Brand polarization intensifies: The luxury watch market as seen in the "2025 Swiss Watch Annual Report"

The 2025 Swiss Watch Annual Report, published by Morgan Stanley and Luxe Consult, reveals the changes occurring in the luxury watch market, which showed signs of decline in various countries last year. This report is analyzed by up-and-coming economic journalist Tomoyuki Isoyama.

Morgan Stanley's 2025 Swiss Watch Annual Report

　Morgan Stanley, a major US financial institution, recently published its annual report on the Swiss watch market for 2025. This is the ninth time the report has been published, and it is a joint publication between Morgan Stanley and the Swiss consulting firm Luxe Consult. A distinctive feature of the report is that it estimates the market share of each brand (not official figures from manufacturers). The 2025 annual report analyzes that while the overall market growth is slowing, with Swiss watch exports declining for the second consecutive year, changes are appearing in the market share of each brand, and the strengths and weaknesses of each brand are becoming clearer.

Analyzing the luxury watch market in 2025

　According to data compiled by the Federation of the Swiss Watch Industry (FH), Swiss watch exports in 2025 were projected to be 25.5524 billion Swiss francs (approximately 5.1054 trillion yen), a 1.7% decrease compared to 2024. This represents a 4.5% decrease from the peak of 26.7483 billion Swiss francs (approximately 5.3479 trillion yen) in 2023. A Morgan Stanley report attributes this largely to the fact that "the Swiss watch industry has historically relied on Chinese customers, but the increase in exports to the United States has not been able to offset the decline in exports to mainland China." The biggest factor driving the significant growth of the Swiss watch market over the past 20 years has been the increase in demand from China, and the sharp slowdown in the Chinese economy has brought a sharp brake to demand for luxury watches.

　According to statistics from the Swiss Watch Federation (FH), the US was the largest market in 2025, but exports decreased by 0.5% year-on-year. Exports to mainland China, which had been the second largest market until 2024, fell by 12.1%, dropping the US to third place, behind Japan. Exports to Japan remained second, but even that decreased by 5.8% year-on-year, so relatively speaking, it only surpassed China. Hong Kong, once the largest export destination, fell by 6.5% year-on-year to fourth place, and has almost completely lost its former glory as a luxury watch market that was once a trading hub in the free city.

Trends by brand

　Amidst this situation, Morgan Stanley's report highlights a shift in trends across different brands.

"The Swiss watch industry in 2025 clearly showed a trend toward increasing polarization. Major brands are gradually increasing their market share, with the top four brands accounting for more than 50% of the total market."

　In terms of market share, Rolex holds the top spot with 32.9%, followed by Cartier at 8.7%, Patek Philippe in third place (7.0%), and Omega in fourth place (6.4%), with these four brands alone accounting for 55% of the market. According to Morgan Stanley, these four brands accounted for 52.4% in 2024, indicating that their market share is increasing in 2025. With the rise in the market share of luxury brands, the proportion of exports with a retail price of 50,000 Swiss francs (approximately 10 million yen) or more has risen from 33.5% in 2024 to 37%. In other words, high-priced luxury brands have emerged as winners, increasing their market share and clearly demonstrating a polarization of the market.

　A Morgan Stanley report identifies privately held brands owned by individual companies as the "winners" who will increase their market share in 2025, while listed brands struggle. Examples of owner-managed brands, or so-called independent brands, include Rolex, Patek Philippe, Audemars Piguet, and Richard Mille. On the other hand, listed companies such as the Swatch Group, which owns Omega, are facing a tough challenge. A major shift in the 2025 sales rankings is Omega's drop from third place, a position it had maintained for many years, to fifth. There is considerable interest in whether the Swatch Group's strategy will change, given its focus on efficiency improvements through the standardization of movements and logistics networks, while also leveraging public relations to increase brand awareness and climb the industry rankings. Swatch's sales also fell from 12th place last year to 15th place this year.

　Audemars Piguet, which has risen to third place in sales and surpassed Omega, is pursuing an ultra-luxury strategy with an average price exceeding 50,000 Swiss francs, despite selling only a little over 50,000 units. It can be said to be a symbolic presence in a market that is becoming increasingly polarized.

　Among the brands in the rankings, Jacob & Co. has made remarkable progress and is attracting attention. Sales volume increased by 24% and revenue increased by 14%, recording the highest growth rate. Founder and current chairman Jacob Arabo stated, "We are extremely proud to have been selected as one of the fastest-growing Swiss watch brands in 2025," adding, "This is because we have always continued to challenge ourselves, never stopped innovating, and continued to believe in our vision."