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2015/09/04

What accounts for the continued rising popularity of diamond bridal jewellery among consumers in both the mature and emerging economies worldwide?

Photo Source: Shutterstock

In the subjective sense the engagement ring is the palpable symbol of the first step on a journey of love and reflects the groom's commitment. The pledge from a beloved man who is both willing and able to provide for his fiancé is a crucial element at the core of the married ideal. Even though through more economic parity weddings have also become a demonstration an able bride's ability to show what she can attain for herself.

 

When diamond bridal jewellery began to be widely marketed to consumers in the USA in the beginning of the 20th century, the permanence and beauty of the hardest stone was quickly and naturally associated with the beauty of love and raw strength of true commitment. It is the perfect combination of the archetypal ideal of love and commitment, sublimely manifested in physical reality. This is why the phenomenon of diamond bridal persists and grows, it was very simply a good idea. It resonates with something deep in the psyche, and affluent consumers in the emerging economies are not immune.

 

The perfect example of the continuing appeal of diamond bridal jewellery is its success in China. A rising number of Chinese luxury consumers are driving multiple global luxury markets including high end handbags, watches, cars and diamonds. Taken as a whole China now accounts for one-third of all luxury purchases worldwide.

 

According to De Beers, global diamond jewellery consumption topped 79 billion dollars in 2013. The fastest growing segment of that market was China where sales increased 14% year over year and increases have averaged 21% over the past 10 years such that China now supports more than 13% of global demand.

 

Married women have led the consumer trend in China with almost two-thirds of the purchases of diamond jewellery, but the second largest segment or one fifth of the market has been strictly bridal. Moreover bridal jewellery had the highest average price and the highest average carats per piece.

 

One of the rising trends worldwide is fancy cuts. There is even some speculation of psychology of  buyers and there preference of specific cuts!

 

Engagement Rings by R.A. Riam Group Inc.
 

The Cut And Shape Of The Stone

Cushion Shape: These two people are balanced urbane worldly and sophisticated yet fiercely loyal.

Emerald Cut: Indulgent and affectionate this couple like to spoil each other.

Heart Shaped: Demonstrative and open couples who are welcome everywhere choose this.

Marquise Cut: Fashion, glamour and fun punctuate this relationship of those who like this shape.

Oval Shaped: Proportion, balance and integrity are central the pair that favor this shape.

Pear Shaped: Free spirits who are intellectual and expressive. Independent, extremely loyal when it matters.

Princess Cut: She is the apple of his eye and he likes to show her off, he is a stable protective spouse.

Round Brilliant: Conservative, faithful, loyal with traditional values.

Special Cut Round: Conservative but not like their parents ready for something new and better


Naturally driven by sentiment, advertising and market forces we can expect the bridal segment to prosper worldwide as the affluent consumer base grows.
 

Several forward looking companies are well positioned to meet this demand.

One in particular; R. A. Riam Group produces a highly successful variety of special diamond cuts for the jewellery trade. They are one of the leading international suppliers of cushion cuts and are perhaps best known for exclusive and standardized diamond cuts, moreover they are a direct manufacturer of loose diamonds.

 

Riam Group produces a beautiful and comprehensive line of Bridal and Fashion styles as well as Anniversary bands and every kind of stud and solitaire basics. They are known for Award Winning jewellery Design and Trendsetting styles.

 

As prime suppliers of bridal jewellery to regional retail chains and better end jewellery stores they provide a trend setting product range in loose diamonds and jewellery in Asia, North America, Europe and Australia. Riam Group have manufacturing in the USA, China and India. Particularly noteworthy this company specializes in creating exclusive product for protected intellectual property, private label customers and couture. 

 

 


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2015/09/03

Many gemstones come steeped in the history of trade, conquest, and adventure, but few have a past like Colombian emeralds

 

Nuestra Señora de Atocha Colombian emerald-set gold jewel. Photo courtesy Sotheby’s.

Nuestra Señora de Atocha Colombian emerald-set gold jewel. Photo courtesy Sotheby’s.

 

Colombian emeralds are very much a gemstone of the present, though. Approximately two million carats, with a value of US$147 million, were exported last year. While most head to the US, explains Luis Gabriel Angarita, president of ACODES the Colombian association of emerald exporters, most Colombian emeralds end up in Asia where they are revered not only for their rich green color but for their rarity and value. 

 

Rough Muzo emerald crystals. Photo Ron Ringsrud.

Rough Muzo emerald crystals. Photo Ron Ringsrud.

 

In the past, many difficulties have beset the Colombian emerald market. Low-paid miners often worked emerald areas illegally. Miners often lost their lives in poorly ventilated and constructed tunnels. Lastly, the value and rarity of emeralds entangled them in bloody drug wars. The end result was lost lives, poor living conditions, environmental destruction, lost revenue, unpredictable supply, and erratic pricing.

However, in the last few years, conditions have been changing. The Colombian government has begun certifying and regulating all types of mining, says Ron Ringsrud, Director of Operations and Sales for Muzo International. In addition, companies like Muzo International, have begun offering miners regular salaries at above average wages and safer working conditions. The result is reduced illegal mining, improved living conditions, better environmental safeguards, stable supply, and regular pricing. “It’s an improvement overall,” says Ringsrud.

 

Town of Muzo in the mountains of Colombia. Photo Ron Ringsrud.

Town of Muzo in the mountains of Colombia. Photo Ron Ringsrud.

 

Miners, Muzo Mine, Colombia. Photo Ron Ringsrud

Miners, Muzo Mine, Colombia. Photo Ron Ringsrud

 

Industry organizations, too, are playing an important part in the changes. ACODES helps members understand and deal with government regulations regarding emerald exports, and subsidizes members’ participation in international gem shows in order to promote emeralds, and develop the market for Colombian stones. Another step in standardization was the establishment of Colombian Emerald Technological Development Center or CDTEC, a gemological laboratory with up-to-date equipment. Supported by the Colombian government and the national emerald federation, FEDESMERALDAS, the lab verifies the identity of stones and issues certificates.

 

Round brilliant 3.08 ct. Colombian emerald. Photo Mia Dixon/www.palagems.com.

Round brilliant 3.08 ct. Colombian emerald. Photo Mia Dixon.

 

To further strengthen the Colombian emerald industry, ACODES, FEDESMERALDAS, and the National Mining Agency in association with the Colombian Ministry of Mines will host internationally recognized speakers from trade organizations, laboratories, and emerald-producing areas around the world at the First International Emerald Symposium in Bogotá, October 13 – 15, 2015. Their goal, says Angarita, is to “promote emeralds and help educate the consumer so they see the beauty of emeralds, and that they are a safe investment.”

 

Colombian emerald crystals from the Muzo Mine. Photo Ron Ringsrud.

Colombian emerald crystals from the Muzo Mine. Photo Ron Ringsrud.

 

Anyone attending gem shows recently knows that emerald prices are rising. While “nice consumer quality emeralds” average between $5000 and $15,000 a carat, says Ringsrud, prices can range from as low as $200 a carat to more than $70,000 per carat, says Zairon Rosero of Four C’s in Bogotá; untreated stones can command more than $100,000 a carat. “More and more people are aware of the incredible rarity of emeralds in general and of Colombian emerald specifically,” says Ringsrud. “They’re very limited. There is no stockpile of emerald like there is with diamonds.”

 

Colombian Emerald. © Gemological Institute of America (GIA).

Colombian Emerald. Photo Credit © Gemological Institute of America (GIA).

 

Colombian Emerald Necklace. © Gemological Institute of America (GIA).

Colombian Emerald Necklace. Photo Credit © Gemological Institute of America (GIA).

 

Emerald cut 1.28 ct. Colombian emerald. Photo Mia Dixon/www.palagems.com.   Square emerald cut 1.97 ct. Colombian emerald. Photo Mia Dixon/www.palagems.com.

Emerald cut 1.28 ct. Colombian emerald. Square emerald cut 1.97 ct. Colombian emerald.
Both from Mia Dixon.

 

While Asia, the US and Europe provide strong markets for Colombian stones, gold and diamonds are more popular in Latin America and even in Colombia. It’s a gap Muzo International, at least, hopes to address. “It doesn’t make sense that ladies in South America shouldn’t enjoy wearing these emeralds,” says Ringsrud. What makes Colombian emeralds different from emeralds from other sources? “They have the spark of life. If you compare emeralds from around the world, you can see the difference. Colombian emeralds are much more beautiful,” says Angarita. “They’re the Rolls Royce of emeralds,” says Jose Rozo of Luxury Colombian Emerald Ltda CI.

 

 

 


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2015/09/02

In the US there’s a turnaround of sorts where mid-market jewels have shown strong improvement while the luxury end of the jewellery scale had a disappointing run. 

 

 

The second quarter earnings reports from Signet Jewelers, the largest retail jeweller in the US, and Tiffany & Co., the largest luxury retail jeweller in the US, are a snapshot that the strong dollar and to a lesser extent the volatility of the China economy are having an effect on people’s spending. It’s also showing that the US economy, even amid signs that the recovery is slowing, remains resilient.

 

And it shows the dominate position Signet has on the US jewellery market.

 

Signet reported that second quarter sales in its US and UK stores increased 15.1 percent year-over-year to

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.41 billion. Same store sales increased 4.2 percent for the same period. Note that the UK stores reported a decline of 2.3 percent due to the strong US dollar. The UK operation accounts for about 11 percent of total Signet sales. So this strength in sales is by far the result of its US stores. The company’s eCommerce sales rose 30.5 percent to $65.9 million. Profit increased 7.2 percent to $62.2 million.

 

The Bermuda-based company owns more than 3,000 retail locations in the US and Canada. Second quarter sales in North America are as follows:

 

* Sterling Jewelers division (which includes Kay Jewelers and Jared) reported that total sales increased 5.9 to $858.5 million. Same store sales increased 3.3 percent. Signet said sales increases “were broad-based across store banners, product brands and non-brands, as well as multi-channels. Bridal and diamond jewellery was particularly strong.”

 

* Zale Division (which includes the recently acquired Zale Corp. brands: Zale, Piercing Pagoda stores in the US and Canada) saw its sales increase by 57.3 percent to 389.3 million. Same-store sales rose 5.8 percent for the period.

 

Meanwhile, Tiffany & Co. was hurt by the strong dollar, even in the US as fewer tourists were buying luxury jewellery from its US locations. Second quarter sales declined 2 percent year-over-year to $475 million. Higher sales to U.S. customers contrasted with lower foreign tourist spending in the U.S. So, if it wasn’t for spending by US consumers, things would have been more difficult for the luxury jeweller.

 

“We entered this year expecting translation and tourism-related pressures on sales and earnings from the exceptionally strong U.S. dollar, as well as challenging economic conditions in certain markets,”

said Frederic Cumenal, Tiffany CEO.

“The adverse effects from the strong dollar have been even more significant than initially expected.”

 

 

 


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2015/09/02

 

 

De Beers lowered the price of rough by around 10%.  While this does add a slightly better chance of profitability for cutters, how will it affect jewellery at the retail level? 

DeBeers likes to believe that it is the driving force in the diamond industry.  For nearly 100 years they have manipulated diamond prices and supply to create a demand based on false rarity.  Over the last decade or two, their control has weakened and recent events at their monthly sights are showing signs that their grip may be crumbling even farther.

The true drivers of the diamond business are the consumers.  They are the ones that provide the profits that keep the entire industry going.  They are the ones that will decide the fate of the industry.  We must listen to them.

Consumers are already speaking to us.  They are losing interest in diamonds.  They no longer believe in the investment value of diamonds and diamond jewellery.  They still like the sparkle but are not interested in paying the traditionally high prices.  As a result, retail diamond prices are falling and the volume of sales is growing smaller.

The drop in retail diamond price coupled with lower gold price will, in the long run, be a good thing.  If jewellery is affordable more people can be in a position to buy and we will see a recovery in jewellery sales volume. 

The problem is that retail jewellers are sitting on older inventory purchased at higher prices.  Lower retail prices cut deeper into margins that are already too slim.  Cutters and wholesalers face the same issue.  They have been absorbing increases in rough prices in order to move goods, often losing money.

The recent reduction in the price of rough may help manufacturers make a small profit or at least break even, but the reduction is not enough to translate to lower wholesale prices.  It will require a significant lowering of rough prices to make any real difference.

Retailers have an advantage over most cutters and diamond manufacturers; they can turn to other product lines to maintain profitability.  Coloured stones are increasing in popularity and the margins are quite strong.  While retail diamond margins languish in double digits or even single digits, colour can produce keystone, triple keystone or higher profits.  Diamonds will still be used as accents, but colour will take the starring role.

Eventually diamonds will find their natural price level.  DeBeers will need to be sensitive to retail demands and adjust their prices accordingly.  It won’t be surprise if they make a few more attempts to fall back on their old manipulation techniques but if they truly want diamonds to be a commodity it is inevitable that prices must follow consumer demand.

There will always a demand for jewellery.  It has been that way for thousands of years and that will not change.  It will take time for the current problems to work themselves out and the industry will finally stabilize at price points that will produce profits and customer satisfaction.  But it will still be stressful for a while.

 

 

 

 


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2015/09/01

The recent global economic turmoil has affected performances of many countries including India where analysts and leaders of different industries are assessing the prospective impacts of yuan devaluation and rupee depreciation.

 

India is not badly affected by currency devaluation

India is not badly affected by currency devaluation

 

India stands to benefit from China's slowdown thanks to its resilient consumer spending and improving macroeconomic fundamentals. The foreign media is taking note of the growth potential of India’s economy acknowledging its strengths against the backdrop of a slowing China and a sluggish global economy.

 

A report published recently in the Wall Street Journal says, "India has not been as badly shaken as Brazil, Russia or South Africa as it has got ample international reserves and it is not greatly dependent on foreign capital to fund its imports. Besides, the country does not rely on exporting resources which means receding Chinese demand for minerals and metals is not serious. India does not even have many companies competing in the third markets against Chinese exporters which benefit from a weaker yuan.”

 

But among these conditions, the gold prices continued to edge higher because of the increased demand from jewellers and falling rupee amid worries over China's slowing economic growth. The yellow metal prices reached to INR 27,575 per 10 gm during the last week of August, 2015. The increase in demand of gold from jewellers ahead of the wedding and festive seasons has helped the prices to move up. The recent crash in domestic stocks markets is largely responsible for the sharp rally, industry leaders feel here.

 

Chairman & Managing Director of P. N. Gadgil Jewellers Pvt. Ltd. and Vice President of the India Bullion & Jewellers’ Association (IBJA) Mr. Saurabh Gadgil says, “Gold is considered as a safe investment bet even during the volatile times as it is usually long term in nature. During the recent fall in the prices of gold, consumers’ demand for gold bars and coins was heavy. We also received substantial amounts of pre orders for customized wedding jewellery.”

 

Speaking about the domestic jewellery demand, Mr. Gadgil says, “With the gold witnessing sharp fall and rise due to recent global market sentiments and economic movements, consumers and investors are little bearish at the moment. But the situation is likely to be under control with the gold prices stabilizing by Diwali. Festivals in India are considered to be sacred times to invest in or buy jewellery. Jewellery sales do escalate during festivals like Ganesh Chaturthi, Diwali, Christmas and wedding season where consumers are likely to make purchases irrespective of the volatility in the prices of gold and other precious metals. This is largely attributed towards consumer sentiments and emotions attached with such occasions. Considering the fluctuations in the prices of precious metals we are expecting a rise of 20% to 30% in our sales by the end of this year.”

 

But on export front, the leaders hold different opinions about the prospective impact of INR depreciation or yuan devaluation. Mr. Vipul Shah, Chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC) says, "I think the rupee downfall will not have negative impact on the gems and jewellery exporters. Even though the prices of raw materials will rise but as our inputs are mostly from imports, it will be offset by higher export realization.”

 

Mr. Gadgil says, “There will be substantial impact on India’s jewellery exports considering the devaluation of yuan and weakening of Indian rupee. However, the situation is temporary. With the intervention of Reserve Bank of India to curb the situation and the beginning of festivities and wedding season, jewellery industry is likely to see a positive growth in the second half of the current fiscal.”

 

A monthly newsletter of the Department of Industrial Policy and Promotion (DIPP) says that the devaluation of yuan is expected to affect the domestic industry as it would make the Indian exports costly in the global market. The impact of devaluation of the Chinese currency on Indian industry is expected to be threefold.”

 

But as mentioned in report of the Wall Street Journal, India highlighted the strength of country’s economy to withstand any turmoil in the Chinese and global economy. The governmental authorities have pointed to the healthy foreign exchange reserves, improving macroeconomic data and the continued interest of foreign companies to tap into India's demand. 

 

 

 


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