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Time is Ticking for the Swiss Watch Brands

May 17, 2017 Lifestyle No Comments Email Email

Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. The 50 most valuable Swiss brands are included in the Brand Finance Switzerland 50.http://www.banyantree.com/en/ap-thailand-phuket-spa-sanctuary

The falling brand values of Tissot (down 18%), Omega (17%), Longines (12%) and Swatch (11%) reflect the current decline in the Swiss watch industry. The industry has suffered more than two years of declining sales, which were down 9% in the first five months of 2016 due to weaker demand from China and emerging markets. Brands like Apple and Samsung, who are well established in the tech space, have introduced smartwatches, threatening the necessity for an old-fashioned watch. Time is ticking for traditional watch brands to invent new products that incorporate technology or they risk losing market share.

Interestingly, TAG Heuer’s brand value grew 39% to CHF 3 billion. Amidst a 10% decline in Swiss watch exports, TAG Heuer reported more than 10% revenue growth in 2016. The revival is attributed mainly to new models and the launch of its ‘TAG Heuer Connected’ line, which makes the brand the first Swiss watchmaker to offer smartwatches. The main challenge Swiss watch makers currently face is the rise of technology. TAG Heuer recently opened an office in Silicon Valley to solidify its smartwatch alliance with Google and Intel Corps. It is clear that TAG Heuer has embraced the need for change and its growing brand value reinforces the importance of innovation.

Rolex is the most powerful Swiss brand this year with a Brand Strength Index score of 89.2. Compared with the more affordable Swatch and mid-market Tissot, Rolex’s renown and premium status seem to allow it to bypass the industry’s market conditions. Rolex’s brand value is up 14% to CHF 6.8 billion.

Despite a 20% drop in brand value to CHF 18.8 billion, Nestlé remains Switzerland’s most valuable brand and the world’s most valuable food brand. Its brand value is more than double that of Switzerland’s second most valuable brand, UBS. In spite of its incredible feat, Nestlé has been hit by the pervasive trend for healthier, more natural food, which has reduced demand for Nestlé’s crucial confectionary brands. Nestlé operates dozens of individual product brands such as KitKat and Butterfinger, however, the Nestlé brand acts as an endorser, visible on all packaging – a decline in these product brands hits the value of the Nestlé brand too.

In contrast, Lindt’s brand value has risen 18% to CHF 1.5 billion, making it the fastest growing Swiss food brand in the table this year. The chocolate industry has been plagued with higher raw material prices and weak consumer sentiment, yet, Lindt bucks the trend. The brand reported higher profits and grew at a faster pace than the overall chocolate market in 2016. Results in Japan and Brazil were particularly impressive with high double-digit sales growth mainly due to the opening of the company’s own shops and cafes. Furthermore, in line with its global expansion strategy, Lindt has opened new stores in Wales and Australia, boosting its network to close to 400 stores. Thanks to seasonal and premium products such as Lindor chocolate balls and gold foil-wrapped Easter bunnies, Lindt has grown sales in stagnant markets; organic sales growth increased 2.6% as a result of Christmas season promotions. With its growing network and product lines, Lindt manages to escape the declining industry, and it will be interesting to see whether the brand bolsters its value further next year.

Pharmaceutical giant, Roche, is Switzerland’s fastest growing brand and eighth most valuable. Roche’s brand value has grown 52% in value to CHF 5.9 billion and has overtaken Pfizer to become the world’s most valuable pharmaceutical brand. New immune-oncology drug, Tecentriq, achieved FDA approval for lung cancer and Roche expects almost €4.5 billion in revenues by 2021 as a result. A trio of breast-cancer therapies boosted earnings, which offsets sluggish sales of some older drugs. Novartis, the only other pharma brand in the table, has also performed well, its brand value up 9% to CHF 4.5 billion, which seems mainly as a result of strong Growth Products performance.

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