Zenith’s Crisis Is a Wake-Up Call for the Watch Industry
Zenith is facing one of the biggest restructurings in its history. At the same time, prices for Swiss luxury watches continue to rise, while sales are developing in completely different directions for the industry's manufacturers. Behind the figures emerges a watch industry where a few brands are taking an ever-increasing share of the market and where the battle for customers is becoming increasingly fierce. The question is whether there are simply too many watch brands trying to sell the same thing to the same people.
It is difficult not to react to the news about Zenith. One of the Swiss watch industry's most prestigious manufacturers, founded in 1865 and with a history that few competitors can match, faces a restructuring that could practically change the entire company's operations. According to reports from Reuters and Hodinkee, around 100 people could lose their jobs at the factory in Le Locle, equivalent to approximately half of the workforce there. Another around 100 jobs could disappear internationally. Production is to be significantly reduced, distribution changed, and the company is to concentrate on significantly more exclusive watches. If the reports about the new direction become reality, several of the model series that we today associate with Zenith may play a significantly smaller role in the future.
Zenith is therefore not being shut down, at least not in the traditional sense. But what is now being discussed is such a comprehensive change that it is reasonable to ask how much of today's Zenith will remain in a few years. According to reports published in connection with the restructuring, the company's sales have decreased from an estimated 138 million Swiss francs in 2023 to 98 million in 2025. During the same period, the number of watches sold is said to have fallen from around 13,000 to 8,500 pieces. The figures are estimates, as LVMH does not report Zenith's results separately, but they illustrate the extent of the problem. A manufacturer with large production facilities, extensive technical expertise, and an international organization has simply become too large in relation to its sales.
The strange thing is that Zenith in many ways represents exactly what we watch enthusiasts usually ask for. The company has a genuine history, its own movements, impressive manufacturing expertise, and not least El Primero, one of the most significant movements for the mechanical chronograph. It is no manufacturer that lacks identity or technical knowledge. Yet, apparently, that is not enough. And perhaps that is exactly why the situation is so interesting. If a company with Zenith's history, expertise, and moreover a financially strong owner in LVMH cannot make the business work, what does that actually say about the market the company operates in?
I believe that Zenith is a symptom of a much larger problem within the watch industry. Over the past ten years, the Swiss watch industry has changed in a way we may not have fully noticed. The large manufacturers have gradually raised their prices, launched increasingly expensive models, and in several cases tried to move their brands up the market. This has been largely successful, at least for some. But at the same time, the market has become increasingly concentrated, and the manufacturers that fail to create sufficiently strong demand risk ending up in a very difficult situation.
Photo: Zenith.
Fewer watches, higher prices, and an increasingly concentrated market
The statistics give a clear picture of the development. During 2023, the Swiss watch industry exported watches and other timepieces worth around 26.7 billion Swiss francs. Two years later, the value had decreased to 25.6 billion. Although this is certainly no dramatic decline in terms of turnover, if we instead look at the number of exported wristwatches, the picture becomes different. During 2023, around 16.9 million watches were exported, while the figure for 2025 had fallen to 14.6 million. This means that over two million fewer watches left Switzerland in just two years. Over a longer period, the change is even greater. The industry sells significantly fewer watches than before, but manages through higher prices and a changed product mix to still retain large parts of its export value.
This in itself is no proof that the industry is in crisis. On the contrary, one could argue that it shows how successfully Swiss manufacturers have moved towards a more exclusive segment. But the problem is that the success is very unevenly distributed. According to Morgan Stanley's and LuxeConsult's annual review of the Swiss watch industry, Rolex, Patek Philippe, Audemars Piguet, and Richard Mille together accounted for around 49 percent of the market's estimated sales value in 2025. Four manufacturers thus control almost half of an industry consisting of hundreds of brands. It is a remarkable concentration and a development that has also been reinforced in recent years.
Take Rolex as an example. According to the same report, the company's estimated turnover increased by around four percent in 2025 and passed eleven billion Swiss francs. At the same time, the number of watches sold decreased by an estimated two percent. Rolex thus increased its sales in value by selling fewer watches. This is naturally a very attractive business model, but it presupposes something that not all manufacturers have: demand that is so strong that customers continue to buy even when prices rise. Rolex has also consistently raised its list prices. During 2025, several price increases were carried out in key markets, and also at the beginning of 2026, prices were adjusted upwards, especially on models in precious metals. At the same time, Rolex has a position that makes the brand almost synonymous with an exclusive watch for many consumers.
At Omega, the development looks different, which I think is particularly interesting. Omega has also carried out extensive price increases in recent years. A Speedmaster Professional is today significantly more expensive than five years ago, and the same applies to several models in the Seamaster family. This is partly due to increased production costs, more expensive raw materials, and currency changes, but also to a clear move towards a higher price segment. The problem is that sales have not followed in the same direction. According to Morgan Stanley and LuxeConsult, Omega's estimated sales decreased by around eight percent in 2025, while the number of watches sold fell by approximately nine percent. Turnover was estimated at around 2.2 billion Swiss francs, which meant that Omega lost places in the ranking of the world's largest Swiss watch brands.
This naturally does not mean that Omega is a brand in crisis or that the company lacks a future. Omega still has a very strong position, a fantastic history, and some of the industry's most recognizable models. But the development shows that price increases do not necessarily lead to the same results for all manufacturers. Rolex and Omega partially compete for the same customers, but their opportunities to charge more are obviously different. When a Speedmaster approaches ever-higher price levels, the consumer's alternatives also change. The question is no longer just whether an Omega is worth its price, but what other watches suddenly become possible to buy for the same money. That is where I think we are starting to approach one of the watch industry's real problems.
When exclusivity becomes a business model
Patek Philippe simultaneously illustrates how successful a consistent exclusivity strategy can be. During 2025, the company's estimated turnover increased by around nine percent to 2.5 billion Swiss francs, despite production remaining at around 72,000 watches. The company has long been clear that it does not want to become dependent on large volumes of steel sports watches. The decision to discontinue the extremely popular Nautilus 5711 in steel was a clear expression of that attitude. Even though Patek still manufactures steel watches, it wants above all to be associated with complicated watchmaking, craftsmanship, and exclusive materials. The company simply has no ambitions to meet all the demand that exists for its most popular models. Instead, it prioritizes protecting the brand's long-term position.
The same development can be seen at Audemars Piguet and Richard Mille, although their strategies and customer groups differ partly. Audemars Piguet increased its turnover by around nine percent in 2025 according to industry estimates and sold around 53,000 watches. Richard Mille generated an estimated 1.75 billion Swiss francs in turnover through the sale of just under 6,000 watches. These are naturally extreme figures, but they say something about how much value has been concentrated in a relatively small number of manufacturers. It is no longer obvious that a large production is a sign of success. In some parts of the industry, it is rather the ability to limit production while maintaining demand that determines profitability.
At the other end of the development, we find manufacturers that are still dependent on relatively large volumes. Longines is an interesting example. According to Morgan Stanley and LuxeConsult, the company's estimated turnover decreased by a full 18 percent in 2025 to around 920 million Swiss francs. Thus, Longines fell below the billion mark for the first time in a long time. For a manufacturer with Longines' history and international standing, this is a remarkable development. At the same time, the figures show how difficult it has become to compete in a price segment where customers have many alternatives and where a higher price tag does not automatically mean greater attractiveness.
If we look at Swatch Group, which owns Omega, Longines, Tissot, Blancpain, and Breguet, among others, the challenges become even clearer. During 2025, the group reported a turnover of 6.28 billion Swiss francs, while net profit fell from 219 million to only 25 million Swiss francs. This is a very sharp deterioration for one of the watch industry's most important corporate groups. At the same time, the picture is not unequivocally negative. During the first half of 2026, Swatch Group reported sales growth of 8.5 percent in constant currencies, which shows that demand has actually started to recover. The problem is that profitability is still under pressure. Operating profit for the half-year decreased to 52 million Swiss francs from 68 million the year before. For an industrial group that owns large parts of its own manufacturing, lower volumes mean high fixed costs, even when sales start to move in the right direction.
At Richemont, which owns Vacheron Constantin, IWC, Jaeger-LeCoultre, and A. Lange & Söhne, among others, we see something similar. During the fiscal year ending in March 2026, sales within the group's division of specialized watch manufacturers decreased by four percent, calculated in reported currency. The operating margin amounted to only 3.4 percent. This can be compared with Richemont's jewelry division, which includes Cartier and Van Cleef & Arpels, among others, which reported an operating margin of a full 30.5 percent. This is an enormous difference and shows how difficult it can be to create profitability within traditional mechanical watchmaking, even for some of the world's most respected names.
Even here, however, there is a recovery to note. During the period from April to June 2026, Richemont's specialized watch manufacturers increased their sales by eight percent in constant currencies. But the comparison with the jewelry business is still telling. The jewelry houses grew by 24 percent during the same period. For large international luxury groups, it naturally becomes increasingly important to consider how capital should be used and which brands actually have the opportunity to become long-term profitable.
It is also worth reminding that not all manufacturers need to move towards extreme price levels to succeed. Cartier is a clear example of the opposite. The company's estimated watch sales increased by around ten percent during 2025, while it continues to offer relatively accessible models like the Tank Must alongside significantly more exclusive watches. Cartier has succeeded in creating a very clear identity around design, history, and recognition. A Cartier does not need to justify its price by offering the most advanced movement or the most complicated manufacturing. The customer is largely buying a design language and a history that has been relevant for a very long time. This is a strength that I believe several traditional watch manufacturers find difficult to recreate.
Even LVMH's latest figures show why we must be careful about drawing conclusions about entire groups from their combined turnover. During the first nine months of 2026, sales within LVMH's watch and jewelry division increased by eight percent organically. This sounds like a very positive development, but the figure also includes large jewelry brands such as Tiffany & Co. and Bulgari. It therefore does not say particularly much about how, for example, Zenith, TAG Heuer, or Hublot are actually developing. During 2025, it was also estimated that sales had decreased for all three of these pure watch brands. So the growth of a large luxury group does not necessarily mean that its traditional watch manufacturers are doing the same.
The second-hand market reveals another reality
Another aspect that I think deserves greater attention is the second-hand market. During the years after the pandemic, we saw an almost absurd development where several watch models were sold at prices far above their official list prices. This created an impression that exclusive watches would almost automatically increase in value, something that was naturally never sustainable. Since then, the market has undergone a comprehensive correction. During 2026, we have certainly seen a cautious recovery, but according to WatchCharts, the overall price level in the fall was still far below the peaks from the spring of 2022. In October alone, their overall market index fell by 0.8 percent, with declines for Rolex and Omega, among others.
For me, this is an important part of the discussion. When a manufacturer raises its list prices year after year, while the same models can be bought significantly cheaper on the second-hand market, a credibility problem arises sooner or later. It does not have to be a problem for the enthusiast who buys a watch to use it for many years. But it becomes a problem when the manufacturer's communication is increasingly about exclusivity, limited availability, and a price that is meant to signal something greater than the product itself. Today's consumers also have a completely different access to information than before. It takes a few minutes to compare prices worldwide, investigate historical sales levels, and see which models are actually in demand. This makes it harder to justify a price increase solely by saying that the brand wants to position itself higher.
At the same time, we should remember that there are very real cost increases behind many of the price adjustments. The strong Swiss franc, rising gold prices, higher production costs, and trade policy changes have heavily affected the manufacturers. The weaker demand from China and Hong Kong has also hit certain parts of the industry particularly hard. Therefore, not all price increases should be interpreted as an attempt to create artificial exclusivity. But regardless of why prices are rising, the question remains how much customers are willing to pay, especially when the differences between different products are not always perceived to correspond to the differences in price.
Here I believe the watch industry faces a structural problem. There are simply very many manufacturers trying to compete in the same segment. We are talking about mechanical Swiss watches that often cost between 50,000 and 150,000 kronor, where customers are offered historic brands, well-built movements, elaborate cases, and more or less similar stories of tradition and craftsmanship. Many of the watches are fantastic products, but that does not mean the market can absorb as many as it wants at whatever prices it wants. For a customer who is prepared to spend 100,000 kronor on a watch, there is today an almost overwhelming range of options. And when several manufacturers simultaneously try to take the step from, for example, 60,000 to 100,000 kronor, the competition changes. They no longer only face their traditional competitors, but also other brands and used models that previously were in a completely different price class.
It is possible that the industry for several years has overestimated how many customers actually exist in these price segments. The pandemic years created exceptional demand, not least through an increased interest in watches as collectibles and investments. Many manufacturers responded with higher prices, larger marketing investments, and in some cases, expanded production. But the extraordinary demand was never a guarantee that the market would continue to grow at the same pace. When consumers' purchasing power was squeezed and the interest in speculation decreased, the differences between the brands' real attractiveness became significantly clearer.
Zenith is hardly the last example
This brings us back to Zenith. The company's planned restructuring appears in many ways to be an attempt to adapt the business to a new reality. Instead of continuing to compete with relatively large volumes in a heavily pressured mid-market segment, the company wants to concentrate on significantly fewer and more advanced watches, where prices and, hopefully, margins are higher. From a business perspective, the strategy is understandable. Zenith has the technical expertise to manufacture exclusive movements and a history that should be able to justify significantly more advanced products. But the question is whether that is enough to create demand among customers who already have a large number of established alternatives.
After all, manufacturing an exclusive watch is not the same as being an exclusive brand. Patek Philippe, Audemars Piguet, and Rolex have built their positions over a very long time and have demand that far exceeds what many competitors can achieve. Their success cannot be copied by reducing production, raising prices, and launching a few complicated models in precious metals. Exclusivity presupposes that there are people who really want to own the product, even when it is difficult to obtain and costs a lot of money. A limited edition that no one wants is not exclusive in any meaningful commercial sense.
I am therefore not convinced that the solution for the entire watch industry is to continue moving upwards. On the contrary, I believe that many manufacturers would benefit from considering what once made their products attractive. It does not always have to be about creating the most expensive, most complicated, or most exclusive watch. It can just as easily be about offering a well-made and interesting product at a price that the customer perceives as reasonable. The successes of some smaller, independent manufacturers also show that there is still demand for watches that offer a distinct character without necessarily trying to compete with the absolute top tier of the industry.
At the same time, we should be careful about describing the Swiss watch industry as an industry on its way to collapse. During the first nine months of 2026, the total export value increased by 2.7 percent compared to the same period the previous year. Several large groups have also reported improved sales during the year. There are therefore clear signs that the market is stabilizing after a few difficult years. But a recovery in export value is not necessarily the same as all manufacturers having better conditions. The structural differences between winners and losers still remain, and much suggests that they will persist even when the economy improves.
This is why I believe that Zenith will not be the last example of a major restructuring within the watch industry. We will likely see more companies reducing their production volumes, changing their collections, reviewing their distribution networks, and trying to find a clearer position in the market. Some will surely succeed in moving towards more exclusive watchmaking, while others may need to go in the opposite direction and rediscover the value of more accessible models. It is also not unreasonable to think that some brands may eventually find it difficult to justify their existence within large groups, especially if their sales are not in proportion to the costs of running the business. However, I believe it would be pointless to try to point out exactly which manufacturers are next in line. The problems are significantly more complex than that, and a weak sales year does not necessarily say much about a company's long-term prospects.
What makes this development interesting is that it also challenges one of the watch industry's most established assumptions: that a higher price is almost always a step in the right direction. For many years, exclusivity has become something of an end in itself. More and more brands want to manufacture fewer watches, sell them for more, and at the same time be associated with the same small group of wealthy collectors. But not everyone can be Patek Philippe, not everyone can be Rolex, and above all, not everyone can build their business model on customers accepting constantly rising prices. Sooner or later, there must also be a clear connection between what a watch costs and why someone actually wants to buy it.
For Zenith, the ongoing change could very well mark the beginning of something new. Perhaps we will see a smaller company once again concentrate on the truly advanced watchmaking that once made the manufacturer famous. If so, it would be an interesting development, even though it is naturally regrettable that such a large part of the business and so many jobs are at risk of disappearing. But I think we are making a mistake if we view it as an isolated event. The figures from recent years show that the watch industry is already changing and that the competition for customers is becoming increasingly uneven.
Ultimately, I do not think the big question is how many watch brands the world needs. There will always be room for manufacturers who offer something interesting, whether it is technical innovation, history, design, or an attractive price. The real question is how many manufacturers can continue to compete for the same customers with roughly the same products, in the same price segment, and with the same ambition to appear increasingly exclusive.
Zenith shows that even a brand with 160 years of history may need to rethink everything from scratch. I suspect that significantly more will be faced with the same realization in the coming years. For if everyone wants to climb to the top, one must also ask how many there actually is room for there.
