weeks, but now it takes up to four months. As for parts such as the moving bridge board, it takes eight months. When supply is limited, the cost of these materials, whether it's time or cost, will all be counted towards consumers.

In February 2021, we mentioned that watch prices are also related to dealer quota games, so we will not extend them here. Most of this article talks about price. It mentions several sensitive periods of the Swiss-system tournament watch industry. At the end of this article, I will mention another advantage of Swiss watch: its toughness is very strong.

The "Wall Street Journal" once issued a soul torture in 2018: Is there not much time left for the Swiss watchmaking industry? Today, it seems that this worry is superfluous.

In the autumn of 1929, the Great Depression radiated to the whole world, and the lives of many brands were hanging by a thread. Even the high-ranking Patek Philippe used methods such as cutting wages and melting precious metals to solve financial problems. It survived, and the prototype of the Calatrava series, Ref. The quartz crisis in the 1980s was unanimously bad-mouthed by the outside world, and it survived. Several luxury Sport Watches were born after that.

People continue to buy watches and love watches.