Gold brings stability, acts as insurance, and generates higher risk-adjusted returns especially in times of heightened uncertainty

Somasundaram PR (Som) joined the World Gold Council in January 2013, as Managing Director, India. Based in Mumbai, Som is responsible for leading the World Gold Council's activities across the Indian gold market. Som has over 27 years of...

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Flun Gumerov - “I think that a diamond is a unique gift from nature. A synthetic diamond is a man-made imitation of the gift of nature”

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05 april 2021

Lucapa narrows kimberlites search

Lucapa Diamond and its Lulo partners have been for close to a decade searching for the kimberlite source or sources of alluvial diamonds being recovered from within the Lulo diamond concession, in Angola. The company believes that the frequent recovery...

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Shashikant D Shah: “Mined diamonds and LGDs are separate categories”

Armed with a commerce degree, Shashikant D Shah entered the diamond trade by opening a diamond Jewellery Showroom exclusively for Nakshatra and Asmi brands in 2003 and has not looked back since. DM Gems came into being in 2003 with Shashikant as Founder/Owner...

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Andre Messika: “The natural diamond industry today is one of the most transparent, regulated, and ethical industries in the world”

Andre Messika, a Paris-based topnotch distributor of polished diamonds migrated to Israel in 2003, to establish Andre Messika Diamonds in the Israel Diamond Exchange in Ramat Gan …and has not looked back since. In 2012, in recognition of the continuous...

15 march 2021

PGI: Sentiment remains positive about precious jewellery purchasing in 2021

05 april 2021

Platinum Guild International (PGI) the worldwide marketing organisation dedicated to creating, expanding and strengthening consumer and trade markets for platinum jewellery, presents its review of Q4 2020. Since PGI was founded in 1975, platinum jewellery has contributed to over 80 million ounces of demand. PGI is headquartered in Hong Kong and has offices in China, India, Japan and the US. 

China:

As per PGI Review, though China’s economy ended on a high note in Q4, retail sales lagged because sporadic outbreaks of COVID-19 hit store traffic. Many retail partners seized the opportunity to promote platinum products, especially branded collections as they offer better margins. Platinum outperformed other categories such as gold, delivering a remarkable 14% YoY growth in fabrication in Q4. The total platinum transactions via the Shanghai Gold Exchange (SGE) continued to increase by 21% YoY in Q4, leading to a 97% YoY increase to 42.2 tonnes in 2020. China customs data showed that net platinum imports increased by 27% YoY in Q4, leading to a 22% increase to 84.7 tonnes in 2020. Hong Kong net imports of platinum, an indication of unofficial imports for jewellery use, increased by 646% YoY to 6.7 tonnes in Q4, leading to an 8% decline to 9.7 tonnes in 2020.

However, although the growth of platinum fabrication slowed down after reaching a peak in October, it delivered a robust total growth of 14% YoY in Q4, which resulted in a decline of 8% YoY in the full year of 2020. It was much more positive than the previous forecast in March, an annual decline by 23%~42%, thanks to effective pandemic control and fast recovery since Q2. • Plain fabrication increased by 14% YoY in Q4 thanks to larger players who launched differentiated products with innovative technologies and new designs. Platinum gem-set fabrication also kept its positive momentum by increasing 6% YoY in Q4. A few players started to increase the share of platinum setting in their gem-set category as a strategic move.

Retailers continued their recovery, but momentum slowed somewhat. The sales volume of PGI retail partners increased by 3% YoY in Q4. The slower recovery in retail demand than fabrication is mainly due to sporadic outbreaks of COVID-19 cases causing cautious consumer spending and declining store traffic, while manufacturers have built stocks for the season. More than 72% of retailers in the PGI survey panel reported the margins of platinum collection and premium platinum products were higher than that of generic platinum products.

According to the PGI’s review, wholesalers and branches of national chains leveraged seasonal ordering meetings to promote platinum to retail clients or franchisees. One wholesaler in the northeast conducted a platinum promotion which resulted in 83 retail stores starting to sell platinum after a hiatus of several years.

PGI also supported retail partners at the Winter Bridal Expo in multiple cities including Shanghai, Guangzhou, Hangzhou, Chengdu and Beijing. PGI drove pre-event awareness with branded content and “My Favorite Platinum Jewellery” voting on social media and apps, followed by a sales conversion push during events. The initiative by PGI helped strengthen trade confidence and contributed to significant sales growth in platinum compared to total jewellery.

China’s platinum jewellery sales continued to recover in Q4. Platinum jewellery retail sales continued to recover, although at a slower pace compared to Q3 due to sporadic outbreaks of COVID-19 cases reducing store traffic. Platinum jewellery fabrication delivered robust growth of 14% YoY in Q4, leading to an annual decline of 8% YoY in 2020.

According to PGI, most manufacturers were satisfied with the recovery and positive momentum in 2020, but they were also cautious about 2021 especially given the sporadic outbreak of COVID-19 in many regions recently. 

India:

The PGI reports says that in India, the pent-up demand with buoyant enthusiasm during the festival season led India’s jewellery industry to recover to 70% by mid-November compared to the pre-COVID festival season in 2019. Also, strategic retail partners reported significant sales growth in platinum in Q4 thanks to targeted recovery programmes.

The Indian gem and jewellery industry has shown resilience despite a prolonged and difficult national lockdown during the first half of 2020. The industry gained sales momentum during the annual Hindi festival season that began in October. As the rate of new COVID-19 cases declined, positive sentiment sprung from formerly pessimistic consumers, bringing relief to retailers since mid-October and the onset of the festival season starting with Dussehra.

According to PGI, as the ‘Season of Hope’ programme was launched in partnership with Oxfam India, between 16 October and 15 November 2020, PGI’s retail partners across over 300 cities participating in this programme reported a 29% YoY increase in platinum jewellery sales. And, the retail sales of platinum jewellery from PGI’s strategic partners increased by 33% YoY under this programme.

With higher gold prices, PGI was able to convert consumers from gold to platinum, especially with entry-level products like rings, bands, and women’s self-purchase… expanded its merchandise in the sub-$1,350 price range. The PGI’s authorised manufacturers saw 80-85% business recovery in Q4, as replenishment and stock orders from retailers started in October 2020. However, an ongoing labour shortage continued to impact their production capacity and delivery timelines. 

Japan:

Japan’s economy has shown some resilience despite a resurgence in COVID-19 cases and the second declaration of a state of emergency. Store traffic recovered in October through late November. Platinum jewellery unit sales were supported by a strong recovery in bridal and asset jewellery and department stores and non-store channels. Now, Japan finds itself in the middle of the third wave of infections that began in November 2020.

PGI report says that platinum jewellery sales in Japan were supported by bridal and asset-type jewellery, and continued growth of non-store channels. However, Japan’s retail sales were down 0.2% YoY in December 2020, following the downward revision for November 2020 to a 0.6% increase from the original 0.7%. Japan’s consumer confidence index reversed its upward trend in September - November and decreased to 31.8 in December 2020, reflecting the implications from the new wave of COVID-19 cases. 

While the Japanese stock market has largely recovered, Japan’s economy remained resilient during the majority of Q4, albeit on a relatively low base due to the sales tax increase in October 2019. Business in the following quarter will face pressure, due to the resurgence of COVID-19 and state of emergency dampening consumer sentiment, and with vaccinations for elderly Japanese unlikely to begin before April.

Japan’s Q4 showed strong high-end sales among the rich, recovered store traffic until November, and continued growth of non-store sales. The year-on-year contraction of platinum jewellery unit sales narrowed in Q4, partly driven by a strong recovery in bridal and high purity platinum sales and helped by a relatively low base in Q4 2019.

According to PGI, platinum remains the best-performing white metal for jewellery and unit sales dropped 4.2% YoY in Q4. Platinum’s affordability attracted consumers as gold continued to increase in metal price with solid sales of Pt999 platinum chains and mid-range platinum jewellery.

The “New Me, Platinum”, a PGI programme for TV shopping doubled on-air exposure and achieved a 2.7-fold increase in ounce demand compared to 2019. Another PGI programme capitalised on the strong consumer demand for asset jewellery, which resulted in drastic 8-fold growth in ounce sales in Q4 compared to last year.

According to the PGI, its new campaign “Platinum Woman”, which was launched on 30 October last year, reached over 10 million consumers predominately in the target age group of 25-34 and below. The branded collection is sold through partners’ online stores and in a total of 200 physical stores. 

USA:

The US economy faced the risk of a resurgent pandemic, but the jewellery industry had a robust holiday season. Platinum jewellery sales strongly rebounded in Q4, recovering most of the earlier decline, driven by significant growth in platinum’s heartland of higher-ticket bridal and diamond jewellery.

The US GDP rose 4% annualised in Q4 from the previous quarter, a sharp slowdown from a 33.4% annualised quarterly growth rate in Q3, showing some resilience despite the rising number of new coronavirus cases nationwide and the expiration of government aid programmes, which hurt consumer spending and forced some businesses to shut down.

PGI says that the USA’s platinum jewellery sales rebounded strongly in the holiday season. On a year-on-year basis, retail sales were up in Q4, albeit seeing the growth rate slowing from October to December. This was mainly driven by the US government’s stimulus, record-high stock market performance and money diverted away from other activities. It turns out that many consumers with cash reserves and limited options about where to spend money have turned to things of symbolic meaning and lasting value. The jewellery industry in the holiday season benefited from increased spending by rich households and money diverted from travel and entertainment.

Platinum jewellery sales strongly rebounded in the second half of 2020. PGI USA’s strategic partners all reported very strong H2 results, recovering most of the Q2 decline and in some cases, finishing the year ahead of 2019 performance. PGI USA strategic partners reported a continued recovery in their platinum business, as unit sales showed a remarkable increase, registering 14% YoY growth in Q4

Platinum bridal jewellery sales were also boosted with unit sales of both engagement rings and wedding bands up by double digits in Q4. Also, a bridal brand that historically has sold mostly white gold ran a Q4 platinum promotion resulting in a low double-digit increase in platinum jewellery unit sales.

To nurture new designers and processors PGI also collaborated with Pratt Institute to include platinum jewellery design and manufacturing as part of its academic curriculum. PGI also launched a platinum jewellery design competition and winners were announced during a virtual event who will work with a New York manufacturer to produce their design in platinum. The outreach to other jewellery education institutions will continue throughout 2021 and beyond. 

PGI Survey:

Also, an exhaustive survey was conducted ….PGI Consumer Sentiment Survey… which indicated that the sentiment remains positive about precious jewellery purchasing in 2021. Platinum is strongly preferred by Chinese young consumers and all age groups in Japan. In China, platinum is most popular among Gen-Z and millennials aged 18-45, the future driver of jewellery consumption. Younger Chinese consumers prefer platinum in jewellery not only to signify relationship milestones such as engagement rings, wedding bands and anniversary bands but in a wide range of non-bridal types of jewellery, such as fashion rings, necklace, earrings and chains. Platinum is also strongly preferred by the Japanese, regardless of the jewellery type. The popularity of platinum among those aged 46-55 in Japan is unrivalled, followed by younger women aged 18-30. In-store shopping is most preferred but under threat among Gen-Z in China and the US. Notwithstanding the effect of the global pandemic on global retail sales, visiting brick-and-mortar retail stores is still the most preferred channel for jewellery shopping, especially for Japanese and Indians, so the retail experience continues to play a key sales role in the sales process.

However, among those aged 18-30, only 38% in China and 48% in the US prefer in-store shopping, while 28% in the US prefer purchasing precious jewellery online. 36% of Chinese of this age group like shortlisting products online in advance of purchasing in stores. The ability to offer an omnichannel experience has seen increasing importance in those markets.

In November 2020, PGI launched an ongoing cross-market survey that will provide insights about the future of jewellery sales in mainland China, Japan, India and the United States. The consumer panel is comprised of 2,000 jewellery consumers. Initial results indicate that while 2020 was challenging for the jewellery industry due to the global COVID-19 crisis, the overall picture remains positive for future sales.

PGI concludes that China’s economy ended on a high note in Q4, but retail sales lagged as the sporadic outbreaks of COVID-19 hit store traffic. Many retail partners seized the opportunity to promote platinum products, especially branded collections as they offer better margins. Platinum outperformed other categories such as gold, delivering a remarkable 14% YoY growth in fabrication in Q4. Pent-up demand with buoyant enthusiasm during the festival season led India’s jewellery industry to recover to 70% by mid-November compared to the pre-COVID-19 festival season in 2019. Strategic retail partners reported significant sales growth in platinum in Q4 thanks to targeted recovery programmes. Japan’s economy has shown some resilience despite a resurgence in COVID-19 cases and the second declaration of a state of emergency. Store traffic recovered in October through late November. Platinum jewellery unit sales were supported by a strong recovery in bridal and asset jewellery and department stores and non-store channels. The US economy faced the risk of a resurgent pandemic, but the jewellery industry had a robust holiday season. Platinum jewellery sales strongly rebounded in Q4, recovering most of the earlier decline, driven by significant growth in platinum’s heartland of higher-ticket bridal and diamond jewellery.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished