Buying, Selling, & Collecting Understanding The New Middle Class Of Watchmaking

I'm no economist, but the consistent refrain of a diminished petite bourgeoisie started me down the road of thinking about the inherent hierarchical structure involved in today's watch business, and how rapidly the industry has changed. Where there was once a fairly clear and consistent separation between the entry-level, the mid-tier, and the high-end ranges of the watch world, there now seems to be less of a distinction than ever before.

But look closer and you'll see that the so-called "middle class" segment is actually unexpectedly thriving, against the odds and current popular collector sentiment.

The watches that exist in the middle range today – which, for the intents and purposes of this story, I'm considering to be those priced in the ballpark of $1,000 to $3,500 – are almost entirely different from the ones we associated with the same price point a decade ago. In fact, many of the companies that I have identified as making up this new "middle class" didn't even exist back then. They use new movements, they experiment with unconventional materials, and they're based all around the world rather than centered in Switzerland, Germany, or Japan. 

The middle range of the watch industry has been through a huge number of unexpected transitions and transformations just in the last decade. But things have started to change for the better in a major way – you just need to know where to look.

A few weeks ago, I reported on the official Swiss watch export data for the first six months of 2022. The data – gathered and provided by the Federation of the Swiss Watch Industry (FH) – told a story of highs, more highs, and a hidden low.

The good news for Switzerland is that the first half of the year actually set a new record high for the total exports of all Swiss watches shipped in the six-month stretch from January to June, with CHF 11.3 billion. The even better news for Switzerland is that they achieved that figure despite supply chain drama, a war in Eastern Europe, and a weakened market in the expected Asian hotspots of China and Hong Kong.

The lone bit of troubling news for consumers was hidden at the end of the FH report: Despite the blockbuster export figures, the total number of Swiss watches exported is currently "at an all-time low, attaining less than half of the figures recorded ten years ago."

What exactly does that mean? Well, to put it bluntly: Switzerland is now producing fewer watches than ever before, at higher than ever prices.

The accumulated wealth is concentrated at the top of the watch market more than anywhere else. Just look at Rolex. According to the most recent Morgan Stanley report on the Swiss watch industry, the Geneva company – sorry, I mean foundation – controlled 29 percent of the market for all Swiss-made watches sold in 2021. And right after Rolex come the conglomerates. Richemont, LVMH, the Swatch Group, and Kering ate up approximately 49 percent of all total revenue achieved by the Swiss watch industry in the same year.

And don't forget that, according to the Federation of the Swiss Watch Industry (FH), last year was the "best year ever" for the Swiss watch industry, with the total export value of Swiss-made watches crossing CHF 22.3 billion, a single-year record high. If you combine the Morgan Stanley and FH data, Rolex and the brands owned by the four conglomerates listed above accounted for 78 percent of Switzerland's total watch export value, or approximately CHF 17.4 billion.

None of this is overly surprising, although it is admittedly a bit of a shock to see the FH lay the issue out so plainly in their report. The elephant in the room, however, is of a Californian variety: The enormous continued commercial success of Apple Watch has decimated the $1,000-and-under price point for both mechanical and quartz watches. Although there are a few other minor contributing factors to that "all-time low" export figure – including ongoing supply chain issues, the COVID-19 pandemic, etc. – it's Apple Watch, and the growing popularity of wearable technology, that has had the largest impact on the downfall of Switzerland's three-figure price bracket.

One of my favorite ways of indicating this is by borrowing a comparison Joe Thompson once used and looking at the stock value of the Fossil Group, a giant in the affordable "fashion watch" realm. 

Fossil's stock traded at $83.75 on the day Apple Watch debuted in April 2015. And yesterday? $4.40.

But it's not just Switzerland that's been impacted, and it's not just the entry-level arena that has been forever altered by Apple Watch's monolithic presence. Increased polarization is seemingly the name of the game almost everywhere. There's one segment of the market in particular, however, that has rapidly changed and is almost never discussed in detail. It's a range where rising prices are most acutely felt – the middle, watchmaking's mid-major division.

If you look back to the 1980s and '90s, the players in this arena were a whole lot bigger – Rolex, Omega, TAG Heuer, Breitling, IWC, and many other watch companies all offered many watches in the so-called "middle class." For instance, a Rolex GMT-Master ref. 1675 would cost you $1,450 in 1986, which would be $3,920 when adjusting for inflation today. In 2022? The list price of a current-gen Rolex GMT-Master II ref. 126710 crosses the $10,000 mark.

So, yes, by the time the new millennium had rolled around, Rolex was already rolling deep in the luxury camp. At the same time, Omega, IWC, Breitling, and many other mainstream watchmakers were in the process of doubling down on in-house movement production in order to raise their prices (often quite substantially) and to attain a whole new level of "prestige."

While many watchmakers moved upward at this point in time, a generation of new companies was born to take their place. Germany's NOMOS Glashütte entered the fold to offer value-driven, in-house European mechanical watchmaking, while Swiss-made stalwarts such as Oris, Bell & Ross, Frederique Constant, Baume & Mercier, and a few others fortified the position at the front of the line for a high-quality Swiss wristwatch at a relatively accessible price.

Flash forward to the mid-2010s, and it felt like the middle segment of Swiss watchmaking was one of the most crowded and competitive out there. Tudor was making its presence felt once again with the 2012 introduction of the Black Bay collection, and Japan's Grand Seiko was picking up momentum after launching international distribution in 2010. As for NOMOS and Oris, they were more popular and seemingly more accessible than ever.

None of that is necessarily true today. Oris, NOMOS, and many others have all positioned themselves higher up the watchmaking hierarchy than where they were less than a decade ago. History does repeat itself: The price hike is typically reinforced by a significant investment in the company's internal watchmaking – as demonstrated by Oris' Caliber 400 and NOMOS' DUW caliber series – but that doesn't necessarily make the increases easier to swallow for value-conscious customers who can no longer afford a brand they once loved.

Evolution is essential for all businesses, and I would never begrudge a watch company for taking thoughtful steps to improve its product, naturally resulting in a higher average price point. But it's also critical to acknowledge the vacuum that opened when the Orises (Orii?), the NOMOSes (Nomoi?), and the TAG Heuers of the world moved upmarket. Many of these brands have played a significant role in the collecting journey of the current generation of watch consumers, and it can hurt to see their accessibility diminish.

A quick note on two relatively big fish in this space: The watch brands owned by the Swatch Group, the world's largest watchmaking organization, have remained relatively stable in price over the past decade-plus. Longines, Rado, Mido, Certina, and Hamilton all benefit from their parent conglomerates massive economy-of-scale and are able to better withstand external market pressures such as inflation. Seiko is a similar story. Alongside the expansion of the Grand Seiko brand, the core Seiko company has also made an extensive push upmarket over the past decade. It almost feels like the average new Seiko release comes in the low four figures rather than the mid-three figure range we've long associated the Japanese watchmaker with. That said, even with a slight increase in prices, the quality-for-value ratio present in nearly ever Seiko watch eclipses that of most similarly priced new watches. 

Change has come quickly for this former middle class of watchmakers – and in combination with the successful "less is more" mantra employed by most of Switzerland's watch industry, it's easy to understand why many longtime watch collectors and enthusiasts are pessimistic about the long-term future of value-driven mechanical watchmaking.

I see things differently. I believe the mid-level watch segment is now home to more companies than ever before, bringing in greater diversity and a broader range of horological perspectives from all over the world. At the same time, there are an increasing number of interesting and affordable high-grade mechanical movements that have entered the watch marketplace in the past few years, a development that should lead to an even higher quality-to-value ratio than ever before.

Movements typically come from Switzerland's Sellita or from Seiko or Miyota in Japan, while cases and other components can be sourced from everywhere ranging from the Swiss cottage industry to the high-tech factories in Hong Kong or Shenzhen. Given the minimal labor investment of the brand itself, prices can range from an entry point in the mid-three figures all the way to surpassing the high watermark I previously identified for the "middle class," around $3,500.

The microbrand space can be a chaotic one, and it's often hard to tell at first which companies are around for the long haul, instead of making a quick buck pumping out Submariner homages. But as the niche has matured, I feel like we're now able to identify what companies are working with a long-term perspective and desire to make a serious impact in the industry, building out their own visual identity and establishing a loyal following.

Many of these names are not strangers to the pages of HODINKEE. Chicago's Oak & Oscar, St. Louis' Monta Watch Co., Singapore's Zelos, Switzerland's Aquastar and Brellum, and the United Kingdom's Anordain and Farer are all brands born in the past decade that have developed a strong reputation for offering high-quality watches at accessible price points firmly in the "middle class" segment, while also not being afraid to experiment. Zelos, for instance, is probably working with a greater diversity of case materials than any other watch company on the planet these days. Glasgow's Anordain is, on the other hand, quite literally, democratizing métier d'art, bringing vitreous enamel dials to the masses. Oh, and remember when Oak & Oscar embedded an actual curling stone into the caseback of one of their watches?

One of the most important and influential figures in the evolution of the independent, international, small-scale production watch space is Ming, a Malaysian company that produces avant-garde Swiss-made timepieces and was founded by the photographer, writer, and physicist Ming Thein in 2017. Ming, the company, has expanded its purview and embraced horological experimentation at a rate far beyond its peers, starting with a $900 Sellita-powered two-hander five years ago all the way up to tens of thousands for a highly limited Swiss-made tourbillon.

Ming clearly has big plans, so I hesitate to associate the company solely with the mid-level arena, but it's important to recognize how the brand's quick ascent has helped evolve the perception of how a young company can grow. That said, Ming hasn't abandoned the middle class just yet – one of the company's latest releases features an innovative, lume-focused dial and a proprietary movement produced for Ming by Sellita, for just under CHF 3,500.

NOMOS, Bell & Ross, and Frederique Constant were all born in a five-year period between 1988 and 1993, and I think it's fair to identify them as pioneers in the modern "middle class" segment, establishing their own distinctive visual identity, utilizing sourced movements, and then gradually moving on to various degrees of in-house manufacturing and higher price points. While all three of those brands benefit from the aura of traditional European luxury, I don't see why a new generation of "middle class" watchmakers can't come from all over the world. 

I think it's about time we retire the diminutive "microbrand" terminology and accept companies such as Anordain, Farer, Ming, Monta, Oak & Oscar, Zelos, and many others, as the cultural leaders of watchmaking's new "middle class."

One area where they and many other small-scale, independent operators will soon have an advantage over previous generations of mid-tier watchmakers is in the quality of the mass-produced movements available to be sourced. ETA's long-running hegemonic dominance of the ébauche category is over (by their own volition). It's been replaced, for the most part, by Sellita, a huge manufacturing operation in La Chaux-de-Fonds that produces quality Swiss movements typically based on the tried-and-true architecture of long-established, in-demand ETA calibers, such as the 2824 (Sellita's version is called the SW200) and the 7750 (SW500).

But new movement alternatives are entering the market all the time.

Just look at the recent announcement of the Miyota caliber 9075, for example. The new movement is quite literally the first-ever affordable GMT movement to offer local jumping hour hand capability and be available for purchase by third-party companies. I think we'll soon see a huge number of entry-level and mid-tier watch companies adopt the movement to offer the same travel-time functionality seen in the Rolex GMT-Master II and other high-end GMT watches.

Several new Swiss-made options from La Joux-Perret are even more compelling. La Joux-Perret quietly announced the self-winding time-and-date caliber G100, the automatic column wheel chronograph caliber L100, and the manual-wind D100, each operating as a direct competitor to their standard-grade, readily available Sellita counterpart. All three movements include a higher level of decoration, an increased power reserve, and are comparable in size to the ETA and Sellita predecessors such as the 2824/SW200, 7750/SW500, and manual-wind ETA 7001/Sellita SW215. Zelos is already offering watches using both the G100 and L100, and Anordain has promised to bring the G100 to its line-up, as well. I can't wait to see these LJP movements make their way to even more watches.

Outside the newness from La Joux-Perret and Miyota, other Swiss movement manufacturers such as Kenissi and Soprod continue to develop. Soprod released the Newton family of movements in 2020 and has been adopted by a number of smaller industry players, while Kenissi has attracted a good bit of attention since its 2016 debut as the manufacturer of a new line of high-grade movement alternatives positioned slightly above the traditional "middle class" price point and currently used by Tudor, Chanel, Breitling, Norqain, TAG Heuer, and Fortis. Horage has even emerged as a potential growth player in the space, collaborating with Bremont just last year on a manufacture movement for the British brand.

A decade ago, none of these movements existed. Bell & Ross, Oris and many others built their businesses for decades almost entirely around the use of ETA and Sellita ébauche movements, but today's newest "middle-class" watch companies have the luxury of choice.

As for what my personal choices would be? Well, if I had a friend who wanted a nice watch in this range of new "middle class" players, here are three I'd recommend.

• Under $1,500: If you want to jump right into the heart of the discussion without dropping too much cash, I'd point you in the direction of one of Zelos' recent La Joux-Perret-equipped releases, such as the Spearfish 40mm Diver ($749) or Vitesse Racing Chronograph ($1,199). Or if something from a more traditional name is more desirable, the Seiko Prospex SPB143 ($1,200) is hard to resist. 
• Under $2,500: This is where I put my own money a few months back. I snagged a white dial example of the Oak & Oscar Humboldt GMT ($2,150) back in June and I've barely taken off my wrist since. The style, quality, and price all speak my personal language. I've also never heard anyone regret a Sinn 104 ($1,720) purchase.
• Under $3,500: I think for the absolute best quality for your money, staying up to date on any Ming release is a must. While the company has certainly expanded its purview since launching five years ago, there's still plenty of interesting releases coming through in the $3,000 range. This year alone we've already seen the release of the 22.01 GMT (CHF 3,250) and the 37.07 "Mosaic (CHF 3,250)." Longines' new Spirit Zulu Time GMT ($2,950) is worthy of a close look as well. 

Yeltsin's reaction demonstrates just how special and privileged a life in the middle class of American society can be. We forget about the small luxuries and the inherent comfort that comes with being able to choose your own destiny. And when it comes to watches, even the middle-class arena I specified earlier is absolutely a "luxury" product at the end of the day, one that is completely unnecessary to live a happy and fulfilling life.

But that doesn't mean we don't all deserve to be able to find the right watch at a price we determine is reasonable. And that, to me, is what a healthy middle-class product segment is all about – to have the freedom and flexibility to decide what aspects of a watch are important or deal breakers, and then to be able to find a maker producing the ideal watch for your budget – no less, no more.