High Hopes for the High End

RAPAPORT… Indian consumers have been showing more interest recently in diamond jewelry and in high-end designs particularly — and manufacturers have been quick to respond. Indian jewelry brands are not only expanding their usual offerings to include diamond jewelry collections, but they also are adding more items at the high end of their product lines. Tanishq recently expanded its product portfolio to include extremely high-end diamond jewelry, at prices from $4,000 to $50,000, with very intricate designs priced as high as $200,000. The line will include necklaces, earrings and bangles.

De Beers is planning to launch its Forevermark brand in India this December with a marketing campaign estimated at $21 million. The launch will include Forevermark diamonds, set in 18-karat or 21-karat gold, which will be priced starting at between $200 to $300.

China Calling

Gitanjali Gems, Indian’s largest jewelry retailer, will soon be opening its own stores in China. Plans call for the group to open 50 jewelry stores in the first round of openings in China and 100 stores total over the next three years. In announcing the $3.5 million expansion in China, Mehul Choksi, chairman, Gitanjali Gems, said, “We have been supporting some jewelry retail chains in China, but have been keen to go it alone for some time now.” According to Choksi, the demand in China for gold jewelry studded with diamonds grew by 15 percent over the past three years and, since the beginning of 2010, growth is up to 25 percent to 30 percent.

The company already operates diamond and jewelry production facilities in China employing about 4,000 people.

Export and Import Value Up

According to provisional statistics released by the Gem and Jewellery Export Promotion Council (GJEPC), India’s share of the diamond world market increased in the fiscal year that ended on March 31, 2010, from 60 percent to 70 percent in value terms. India exported about $17.54 billion in cut and polished diamonds in fiscal 2009-2010, a year-to-year increase of 20.11 percent. Cut and polished diamond exports were the main drivers of the 16 percent growth — to $28.41 billion — in gems and jewelry exports to the U.S. in the fiscal year.

Overall exports of cut and polished diamonds totaled $1.795 billion during May 2010, a growth of 73.44 percent from the $1.035 billion recorded in the same period of 2009. For the first two months of 2010, polished exports climbed 5.4 percent to 1.1 million carats worth $1.52 billion, a jump of 15.7 percent.

Market Dynamics

Commenting on the current market dynamics, Kalpesh Vaghani, partner, Kapu Gems, shared, “Rough prices are moving upward and there is a complete mismatch in the prices of rough and polished. We feel that in the current market, the ratio of polished stock is equal to the actual demand, which is a good sign that there is less hoarding of goods and manufacturers are practicing lean inventory. In addition, there is scarcity of nice goods and customers are ready to pay good prices for better stones.” Vaghani feels that the prices of rough will have to come back down to a more realistic level in order to boost the sales of polished diamonds.

Diamonds as Investments

The Federation of Indian Chambers of Commerce and Industry (FICCI) is promoting the idea that transparency in the pricing of rough and polished diamonds, along with the creation of limited-edition solitaires, could help consumers accept diamonds as an appropriate investment tool for wider portfolio diversification.

Bina Goenka, founder of the Bina Goenka Luxury Group, said, “Like gold, diamond jewelry has a resale value but ambiguity in pricing and the lack of transparency in the overall trade” has held back its potential use by investors.
With the India International Jewellery Show (IIJS) scheduled for August 19 to 23 in Mumbai, industry players in India are busy preparing for the show. After a two-year lull, all expectations for the show are high — especially after the success of the Hong Kong show.

The Marketplace

• June was the peak of trading activities, in contrast to July, which was quite slow.
• Demand was good for piqué goods but VVS goods were slow.
• Buyers are showing strong price resistance.
• Sellers are ready to negotiate to some extent.
• Shortages of goods are holding up the prices.
• G-I in VVS were moving well on the domestic front in July.
• Internationally, round, cushion, princess and emeralds are strong in D-F, VVS-VS.
• J-M in VVS is moving slowly.