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Omega vs Rolex
by BLOOMBERG 05:55 AM Mar 20, 2010BASEL (Switzerland) - When it came to choosing a new watch, Mr Ma Jun had no hesitation in selecting a US$6,800 ($9,493) Omega Constellation over a Rolex.

"Omega's designs are newer and trendier," said the 30-year-old businessman from Hangzhou, near Shanghai. He bought the watch a month ago after seeing advertisements featuring American swimmer Michael Phelps and Chinese actress Zhang Ziyi.

"Rolex is old and traditional," he said.

That perception, together with a boom in Asian sales, helped Swatch Group's Omega snatch market share from Rolex in the US$35 billion Swiss watch industry last year, analysts say. Rolex, whose cheapest model is almost 60 per cent more expensive than Omega's, has also been hit harder by the United States recession.

Swiss watch exports fell 22 per cent last year, the biggest drop since the Great Depression, as retailers cancelled orders amid the global crisis.

But both Swatch Group and Cie Financiere Richemont, the owner of Cartier, have signalled their shipments outperformed the market, leading Mr Rey Wium, an analyst at Nedbank, to speculate Rolex's shipments dropped more than the market did.

"If these two outperformed, clearly somebody else suffered much more, and we all know it was probably Rolex," said Mr Wium. "These things are notoriously difficult to gauge, but Rolex definitely lost out in terms of sales to retailers."

Both Rolex and Omega are showcasing their latest models at Baselworld, the world's biggest luxury watch trade fair, now taking place in the Swiss city.

Omega is one of 18 brands belonging to Swatch Group, which also produces US$50 plastic Swatches and double- tourbillion Breguet timepieces for more than US$700,000. Bank Vontobel analyst Rene Weber estimates Omega's 2008 sales at about 1.48 billion Swiss francs ($1.96 billion), compared with Rolex's 4.5 billion francs and Cartier's 1.63 billion francs.

Omega, whose entry-level timepieces cost about US$2,500, gets 35 per cent of sales from greater China, estimates Mr Jon Cox, an analyst at Kepler Capital Markets. Rolex, whose watches start from about US$4,100, gets about 5 per cent of sales from the region, he estimates.

China, including Hong Kong, is the world's largest market for Swiss watches. Last year, the Chinese market consumed a fifth of total Swiss watch production.

A quarter of all Internet searches for watch brands in China last year were for Omega, compared with Rolex's 18 per cent, according to IC Agency, which analysed 500 million search queries in a study of 10 countries.

Rolex, which is owned by the Hans Wilsdorf Foundation, got about a third of revenue from the US before the credit crunch, Kepler's Mr Cox said. The US had the biggest drop in Swiss watch shipments in 2009 among the 10 nations that imported the most, declining 38 per cent. Omega relies on the US for about 10 per cent of its sales, according to Mr Cox's estimates.

Omega's revenue from its own boutiques, which normally makes up about a fifth of the brand's overall sales, increased 10 per cent last year, according to company president Stephen Urquhart. The brand doesn't disclose total revenue. Mr Cox estimates that sales at 105-year-old Rolex fell about 25 per cent in 2009.

Omega gained lustre with younger consumers when English actor Daniel Craig wore its Planet Ocean in the 2006 James Bond movie Casino Royale. Mr Craig's predecessor as 007, Irish actor Pierce Brosnan, also appeared with an Omega in the 1995 film Goldeneye. Rolex was in earlier Bond movies, with Scottish actor Sean Connery wearing a Submariner model in 1962's Dr No.

"I won't wear Rolex, that's a brand for my dad," said Ms Dani Wen, a 23-year-old student from Guangzhou as she eyed a US$3,800 ladies' Omega Constellation in a Hong Kong watch shop.

Still, Rolex may maintain its market share in coming years as smaller brands go out of business, Vontobel's Mr Weber said. Retailers have been cutting the number of brands they stock in order to focus on better-selling marques, and they are more likely to drop minor brands than established names like Rolex, he said.

"The big battle is Omega versus Rolex," said Mr Andre Polony, the owner of the Piguet jewellery and watch store in Nyon, northeast of Geneva. "Rolex is losing market share against Omega and over time this might weaken Rolex's hegemony."

Source:
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