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13 september 2021

Huw Daniel is the CEO of Platinum Guild International, overseeing market development activities in China, Japan, India and the USA, on behalf of the platinum producers of South Africa.

Before taking up this role in 2015, Huw ran PGI USA for 12 years.

Prior to PGI, Huw had over 25 years’ experience in marketing and communications, mainly at Saatchi and JWT, working in the UK, France, Asia and the US, with clients ranging from Procter & Gamble, to DeBeers, LVMH and the European Commission.

In addition to his role as President of the Precious Metals Commission at CIBJO, Huw has served on various boards including the Jewellers Vigilance Committee and New York Insight Meditation Society.

Here, in an exclusive interview with Rough&Polished, Huw Daniel elucidates about PGI’s efforts to grow the platinum jewellery markets across the globe.

Some excerpts:

What’s your forecast for platinum jewellery in terms of growth in major consumer markets across the globe? Currently, what are the hurdles you think will impact the development of the global platinum jewellery market?

PGI develops the global platinum jewellery market as a new demand source for platinum. Since 1975, jewellery development has demonstrated a strong track record in delivering results, and platinum jewellery has contributed over 80 million ounces of demand. PGI has consumer marketing and educational programmes and collaborates with manufacturers and retailers in four major markets: China, Japan, India and the US.

As seen in 2020, PGI foresees a K-shaped outlook once consumers get back into stores and it will continue in 2021. The growth varies in each market:

- China is the first market to recover from the COVID-19 pandemic in 2020, and recovery in platinum jewellery will continue although at a slower pace in 2021. Those retailers who continued to introduce new SKUs with innovative technology and designs through branded collections drove platinum sales but mass, generic products will be facing competition from gold.

- India has been a fast-growing platinum jewellery market in recent years until the COVID-19 outbreak happened. Recovery started in Q4 2020 and continued in Q1 2021, while the second wave hitting India in mid-March sent many parts of the country into a lockdown or semi-lockdown. The business has gradually resumed since June but we expect the recovery in 2021 will take some time with concerns of another wave in Q4.

- Platinum has a large share in Japan’s jewellery market, which has seen a strong recovery from Q2 2021 led by affluent consumers and continued strong bridal performance, asset-type jewellery and high-end jewellery. This benefits platinum jewellery and its retail sales could have a modest increase this year.

- The US platinum jewellery market has undergone several years of growth, even in 2020 when COVID-19 caused the business shutdown in Q2. The US market continues its recovery in 2021, showing robust sales in H1 2021 compared to the same period of last year, driven by a booming stock market, the effective roll-out of vaccinations and improved economic conditions. Platinum jewellery retail sales are projected to grow for the eighth consecutive year in 2021.

Some main hurdles impact the development of the platinum jewellery market:

- Platinum has been and still is a relative niche category of the jewellery market in most regions, which requires constant spending on consumer marketing and education and trade investment to ensure platinum sits on top of consumers’ minds and is available at POS when they purchase jewellery.

- Because of the relatively small volume, platinum needs to differentiate from the mass category (i.e. gold) for both consumers and trade. It needs to provide a distinguished proposition from gold to appeal to consumers and a different marketing & sales strategy to create higher margins for the trade.

- The lack of novel designs and innovative technologies has made platinum jewellery less attractive, competitive and relevant compared with other categories such as k-gold, especially among young consumers and for non-bridal jewellery.

- Competition also comes from other categories beyond jewellery, such as travelling and holidays, once businesses and life return to normal. This could mean a smaller share of wallet for jewellery as a whole, and hence less spending on platinum jewellery.

In comparison to gold/silver as the favourites for plain and studded jewellery, what are the qualities that platinum possesses as a metal of choice going forward?

Platinum occupies a unique position in the jewellery market. Small in scale compared to gold and diamonds yet punching above its weight for those manufacturers and retailers who make it a strategic priority for their business. These companies find platinum compliments their other offerings by providing increased differentiation among their competitors, and higher dollar transaction sizes, leading to higher gross profit per unit sales. Platinum’s innate characteristics also mean less wear and tear, gemstone loss and maintenance issues, providing an overall higher quality offering for discerning customers.

Platinum is a pure, precious and durable metal that’s 30 times rarer than gold. It has a high purity level of over 95% and does not require rhodium plating which means it never changes colour. Platinum loses very little metal across a life of daily wear compared to less pure alloys that contain a higher percentage of base metals and are more vulnerable to corrosion and metal loss through scratching. Platinum’s high purity and hypoallergenic nature have been highlighted during the Covid-19 pandemic as corrosive agents in hand sanitisers cause pitting and brittleness in lower purity metal rings.

Like all fine jewellery platinum may scratch, however, metal is generally displaced on the surface of the piece creating a fine sheen or patina.

This squishing process is the reason why platinum shanks lose very little volume, and prongs rarely need re-tipping, resulting in the most secure setting for gemstones. Typically jewellers prefer to set gemstones of value in platinum prongs, regardless of the metal used for the rest of the piece.

These qualities make it a great choice for bridal jewellery and high-end jewellery that could last a long period, and the most secured metal setting diamonds and gemstones. Beyond platinum’s physical characteristics, thanks to decades of consumer marketing, platinum is established as a metal that strongly connects with quality, love and meaning. While gold and silver in many markets are associated with investment products and fashion jewellery.

This has been even more notable in 2020/2021 that COVID-19 has changed people’s lives from many aspects, and one is that people started to re-evaluate their life priorities, as PGI’s consumer survey shows, and appreciate their relationship with their family and loved ones in this challenging time. Platinum is now well-positioned when consumers look for ways to symbolize emotions and commemorate significant occasions and moments in their lives.

While the USA and China are viewed to hold the highest market share in the platinum jewellery market, how do you see this trend panning out in the next few years, given the present challenging times?

Currently, China remains the largest platinum jewellery market, followed by Japan and the US. Although this market had a quick recovery post-COVID-19, China faces challenges such as a declining bridal population and higher competition from other categories. The Chinese market still possesses significant opportunities in lower-tier cities, pre-marital and post-marital purchases, as well as in men’s jewellery, which we have started to collaborate with our retail partners to address since 2019.

Japan is the most mature market for platinum jewellery, where platinum is the preferred metal among mature women who appreciate the quality, elegance and strength that platinum jewellery represents. Platinum has a dominant position in Japan’s bridal jewellery segment, over 90% share of engagement ring and wedding band acquisition, and also contributes a large share in the total revenue of the jewellery industry. The platinum jewellery market is expected to continue to recover and grow in Japan, although at a small percentage. This includes incremental demand developed targeting young generations, who are less engaged with fine jewellery than their predecessors, as well as a strongly growing investment jewellery category in the form of heavier pieces and chains.

The US market is the third largest in the world. Bridal, especially diamond bridal jewellery, comprises the majority of platinum jewellery demand in the US. Platinum jewellery has expanded its share not only in the bridal, diamond and gemstone jewellery but also has established a new metal only product category for platinum without diamonds or gemstones, targeting women self-purchase. The growth of branded platinum jewellery was in major chains, and jewellers continue to work on dedicated platinum strategies with grant funding from PGI. Expanding technical education offerings by partnering with jewellery schools will help to ensure a new generation of platinumsmiths. PGI believe the US market will have another year of growth in 2021 and a few years beyond, thanks to economic recovery, pent-up bridal demand and the continuous collaboration with manufacturing and retail partners.

What are the difficulties or loss of market opportunities faced by the vendors of platinum jewellery in the jewellery markets globally? What steps has PGI taken to ease the situation?

There are some difficulties and potential opportunities for the platinum jewellery industry:

1. Platinum has been and still is a relative niche category of the jewellery market in most regions, which requires constant spending on consumer marketing and education to ensure platinum sits on top of consumers’ minds and is available at POS when they purchase jewellery.

2. In key markets, platinum has a strong connection with bridal jewellery, while has limited product offering in non-bridal and fashion segments, which limits growth in those areas.

3. The relatively small scale of the platinum jewellery market and the concentration of manufacturers also create hurdles for innovation in technology and designs, which is crucial to reduce production costs and improve appeal to consumers.

4. The small size of the platinum jewellery market requires jewellers to focus on product turn and margins, to stay competitive in the jewellery business portfolio.

5. The digitalisation of the jewellery industry has been behind others. The COVID-19 has accelerated digitalisation and requests jewellers to enhance their capacity to engage with consumers via multiple touchpoints and channels.

PGI has several initiatives that have responded to those difficulties and opportunities.

- To target identified demographics and consumer segmentations across the major markets, PGI has developed a branding strategy, including building platinum’s equity as a symbol of love, meaning and authenticity to highlight platinum’s qualities for consumers’ consideration and purchases, as well as developing branded collections to target specific consumer segmentations. Branded collections are either created in-house or co-developed with partners while PGI provides strategic and customised product design, marketing and sales support.

- PGI has guided and led the development of innovative technologies such as hard platinum and heat-treatable alloys to ensure better polish, better shape retention and higher scratch resistance.

- PGI reached and engaged with targeted consumers both online and offline to better understand their needs to improve sales conversion via multiple channels.

In your opinion, what are the key markets for platinum jewellery currently? What was the size/value of the emerging markets in 2021/22 amidst the pandemic? What growth do you foresee in the next, say 5 years?

PGI operates in four major markets: China, Japan, India and the US. It’s very difficult to predict the market size beyond 2021 due to the continuous impact of COVID-19.

In 2020, China’s platinum fabrication was 930k oz, negatively affected by the business shut down in Q1 before it recovered strongly from Q2 last year. In 2021, the growth of the jewellery market in mainland China slowed, while platinum branded collections from PGI partners have done well with positive growth and we expect this will continue. PGI’s retail partners, which account for around 1/3 of total retail sales, saw a single digit increase in H1 2021. Those retailers who continued to introduce new SKUs with innovative technology and designs through branded collections drove platinum sales but the rebound of gold demand on the back of lower prices caused severe competition against platinum generic products.

Indian fabrication volume was over 220k oz in 2019 but declined to 118k oz in 2020affected by COVID-19, mostly because the jewellery industry lost almost three-quarters last year. The good news is that PGI’s strategic partners came roaring back with 25% growth in Q4 2020, compared to the same period in 2019. Recovery continued in Q1 2021 with strong year-on-year growth. Entering Q2, stores were shut for more than two months, alongside other restrictions imposed across states and markets across the country have only started to reopen in June. With concerns of an impending third wave in Q4, retailers are expecting a slower recovery in 2021.

Japan’s retail sales of platinum jewellery were 509k oz in 2020, a decline of 10% compared to 2019. Platinum was the best-performing white metal for jewellery in Japan, thanks to the competitive platinum price, increased contribution from affluent consumers, and a strong performance in bridal jewellery as well as growth in online sales. 2021 outlook sees recovery led by affluent consumers and continued strong bridal performance, although subject to the impact of new COVID-19 strains and speed of vaccination roll-out. Retailers saw a notable increase in consumer traffic; and restricted from spending on travel and dining out, wealthy Japanese continued to support sales by maintaining their appetite for high-end jewellery. Platinum jewellery retail sales are likely to have a modest increase over 2020.

Platinum jewellery retail sales in the US finished the year with a 3.4% increase vs. 2019. While pandemic measures shut down factories and impacted sales of new metal to manufacturers, retailers used this as an opportunity to sell aged inventory, resulting in a net increase in business. In 2021, jewellery industry sales performed strongly thanks to continued vaccination rollouts and economic recovery. PGI’s strategic partners saw a double-digit increase in their platinum business ounce sales in H1 2021, driven mainly by bridal and gemstone fashion jewellery. Platinum jewellery presence in the major chains continues to expand and deliver impressive results. PGI expect this market to have another year of growth in 2021 and beyond.

As per research, demand for platinum jewellery is very low in regions like India/Middle East, which are major jewellery consuming sectors. Gen Z that stays away from yellow gold, prefers white gold jewellery to platinum. How does PGI intend to address this challenge … to grow the platinum markets in these regions?

Currently, PGI doesn’t have a presence in the Middle East.

India is traditionally a gold market, and the development of the platinum jewellery market did start from a low base, but in recent years we have seen fast growth in this region, especially among the young generations. Platinum in India has built aspiration and relevance among these young consumers by PGI building differentiation from gold through a strong emotional and image-driven equity. Platinum jewellery is now seen as a symbol of love and an expression of commitment, making it ideal to mark milestone moments of love and bonding. The metal’s rare nature gives it additional value and appeal: young affluent consumers who are increasingly driving purchase decisions choose platinum for its modern, versatile and elegant designs that set them apart and help make a unique statement.

We developed segment brands and branded collections to strengthen platinum’s equity and its relevance with young generations. A good example is “Platinum Days of Love” (PDOL). In 2009, PGI launched PDOL to appropriate spousal love-gifting, based on the insight that young couples desire love and intimacy within the contractual arranged marriage. Platinum Love Bands, the products of PDOL, address consumers’ aspirations for modern, elegant designs, and mark the discovery of love between a couple within the social norm.

The brand has built strong desire and preference among its core consumer group with values in modern relationships to deepen the meaning of the ‘rare love’ that platinum symbolises, linking back to the rare attribute of the metal. By highlighting values of friendship, respect, mutuality and equality in a relationship, brand marketing continues to initiate conversations and engage consumers on what defines a love that is rare and befits a metal like platinum that is rarer than gold.

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