Story Highlight
– Global watch industry facing structural reset in 2026.
– Swiss exports declined; Chinese demand dropped 35%.
– Major brands see profitability collapse amidst stable revenues.
– Secondary market favors independent watchmakers with creative credibility.
– India emerges as fastest-growing market for Swiss watches.
Full Story
The global luxury watch sector is currently facing a significant transformation, indicating a shift that goes beyond mere cyclical adjustments. By early 2026, it becomes clear that fundamental changes are occurring in pricing, distribution, and the market’s perspective on luxury watches.
Declining Swiss watch exports over the past two years, coupled with a drastic 35% drop in demand from China and the imposition of ongoing tariffs by the US, have revealed the vulnerability of an industry reliant on globalisation and stable trade relationships. At the same time, the cost of Swiss watchmaking is increasing due to a robust Swiss franc, record gold prices, and escalating geopolitical tensions—factors that are squeezing profit margins across the industry.
The financial outcomes for major watch brands highlight this paradox: while profitability is plummeting in their watch divisions, revenue is stabilising. As the primary market seeks to adjust, the secondary market offers a contrasting narrative. Notable independent watchmakers, such as François-Paul Journe, are achieving remarkable premiums not through size or marketing, but via artistic integrity and the approval of collectors. This trend is not just anecdotal; it is quantifiable and is actively reshaping the industry’s landscape.
### The Structural Changes at Play
As of March 2026, we witness three interwoven structural shifts occurring: changes in trade dynamics, shifting consumer demographics, and a new valuation framework for luxury goods informed by savvy market participants.
The decline in Swiss watch exports paints a stark picture: in 2024, the total value fell to CHF 26 billion, marking an overall decrease of 2.8% in value and 9.4% in volume—significant reductions reflecting the sharpest downturn since the post-Global Financial Crisis era. By late 2025, figures dropped further to CHF 23.4 billion. This is not simply a post-pandemic correction; it is indicative of a fundamentally altered demand landscape.
China, previously a powerhouse for growth in the sector, reported a staggering 34.8% contraction compared to its peak in 2023, with other traditional markets like Hong Kong and Japan also exhibiting softening demand.
### Implications of Recent Tariff Policies
The announcement of a 31% tariff on Swiss imports in April 2025 created immediate repercussions, leading to inflated exports due to rushed shipments. A further tariff increase to 39% by August caused a significant year-on-year export decline of 56% to the US in September, revealing not merely a temporary disruption, but a fracture in the market itself.
Subsequent negotiations resulted in a retroactive tariff of 15%, which, while stabilising the situation, added a persistent challenge to every Swiss brand aiming to sell in the US. Brands that had hiked retail prices during the tariff escalation now face pressures that undermine long-established pricing structures.
The geopolitical context is critical; as outlined in the World Economic Forum’s Global Risks Report for 2026, shifting geoeconomic relations pose significant risks. These developments demonstrate that Switzerland’s reputation for neutrality cannot shield it from the impacts of global trade dynamics.
### Financial Performance of Major Players
Recent fiscal data from Richemont, which owns several prestigious watch brands, reveals a troubling trend. The group’s watch division saw a 13% revenue drop, culminating in an operating profit margin of just 5.3%. In sharp contrast, its jewellery division achieved a 31.9% operating margin on rising revenues.
By the first half of the fiscal year 2026, Richemont’s watch margins fell further to 3.2%, showcasing a widening gap in profitability compared to jewellery. Similar trends are observable at LVMH, where margins in the Watches and Jewellery division fell despite revenue growth—indicative of an industry grappling with structural challenges rather than temporary setbacks.
### The Rise of the Secondary Market
An essential development in understanding the current watch landscape is the emergence of the secondary market, which functions as an impartial mechanism for price discovery independent of marketing efforts or brand prestige. Recent data illustrate a marked preference for independent watchmakers, with F.P. Journe achieving 176% of its pre-sale estimate in a November 2025 auction, vastly outpacing established luxury brands.
The secondary market is validating the worth of independently produced watches, driven by collector enthusiasm and authentic provenance rather than historical or institutionally imposed valuations.
### Future Trends and Opportunities
The shift in demand is significant; India has emerged as the fastest-growing market for Swiss watches, exhibiting a 35.2% growth in exports while China faces declines. India’s burgeoning affluent population, forecasted to double by 2028, indicates a promising future for Swiss timepieces, albeit with existing distribution challenges.
Meanwhile, the Middle East, particularly Saudi Arabia, has also seen a surge in luxury watch imports, suggesting rapid market expansion driven by economic diversification and a culturally evolving collector base.
In summary, the luxury watch industry is navigating profound shifts, where creative credibility is increasingly important, and new markets are rising, setting the stage for evolving dynamics in consumer preferences and value attribution.
