Swiss watches: Pivot to India and Mexico as China cools, US tariffs bite
Bottom Line Impact
Without swift reallocation and pricing discipline, sector EBIT could compress 100-300 bps; a focused India-Mexico push can recapture 10-20% of lost China volume, stabilize margins, and defend brand equity through tighter price harmonization and enhanced service.
Key Facts
5- US remains the largest Swiss watch export market at CHF 4.4b in 2023, up 5% YoY, but now faces 39% tariffs imposed in August
- Mainland China exports fell 26% in 2023 to CHF 2.0b, implying an absolute decline of roughly CHF 0.7b vs 2022
- India exports reached CHF 274m in 2023, up 25% YoY; Mexico hit CHF 337m, up 16% YoY
- Swiss-India FTA entered into force on Oct 1, improving market access via phased tariff reductions and streamlined entry
- Since the 2021 Switzerland-Mexico FTA update, Swiss watch exports to Mexico have increased roughly 5x, elevating Mexico to the top LatAm market
Time Horizons
Executive Summary
Deloitte signals a structural market rebalancing for Swiss watchmakers as 39% US tariffs and a China demand slump compress top-line momentum. FTAs with India and Mexico, plus fast-growing affluent cohorts, open near-term hedge markets, but will only partially offset the China and US hits without decisive channel, pricing, and assortment shifts.
Actionable Insights
Immediate Actions (Next 30-90 days)
Reallocate 10-15% of 2025-2026 retail capex to India and Mexico to open 8-12 mono-brand doors and 15-20 shop-in-shops in Tier-1 locations
Rationale: Accelerates presence where demand CAGR can exceed 20%, partially offsetting a potential CHF 300-500m revenue drag from US tariffs and China softness across the sector
Role affected:CEO
Urgency level:immediate
Deploy a three-tier US pricing playbook: 5-8% selective price increases on icon SKUs, 150-250 bps cost takeout, and hedging for tariff-driven FX and input volatility
Rationale: Balances margin defense with volume risk, preserving 100-200 bps EBIT in the next two quarters while avoiding brand equity erosion
Role affected:CFO
Urgency level:immediate
Short-term Actions (6-12 months)
Shift 20-25% of performance media to India and Mexico; launch influencer-led drops and localized storytelling tied to festive calendars
Rationale: Mexico demand is highly social-led and India is in an awareness-acceleration phase; targeted spend can lift traffic 15-25% and conversion 200-300 bps
Role affected:CMO
Urgency level:short-term
Stand up certified service hubs in Mumbai and Mexico City and pre-position top-50 SKUs to cut lead times to under 10 days
Rationale: Service SLAs and availability are decisive for first-time luxury buyers; reducing wait times curbs grey-market leakage and boosts NPS by 10+ points
Role affected:COO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- US tariff escalation or prolonged duration compressing margins and demand beyond 2H-2025
- China recovery delays due to youth unemployment and real-estate drag, extending a CHF 0.7b sector shortfall
- Overexpansion risk in India and Mexico leading to channel dilution and discounting
Primary Opportunities
- FTA-driven tariff glidepaths enabling 3-5% price harmonization and higher official-channel share
- Social-commerce conversion in Mexico lifting entry-luxury sell-through by 15-20%
- Festive and wedding cycles in India supporting double-digit growth in complications and precious metal SKUs