Patek Philippe's newest watch is 18-karat white gold, charts the sky in the northern hemisphere and costs US$109,000. If only there were enough Swiss watchmakers to produce more than 30 a year: Demand is outstripping supply.
Economies have slowed in Europe, the US and Asia. Sales of lower-priced timepieces are falling. Yet sales of the most expensive watch models -- those with diamonds and platinum or with such mechanisms as a calendar -- are rising, according to Geneva-based Patek Philippe, rivals and industry associations.
"The top end of the watch business has proven to be more resilient to economic cycles," said Scilla Huang Sun, who manages 70 million euros (US$62 million) in luxury-goods shares at Clariden Bank. "It's also where margins are higher." LVMH Moet Hennessy Louis Vuitton SA and Swatch Group AG say they are shifting toward the top end of the market. While sales of watches with a factory price below US$1,200 fell last year, those of pricier models rose nearly 30 percent, according to the Federation of Swiss Watchmakers.
"More and more people are willing to buy complicated pieces," said Patek Philippe President Philippe Stern. "We can never answer the demand." Still, the luxury watch industry isn't immune to hard times.
In the first three months of of this year, the value of Swiss finished watch exports declined 4.2 percent. LVMH, the world's biggest luxury-goods company, has only one profitable watch brand, TAG Heuer, of the four purchases of watch and jewelry companies it made since 1999.
Analysts say it takes time to upgrade the image of a watch brand. In addition to adding jewels and mechanisms, watch companies must be more selective in choosing the retailers that sell their watches, and increase advertising.
"If you target the wrong audience without being equipped with the right designs, you'll fall flat on your face," said Bryan Roberts, an analyst at Mintel Retail Intelligence.
Still, analysts say the numbers of wealthy individuals will keep rising. Families in the US and Europe with household incomes of more than US$100,000 are forecast to grow by 20 percent over the next four years, according to Mintel.
And the global economy is beginning to recover. In the US, it expanded at a 5.8 percent annual rate in the first quarter, the fastest in two years. The economy of the 12 euro countries may have grown as much as 0.5 percent in the first three months of this year from a 0.2 percent decline in the previous quarter, according to the European Commission.
"The outlook is becoming better," said Bulgari Chief Executive Officer Francesco Trapani in an interview. "The worst is going to probably be over after the first half." Although Swiss watchmakers exported fewer watches last year, the value of the goods rose because companies made increasingly expensive and complicated models, according to the federation.
Like Patek Philippe's Stern, LVMH watch and jewelry unit Chairman and CEO Philippe Pascal is aiming to lure wealthier clients.
"Being able to move each brand more upscale is an LVMH mission," he said. Sales are expected to rise as much as 14 percent this year, he said, adding that two more brands will break even.
Its Zenith brand stopped making cheaper battery-operated timepieces and is focusing on mechanical models. And Ebel has introduced "Gems of the Ocean" watches with diamonds, green tourmaline and blue topaz that fetch between US$40,000 and US$140,000.
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