“I’m not worried about China, I’m not so much worried about America, I’m not worried about Russia or Latin America. My only worry is Europe,” concluded Chief Executive Officer of Hublot Jean-Claude Biver in his recent interview at the Hublot headquarters in Nyon, Switzerland.
The research undertaken by Bain & Co and Altagamma suggests that the global luxury market will expand to €191 bn in 2011 – up from ?173 bn in 2010.
The year 2011 ended well for the Italian jewelry industry. At the beginning of the year total sales of Italian jewellery rose by 9.4 percent, exports of jewellery made in Italy jumped 17.5 percent in value, but then a slowdown in the global economy triggered a fall in exports in the third quarter; however, the shopping season for Christmas and the New Year eventually brought a dynamic move upwards.
Figures describing the consumption of precious metals by the jewelry industry, which appears to be a major market driver, turned higher resulting in subsequent export growth.
Neither the economic recession in Europe, nor the high level of unemployment in the U.S., nor any other hurdles seem to be able to cool the shopping fever among Asian buyers.
In turn, as the New York Times recently noted, efforts by international luxury companies to bring their goods to shoppers in Asia have led to a large increase in glitzy high-end shops across the region in the past few years.
The daily says that Italy’s luxury retailer Prada reported that sales in Asia had climbed 45 percent in the last quarter. Even in Japan, where an already feeble economy was weakened by the earthquake and tsunami, Prada sales grew nearly 20 percent.
Continued bullishness about the Hong Kong luxury market, and the resilience of Chinese tourist-shoppers, are among the major factors fueling interest in listing on the Hong Kong stock exchange among some of the world’s best-known brands, the Jing Daily, a Chinese online edition, says. Earlier this year, Prada and Samsonite listed in Hong Kong, and in the months ahead many expect that other brands will do the same.
Manufacturers want to go forward with confidence, they want to develop without rolling back, and in their majority they unconditionally believe in the Chinese market. Business is slowly slipping away from Europe.
Meanwhile, Graff, an exclusive jewelry manufacturer based in London, is also considering listing in Hong Kong rather than in London, thus emphasizing the growing importance of Asia in the luxury sector. According to the New York Times, managing director François Graff said in his recent interview: "Hong Kong and Asia is a very important center for diamond and jewelry business. Asia currently accounts for about one-third of the company’s business ".
In their recent study Bain & Co. said the Asian luxury goods market saw a 35 percent increase in sales which reached $17.3 billion. This figure may appear even more impressive on the backdrop of some 30 percent spike in demand in 2010.
Analysts predict continuous sales growth in Asia for 2012 as well reaching by their estimate about 20 percent, which would exceed expansion rates in other parts of the world.
Every year while traveling abroad Chinese shoppers spend an estimated €12 billion to ?15 billion and much of that spending happens in Europe contributing to sales growth there. Therefore, it is not surprising that Chinese consumers account for more than one-fifth of global luxury goods consumption.
McKinsey released a report analyzing prospects of the luxury market worldwide which says that by 2015 the value of its Chinese segment could reach about $28 billion - roughly double the 2009 figure.
Tiffany presented “better than expected” results with net sales in Europe rising by 19% to US$92.5 million in the third quarter and by 25% to $279.5 million in the year to date.
Despite the challenging outlook amid the economic crisis in Europe, the jewelry company plans to open three more stores in Europe by the end of January and hopes to increase sales in the area up to 20%.
Being cautious about plans, Hermès raised their sales forecasts up to 16% reflecting strong demand in Asia, Europe and America, compared with the previous forecast of 12 to 14 percent. In 2012, the company expects a 10 percent increase, stressing that in time of economic uncertainty consumers tend to favor strong brands as long-term investments for the next generation.
According to the Fashion Snoops, the family owners of Hermes, the French high fashion maison, also introduced some changes in their operations finalizing the creation of a holding company, H51 with 50.2 percent of the share capital in their hands to protect the luxury house from a hostile takeover, when LVMH revealed that it had secretly built up a 17 percent stake in Hermes last autumn. Speculation that LVMH was preparing a bid has propelled Hermes' share price to stratospheric heights this year, up almost 50 percent since January amid a moribund French market overall. The creation of the holding may dampen Hermes shares' speculative appeal.
Richemont registered a sparkling start in 2011, despite a patchy regional landscape. Japan grew just 9% while sales in the rest of Asia Pacific soared by 60%, Regional Jeweller says. Europe posted solid 22% top line growth, although this includes the Middle East, and the company admitted that Asian tourists in Europe remain an important sales driver.
The world's second largest luxury group, Richemont, the owner of such brands as Cartier, Piaget, IWC, and Vacheron Constantin, has announced plans to open a new mega watches store in Paris, which will spawn its goods over an area of 2,250 square meters cashing in on the ever growing influx of Chinese tourists. The investments in the new store is estimated at €70 million and the opening is scheduled for Christmas 2012.
LVMH is mulling to acquire three prime retail locations on London's prominent luxury shopping street for $500 million. At the same time the luxury conglomerate is looking for a possibility to expand its presence in New York.
The global economic woes have not yet touched Gucci. The company forestalled the events developing an emergency swift-response plan to cut costs if sales slowed. Gucci believes that 2012 might be quite difficult, but it will not stop investing for the medium and long term. Gucci plans to open seven sales outlets in the Galeries Lafayette stores across France.
Swiss luxury watchmaker Hublot, owned by LVMH, plans to expand into the jewelry market in 2013 after it had developed a scratch-resistant gold alloy, Bloomberg Businessweek says.
The new gold alloy, dubbed Magic Gold, was developed jointly with the Swiss Federal Institute of Technology Lausanne.
The 18-carat Magic Gold, like other 18-carat alloys, is composed of 750 parts pure gold out of 1000, but the inclusion of ceramic makes this gold scratch-resistant, unlike traditional 18-carat gold.
The technology used to develop it can be applied to other metals including silver, platinum an aluminum alloy.
The color of the new alloy will be slightly different from other shades of gold to make it distinctive. Hublot watchmakers are working with new combinations of metals and materials such as silicon to make timepieces that are more durable and lighter, as well as to reduce the need for lubricants. The brand has no plans to share the technology with other watchmakers. The first unique timepieces Hublot made using the new process plans to introduce at the BaselWorld industry gathering in March this year.
The new move would increase Hublot's credibility and reinforce the brand while it would also increase revenue.
Hublot remains on course for revenue growth of about 30 percent this year. The Swiss watch industry may expand demand by 3 percent in 2012, depending on the economic situation in Europe.
The company plans to open up to 27 boutiques globally in 2012, including about 10 stores in China.
Queriot is a new jewellery brand launched by Francesco Minoli, formerly an executive at Pomellato. The experienced jewelry-industry insider decided to combine great craftsmanship with excellent prices and make the best possible use of less expensive 9-carat gold, silver and small diamonds in his new collection, Civita. Queriot has already opened its first boutique in Milan, one of the world’s trendiest fashion capitals.
Damiani continues its expansion this time focused on Latin America from a department store in the prestigious residential district of Mexico City. Lately, customers in Latin American started to display great interest towards jewelry goods made in Italy. So, the company’s decision to expand its retail front was quite natural. In this way Damiani will be able to consolidate its presence in America where the company already operates stores in Los Angeles, New York, Honolulu and Monterrey.
Jewelry exclusive
To attract attention to luxury cars, Mercedes has issued an exclusive model of Mercedes SLR McLaren decorated with 24 karat gold and rubies. The masterpiece took over 30,000 hours of work and 35 jewelers involved in settings. The exclusive car is valued at $11 million.
What else might feature jewelry designed for wedding celebration? Imagination has no limits and this time the party’s centerpiece was the world's most expensive wedding cake worth $30 million. Stud with sapphires, emeralds and diamonds, the cake was made to order of Devorah Rose, editor of the Social Life Magazine in New York, specially for her diamond gala. The cake was baked by Buddy Valastro and his team from Carlo’s Bakery in New Jersey taking part in a TV series aired on cable television network TLC. The invited guests were hand-picked to avoid inadvertent diamond bites.
Veronica Novoselova, Rough&Polished correspondent in Italy
