Europe is home to some of the world’s most iconic companies. Many started small to quell a single person’s curiosity before exploding into a global phenomenon. As a new resident, stories of big, successful European brands have piqued my interest. What’s their story? How did they transform into the giants they are today? How have they sustained their legacy over time? Those are some of the questions I explore in this new series.
It’s the 1980s, and the Swiss watch industry, Switzerland’s lifeblood, was battling extinction.
An innovation by Japanese watchmaker Seiko—a battery-operated quartz watch—kept time more accurately than its mechanical counterparts. While the new instrument was only a few millimeters long, it was enough to obliterate the acclaimed Swiss watchmaking industry.
Switzerland had dominated the craft of horology for its entire history, supplying 50% of the world’s watches until that point. Its watches became tokens of wealth, power, and affluence.
to this day.
, coupled with a global recession and a strong Swiss franc, left many such Swiss companies in a bind. Unemployment in the industry soared, and experts speculated that entire watchmaking communities would cease to exist as Japan eclipsed Switzerland as the world’s largest watch manufacturer.
That’s when Nicolas G. Hayek came to the rescue. In the spring of 1982, the banks that kept watch companies from going bust tasked the Lebanese-born consultant with writing a report that could’ve essentially spelled the end of Swiss watchmaking.
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Instead, Hayek proposed combining several Swiss watch labels under one roof as Société Suisse de Microélectronique et d’Horlogerie, or SMH.
He also insisted on setting up a funkier watch brand to let the average person buy inexpensive timepieces. Instead of limiting people to one high-end watch, Swatch would be their second watch (hence the name), which would be more artistic and imaginative. It would also be made with plastic, easier to buy, and mass-manufactured rather than individually hand-crafted.
Although an outlier among its elite peers, Swatch is now widely regarded as the anchor for the entire Swiss watch industry’s revival.
. He grew up in Biel, where Swatch Group is headquartered, and says he vividly remembers the company’s impact on the town.
watches by the early 1990s, as Hayek’s efforts started to pay off. Like a rising tide lifting all ships, Swiss watches regained their allure, albeit in a very different way from the pre-quartz era.
In addition, Hayek streamlined big Swiss brands like Tissot and Omega under SMH, which officially became Swatch Group in 1998. The Swatch brand, with its $60 watches, now operates under the same parent company that sells a $30,000 Blancpain.
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Donzé pointed out that the gulf between the volume and value of watches helps demonstrate the industry’s sea change. While Swiss watch exports have halved since 2000 to about 15 million, the value has increased two and a half times from CHF 10 billion ($11 billion in today’s exchange rate) in 2000 to CHF 25 billion ($28 billion) in 2024.
There’s no doubt potential to be tapped—but can Swatch still hold a winning share of it?
While the Zurich-listed company made itself indispensable to an industry once verging on extinction, that spiel alone won’t be enough to sustain it forever.
in operating profits last month owing to weak consumer spending in China. The company has also recently sparred with some shareholders over corporate governance and trailing share price performance.
However, Swatch has defended its results, expecting a stronger 2025 as it deliberately postponed redundancies and saw an uptick in demand across other regions outside China. It’s still fighting to win market share that will help it stay the undisputed watchmaking juggernaut.
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1. Marketing for the right audience
When Swatch was still SMH, the company had to convey a sharp, impactful message that thrust timepieces back into the public consciousness.
To achieve this, when the group launched the Swatch brand, it decided to do things differently by making watches a fashion collectible. As styles change with seasons and trends, watch designs could, too.
, Swatch has introduced more audacious designs.
Swatch began making limited-edition watches to capture cultural zeitgeists. This created an artificial shortage that had only been seen for luxury watches (for entirely different reasons, mainly owing to the time each craftsperson took to make them).
“In an industry known for its traditionalism and luxury, Swatch watches embodied attainability, creativity, and fun, without compromising on quality,” said Villard.
followed the same template but looked distinct, making them a coveted addition for Swatch collectors, commanding over $20,000 even today.
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(even Bill Gates couldn’t resist wearing one).
to non-technical innovation, as brand positioning through marketing became front-and-center.
the Olympic Games in 1932.
Breguet and Blancpain are ultra-exclusive watchmakers, while Longines is in the medium-priced range.
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It has since had a few bumpy years as demand for some watches eased while its brands went head-to-head with independents (such as Rolex and Patek Philippe) and conglomerate-backed watchmakers (such as Richemont’s IWC and LVMH’s Tag Heuer).
Its market share has plunged considerably versus private watchmakers, which could result in the underperformance of the entire Swiss watch market in 2025, according to a report published earlier this month by Morgan Stanley and LuxeConsult. Still, it remains a key player, with four of its brands featured in the world’s top 20 watchmakers (slightly lower than Richemont, which owns five brands).
2. Ownership in every right
When Swatch was established in response to the 1980s quartz crisis, its brands had several contemporaries, many of whom had been in the watchmaking business for decades (if not centuries). But if Swatch had to deliver profits and become the backbone of the industry, it had to fortify itself in more ways.
supplier ETA had been the core of its previous entities’ watchmaking business. Today, ETA designs and produces movements, which are the engines that power mechanical, quartz, and Swatch watches.
that became Swatch’s foundation.
or more).
Its innovation means Swatch watches can keep running for 90 hours even when not on the wrist without losing accuracy.
-priced watches and to driving cross-brand collaborations, such as those between Swatch and sister brands Blancpain and Omega.
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He added that Swatch had “no competition” in its segment and “stands alone due to its technological innovations and unique performance.”
and batteries for timepieces. It owns and operates its own foundry for gold and other alloys. Swatch also owns Micro Crystal, which manufactures tiny quartz crystals that help with precise timekeeping and are also used in smartphones and medical tools.
It’s no small feat that Swatch Group can make nearly all the components for the watches made by its 16 different brands. It was even more significant, though, that it held a virtual monopoly by supplying parts to 80% of its Swiss contemporaries.
making components for anyone but its own brands as it made the “entry-level far too low,” Nick Hayek said. However, given its formidable presence in the market, the Swiss competition commission only allowed Swatch Group to gradually wean off rivals—big and small—from its supplies in a 2013 deal.
Today, big watchmakers are also vertically integrated, just like the Swatch Group did. However, they only make components for their own watches rather than supply them to the rest of the industry.
3. Innovation at the core
With ETA and legacy watchmakers like Omega all under the Swatch Group umbrella, innovation became the main driver for the Biel-headquartered company.
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Swatch Group’s pioneering approach has made its watches a microcosm of engineering innovation.
There’s no dearth of resources for those steeped in Swatches. Scores of collectors worldwide are dedicated to curating the rarest and oldest Swatches, helped by a thriving eBay and secondhand market. The company even publishes a £350 encyclopedia documenting 40 years of design breakthroughs.
That’s probably what has kept Swatch’s appeal alive even as smartwatches have occupied wrist space in recent years.
“The idea of expressing yourself through your watch goes far from the values represented by smartwatches,” Villard said, adding that contrary to belief, smartwatches have drawn new business to Swatch’s watches.
“Especially in markets like the U.S. where there is an increasing demand for smartwatches, customers also have the growing tendency to be interested in a traditional watch for the first time in their life as an accessory reflecting their personality and their individuality.”
in its own right.
could mark a new paradigm for the company.
) and Swatch’s playful colors in bioceramic.
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The company subsequently reported record sales of CHF 9 billion ($10 billion) for 2022 as the pandemic boom overlapped with the MoonSwatch’s craze.
“We’ve also connected with a new audience. It’s opened the door to younger customers gaining an interest in watches in general as well as being excited specifically about our innovative designs,” Villard says of the impact MoonSwatch has had.
The Hayek-led company took a page from its MoonSwatch success to unveil another collaboration between Swatch and Blancpain of a colorful scuba diving watch called the Scuba Fifty Fathoms.
Only time will tell
Swatch Group’s story and contribution to the watch industry can best be summarized in Charles Dickens’ famous, as it’s seen the best and worst of times. It was birthed out of a crisis that it took in its stride, emerging as a trailblazer.
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It begs the question: Does Swatch have what it takes for the next century of watchmaking?
Swatch’s shares have fallen 15% in the last year while its operating profits slid by alarming levels in 2024. The group undeniably has its weaknesses, Donzé pointed out.
“The big problem for Swatch Group is its inability to manage modern luxury brands,” he said. Independent luxury watchmakers control 47% of the Swiss watch market, according to the Morgan Stanley and LuxeConsult report.
Vontobel analyst Jean-Philippe Bertschy also echoed that Swatch Group’s bespoke brands aren’t pulling their weight.
For instance, Breguet and Blancpain sales are “similar to those of Patek Philippe or Audemars Piguet 20 years ago, they remained virtually unchanged at around CHF 200-300 million each, while the other independent brands exploded to CHF 2 billion each.”
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of the company’s share capital and controls roughly 43% of its voting rights.
for luxury players recently, could be one way for the company to grow, he noted.
The ebbs and flows of the watch market could mean that different segments of Swatch Group perform well at different times. In recent years, as consumers were under financial pressure and turned away from luxury spending, entry- and mid-level brands helped drive Swatch’s sales volumes.
That restores a natural balance following the boom in higher-end watches experienced during the COVID-19 pandemic. Swatch is confident demand will pick up, so it didn’t lay off staff at its production unit even as orders from third parties and its own brands were down.
In a market where the most complicated timepieces won the business and praise of watch connoisseurs, Swatch succeeded with simple, low-cost, sophisticated, low-cost alternatives. This characteristic and the company’s strong leadership in innovative horology could keep the Swiss giant relevant for years to come.
asked Villard what he thinks a world without Swatch might look like, he laughed, saying that’s hard to imagine.
“Since the brand was founded 40 years ago, our main aim is to satisfy a wide audience with our offering, but at the same time, we’ve always taken risks, which I think is key to the success of Swatch today,” he said.
