Global jewellery industry calls for immediate action on gender equality

The global jewellery industry has called for collective and immediate action on gender equality, a crucial building block in developing a strong and responsible supply chain that contributes to achieving UN Sustainable Development Goal 5.


Dubai IE promotes Gold & Jewellery sector in JCK Las Vegas

Dubai Industries & Exports (Dubai IE), the export promotion and industrial development agency of Dubai Economy, showcased the capabilities and potential of the gold & jewellery sector in Dubai for the first time at JCK that concluded in Las Vegas...


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Russia – Oasis of Luxury

13 january 2009

Demand for luxury in current environment is frail and difficult to predict, the Russia Daily believes. On the one hand, as it recently turned out, Sotheby's brought their eggs to a wrong market trying to sell a blue diamond of 10.48 carats. The brokers anticipated to gain six or even ten million dollars, but could not find any buyers. Although lately Geneva was not in want of rich connoisseurs of luxury, over one third of gems and jewelry pieces on sale did not find their new owners. For the auctioneers, this was not their first painful surprise. As recently as last autumn, the biggest-ever-sold diamond exceeding 100 carats in Hong Kong was left without its new keeper. However, on the other hand, Christie's managed to sell a unique 42-carat sapphire at their auction held on November 21, 2008. Its buyer who wished to stay anonymous paid CHF 4.187 million.

The Kommersant Daily offers three scenarios for the jewelry and watch industry belonging to the luxury segment. The optimistic outlook is based on the Richemont Group’s last October sales which increased 1.6% compared to October 2007 (10% up for the previous six months); the net profit index higher than expected by analysts; the double-digit growth displayed by Asian markets; although taking into account the sagging U.S. market and the European market’s downward trend despite the brisk demand on the part of non-resident buyers. In its commentaries the Group says there are no signs of a slowdown on the Asia Pacific markets (except Japan), Middle East and Russia. Extrapolating the above data onto the year ahead there are no catastrophic consequences for the market visible, if only sales growth rates are changing from double digit (over 10%) to single digit.

The second scenario is pessimistic. The Italian Bvlgari Group reported a significant drop in profits as far back as the third quarter 2008 and refused to give any forecasts for 2009. Richemont’s last October growth of 1.6% was more due to uncertainty of exchange rates with the U.S. dollar and yen going stronger against the euro; if this to be set aside, Richemont’s sales will go down 2% vs October 2007. All this considered, the whole picture appears as follows: the money-market volatility affects companies’ economic indicators as the industry is crawling into the unpredictable year 2009 after the miscarried Christmas season. If the Chinese and Russian economies will be hit by a sudden slowdown, then the industry will sink into the crisis abyss for two or three years.

As for the third, more realistic scenario, combining the features of the first and second, observers are inclined to think that unlike the previous hard-felt crises (in the 1970s and early 1980s) the industry may avoid a significant slump turning to the new markets, which before were just non-existent on the global luxury map. First of all, this is China and then Russia and India. However, it should be kept in mind that because of the recession on the traditional markets (the United States, Europe and Japan) jewelry manufacturers will not be able to preserve their sales rates: next year they will drop down to single digits and in 2010 will be negative. A similar view is expressed by the analysts of Bain&Co, an authoritative consulting company. According to their forecasts, 2008 will yield a three-percent growth across the whole luxury industry, while in 2009 it will be two percent shrinking to naught further on.

Top managers of pace-setting jewelry and watch companies offer their own outlooks. Jean-Christophe Babin of TAG Heuer notes that this crisis may accelerate the structural processes his company has observed during the last five years. “As for Russia, I value its powerful and even aggressive development to the full extent,” he says. “This is why we have great plans in Russia for the future – opening our store in Yekaterinburg. In Russia we place our stake of course on chronographs and women’s models.” Jacob Arabo of Jacob`s & Co. believes that under crisis conditions diamonds are the main investment vehicle. “We see growing interest towards large and rare gems among investors,” he stressed. “In 2009 we shall continue to sell rare diamonds with good characteristics, as well as watches through a wider network of distributors in emerging economies.” Fawaz Gruosi, de Grisogono, says his company has positive outlooks for the coming year. They expect a more than 20-percent sales growth. “The crisis is not currently affecting this company due to our positioning in the upper segment of the luxury market,” Fawaz Gruosi believes. “Our customers will behave cautiously in the slowdown period, but they will be back to their habits after the recession, which was what we observed during the last crisis. Our advantage is that we have our own network of boutiques bringing us profit.” Bernard Fornas, Cartier: “Our trump card is that we are present everywhere in major financial points of the world. In our sector we are number one in Asia, number one in the Middle East, Russia and the CIS, number one in Europe and very strong in the United States… In the crisis period, customers are very attentive to traditional values. This is why I say that our task is not just to survive, but this is a chance to take some part of the market.” Maxim Fishbein, CEO of Gold Union, a jewelry house in Saint Petersburg, believes that the luxury segment may be the least affected by the crisis. In his opinion, advertising may increase in scale if mass media will reduce prices for placing ads.

The Fashion Consulting Group is convinced a decrease in consumer demand for luxury is inevitable. “Now the question is whether the 2009 luxury market in Russia will be able to reach the 2008 level. The most upbeat estimates boil down to a two-to-three-percent sales growth,” says Anna Lebsak-Kleimans, CEO of FCG. In other countries the situation with luxury is even worse. “There are only two oases in the world left for luxury merchants – Russia and the United Arab Emirates. Many Russian VIP-customers have recently been called from famous brand stores in London offering discounts for would-be purchases,” a top manager of one of the jewelry holdings told the Kommersant Daily. The most famous luxury brands confirmed their interest in the Russian market. For instance, although Tiffany’s net profit in the third quarter fell down by 57%, there is no sign of decreased demand for Tiffany products in Moscow. Rich Russians continue to spend a powerful lot of money, PRIME-TASS was told by Tiffany’s Moscow store in Tretyakovsky Passage: “We have no clients mainly in summer time, but in autumn and winter we have definitely more customers. The price range is very great – from 10,000 roubles to infinity. There are rich people, elite, who spend very big money. On some days we sell nothing at all, but on other days we sell one million euros worth of goods.”