Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Luxury Watch Industry
Transcript
- Lucas: Luna, I was flipping through Swatch Group's annual report from late 2025, and one number jumped out: sales of entry-level Swiss watches — anything under about two thousand dollars — dropped twelve percent year-over-year in China and Europe. Luna: Oof. That's a big chunk of their volume. But I'm guessing the high end is a different story? Lucas: Completely different. Watches over twenty thousand dollars — think Patek Philippe, Audemars Piguet, the top-tier Rolex stuff — actually grew eight percent. So the market is bifurcating, and demographics are a big part of why. Luna: How so? I mean, luxury watches have always been a status symbol for wealthy older men. Is that changing? Lucas: It is, but not in the way you might expect. The traditional narrative was that a man buys a nice watch when he gets a promotion or turns forty. But in countries with falling birth rates — Japan, South Korea, much of Europe — fewer people are having kids, and that frees up a ton of disposable income. Luna: Right — the 'childless professional' demographic. They have higher per-capita spending on discretionary goods, including luxury. Lucas: Exactly. And not just men. Women are now around forty percent of new luxury watch buyers globally, up from maybe twenty-five percent a decade ago. Brands like Cartier and Omega are actively marketing to women who are delaying or forgoing children and have significant purchasing power. Luna: So the shrinking family unit is actually creating more high-end watch customers? That's a fascinating twist. Lucas: It is, but it's not a straight trade-off. The total number of potential buyers is shrinking because population growth is slowing. So the industry is chasing a smaller pool of wealthier individuals. That's why entry-level watches are suffering — the young people who would have bought a Tissot or a Hamilton as a first mechanical watch are either not buying or skipping straight to higher tiers. Luna: Or they're buying pre-owned. The certified pre-owned market for luxury watches has exploded. Rolex even launched its own CPO program in 2024. Lucas: Great point. Pre-owned lets a younger buyer get a Rolex Submariner for maybe eight thousand instead of twelve. That cannibalizes entry-level new sales but strengthens the overall brand ecosystem. And it's a smart play in an aging society where people are more comfortable buying secondhand. Luna: Let's talk about geography. You mentioned China — falling birth rates there are dramatic. How's that affecting luxury watch demand? Lucas: China is the world's biggest watch market by value, and its birth rate fell to about one child per woman in 2024. That means twenty years from now, there will be far fewer Chinese men in their thirties and forties — the prime watch-buying age. So brands are already pivoting to older demographics and to women, who in China are increasingly high-earning and childless. Luna: Are they also marketing to younger buyers in their twenties? I've seen some watch brands do collaborations with streetwear labels. Lucas: They are, but it's tricky. A twenty-two-year-old in Shanghai or Seoul might buy one luxury watch in their lifetime, not five. So the lifetime value of a customer is lower in a low-birth-rate society because there are fewer milestone moments — no son's graduation, no daughter's wedding — that traditionally triggered watch purchases. Luna: That's a structural headwind. So which brands are best positioned? Lucas: The ones with the strongest high-end cachet. Patek Philippe, for instance, has always marketed itself as a generational heirloom — 'You never actually own a Patek, you merely look after it for the next generation.' That message resonates even more when families are smaller and the watch is passed to one child rather than split among four. Luna: Interesting — the heirloom angle actually becomes more powerful. But what about independent watchmakers? F.P. Journe, maybe? Lucas: Independents are thriving because they offer scarcity and craftsmanship that appeals to wealthy collectors who don't have children to spend on. Their customer base skews older, but they're also drawing in young tech entrepreneurs who made money early and want a tangible asset. Luna: And tangible assets are a big theme in an era of low trust in currencies and banks. Watches are portable wealth. Lucas: Exactly. Especially for people in countries with capital controls or unstable currencies. A Patek Nautilus can be liquidated almost anywhere. So demand from places like Turkey, Argentina, and even parts of Asia remains strong despite local birth rate declines. Luna: So the net effect on the luxury watch industry is ambiguous? Headwinds from fewer young people, tailwinds from higher per-capita spending among the childless. Lucas: That's the story. Swatch Group's CEO said in their 2025 call that they expect the entry-level market to keep shrinking at three to five percent annually for the next five years. But their high-end brands — Breguet, Blancpain — are raising prices and margins. Luna: I wonder if we'll see more consolidation. Big groups like LVMH and Richemont might scoop up independents. Lucas: Possibly. But independents are often family-owned and not eager to sell. Still, if birth rates keep falling, the pressure to scale up and capture the remaining high-net-worth buyers will increase. Luna: Before we move on, I want to linger on something you said about women buyers. Are brands actually changing their designs, or is it just marketing? Lucas: Both. Rolex introduced a smaller version of the Daytona with a mother of pearl dial that's clearly aimed at women. But more importantly, the entire category of 'ladies' watches' is being rethought. Women are buying larger, more complicated pieces — not just diamond-set quartz watches. Luna: That's a big shift. Companies like Patek have always made men's and women's versions of the same model, but now they're marketing the women's versions as serious collector pieces. Lucas: And that's driven by demographics. Women in their thirties and forties who are childless and have high disposable incomes are a rapidly growing segment. McKinsey projected in 2024 that women would account for fifty percent of luxury watch purchases by 2030. Luna: Speaking of projections, what about the secondary market? Prices for pre-owned Rolex and Patek have corrected from the pandemic highs. Does that change the calculus for buyers? Lucas: It does, but it also opens the door for more entry-level enthusiasts. A pre-owned Tudor Black Bay might cost three thousand dollars — still a lot, but accessible to a younger buyer who might otherwise skip watches entirely. So the secondary market acts as a gateway. Luna: And it keeps the brand top of mind. I mean, you see a Rolex on someone's wrist and you start wanting one. Lucas: Right. So even if new sales dip for lower-tier models, the overall brand heat stays high. That's why Rolex invests so much in its own pre-owned certification. Luna: Let's zoom out. We've talked about watches, but this pattern — falling birth rates concentrating spending among older, wealthier, childless consumers — applies to a lot of luxury goods. Handbags, fine jewelry, high-end cars. Lucas: Absolutely. And the watch industry is just a really clear lens because the product is durable, status-driven, and has a strong secondhand market. It's a microcosm of how demographics reshape consumer economies. Luna: Alright, so what's the one thing you want listeners to take away? Lucas: That falling birth rates don't automatically doom every industry. For luxury watches, they're actually creating a smaller but richer customer base. The challenge is for brands that relied on volume from young, aspirational buyers. The winners are those that can command high prices and cultivate scarcity. Luna: And that's a strategy that works as long as inequality stays high — which is a whole other demographic conversation. Lucas: It is. But for today, if you're thinking about the watch market, watch the birth rates. They're ticking in a different direction than the seconds hand. Luna: Nice. And you know, if walking through the economy with us has made something click — even just a little — we want to say that this show stays ad-free because a handful of listeners chip in monthly through Buy Me a Coffee. It's at buy me a coffee dot com slash fexingo. Lucas: Yeah, that support is what lets us spend time digging into reports like Swatch Group's annual filing. It's genuinely appreciated. Luna: Alright, back to the data. Lucas, you mentioned Swatch Group's entry-level drop. Are there any other brands we should watch for similar trends? Lucas: Tissot and Longines are the ones to watch. They're the volume drivers for Swatch Group. If their sales continue to slide, the group might have to restructure its lower-tier production. Luna: And that would ripple through the entire Swiss watch supply chain — movements, cases, dials. Lucas: Exactly. The demographic effect isn't just about end consumers. It shapes the labor market, too. Fewer young people means watchmaking schools in Switzerland are struggling to fill classes. The industry might face a talent shortage just as demand for high-end pieces rises. Luna: That's a fascinating knot. So falling birth rates could actually constrain supply, which pushes prices higher, which makes luxury watches even more exclusive. Lucas: You've got it. And that's the kind of feedback loop that makes demographics such an interesting lens for any industry. Luna: Well, we'll keep watching the watches. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.