Watch out: a security guard in Vacheron Constantin’s Moscow boutique © Bloomberg

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At the Moscow Watch Expo in mid-October, the centrepiece of Russian brand Slava’s stand was a large watch with “USSR” written on the face. It was an updated version of the Soviet watch worn by agents belonging to Smersh, Stalin’s counter-intelligence agency. (“Smersh” is an acronym for “death to spies” in Russian.)

This watch was made to commemorate the 70th anniversary of Victory Day — the Soviet Union’s defeat of Nazi Germany in 1945 — and the company talked proudly and without irony about the updated version.

Russian watches like Slava are not as popular among the national elite as they used to be. Its membership has lately turned to Swiss models; witness scandals with President Vladimir Putin’s spokesman Dmitry Peskov and Patriarch Kirill, head of the Russian Orthodox church, wearing watches (Richard Mille and Breguet, respectively) that their salaries would suggest they could not afford. But since sanctions and a currency slide hit, even Swiss watches are falling out of favour.

According to the Federation of the Swiss Watch Industry, imports of Swiss watches to Russia between January and November 2016 fell by 46 per cent to SFr140.5m ($136.9m) compared with the same period in 2014, far greater than the 13.3 per cent global slide. By another measure, of the 446 foreign brands available on the Russian market during 2012-14, 204 have stopped exporting to Russia in the past year, according to Time Seller, a Russian watch association.

The collapse of the rouble, following the oil price, has played its part. On January 1 2014, $1 bought Rb35.18; in January 2016, the rouble hit a historical low against the dollar of Rb85.97. On the first day of this year, it had moderately recovered to Rb60.66. “The mood is still negative,” says Dmitry Krylov, watch expert at the Fashion Consulting Group and general director of Chasovshik.ru, a pawnshop which specialises in Swiss watches. “People are worried and are reluctant to spend money, even if their savings are in hard currency,” he says.

Before the crisis, and before western sanctions against politically-connected Russians in response to the invasion of Crimea, the wealthy would buy watches two or three times a year, according to Mr Krylov. As Anna Lebsak-Kleymans, the general director of the Fashion Consulting Group, puts it, now there is “a trend for rational investment purchases — where less is more”.

Experts who attended the watch fair say traditional buyers of expensive brands — oligarchs and politicians — have stopped buying in bulk, but not for lack of money. “Officials have almost stopped wearing expensive watches, because excessive consumption which previously was meant to impress other people is now taboo,” says Vyacheslav Medvedev, the general director of horological publisher Watch Media.

While some brands in Russia have lost part of their local clientele, others have enjoyed greater demand from tourists because of the rouble’s fall. Mercury Group, which is among the top three importers of Swiss watches to Russia, according to an industry expert, has previously said that it has not raised its prices, in order to retain clients.

Tourist interest during the days of currency devaluation reached well outside Moscow to the regions. According to Konstantin Sobko, owner of the Brizo jewellery and watch shop in Samara (1,000km to the south-east of Moscow), sales almost doubled in 2014-15 because of new customers.

Mikhail Kasparov, general director of ProTime Rus, the distributor for Frederique Constant, Maurice Lacroix and Escada watches, says in some shops half of all sales are to Asian customers, attracted to Russian shops by the fall in the value of the currency. One expert at the watch show recalls how he saw a Chinese tourist buy Longines watches in a luxurious department store on Red Square and resell them immediately outside to other tourists.

Shopping in Russia has also become cheaper because, after Russia joined the World Trade Organisation, duty for watches was lowered from 20 per cent to 7 per cent, explains Mr Kasparov. This hit locally produced watches, especially those at the cheaper end.

Guillaume Alix, chief executive of Groupe Montaigne, which owns watch retailer De Bon Ton, explains that “not all brands have decided to change their prices — only those who have subsidiaries here. If they are on the stock exchange, they need to change the price immediately. Distributors, on the other hand, could decide whether or not to raise prices” because, he says, they still bought at the old prices.

For some companies Russia remains a lucrative market, despite its sanctions and economic problems. In 2016 Rolex opened a boutique in the centre of Moscow. Omega launched its third shop in the Russian capital in November last year. Breitling opened its first monobrand shop in the capital in 2014. That said, new stores are planned years in advance.

The mood among the considerable crowds at the opening day of the expo was upbeat but, warns Mr Medvedev, who has been organising the event since 2011, it may be too soon to celebrate. “We used to have the fair in a bigger venue but this year we have seen the market fall. There are no miracles here.”

As another expert who attended the fair jokes: “2017 will certainly be worse than 2016. But better than 2018.”

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