The report compiled by Altagamma, an Italian association of designers and couturiers, and by the Bain & Company Agency forecasts and 8-percent annual increase in luxury goods sales in the nearest three years.
The Altagamma Group contains about 60 participants including Jewellery Company Bulgari and Versace, a manufacturer of fashion ware and accessories.
According to their prognosis, the sales of de-luxe items will group by 7%-9%. While the Japanese market is in stagnation, Europe remains a reliable market as before. Sales are virtually not influenced by the American crisis since it does not involve well-to-do consumers. The same may be said of influence exerted by the strong euro.
Report Buyer, a British research company, produced a more long-term forecast. According to their opinion, expenses for de-luxe goods will grow by 70% by 2012 and will amount to $465 billion. “The level of wellbeing in the world taken as a whole is rising and demand for luxury goods will be rising along,” the company report says. The company analysts expect that watches and jewellery products will be second to fashion clothing, which has now a market share of 44.3%, but is assumed to play a more modest role.
Popular brands of watches and jewellery items attract consumers by way of new high-end goods, the analysts believe. Besides, the initial value of jewellery articles and watches makes them an inviting object for investments in the eyes of a wide range of consumers.
In the opinion of James Allan, a well-known analyst of the diamond market, there are no doubts at all, that diamonds as always remain to be “a girl’s best friend.”
The Principal of the AllanHochreiter finance group believes that dominating influence on the market is produced by the so-called “baby-boomers”, the Americans born in the period of 1945 – 1964, who are spending the greater part of their income to buy diamonds. The U.S.A. accounts for 43% out of $72 billion spent last year for retail diamonds. According to Allan, this is one of the main impacts spurring the market and there are no other reasons to expect that this tendency will not be followed in other parts of the world. This is particularly well seen, the analyst says, in the Middle East oil economies - exactly this area accounts for 15% of sales.
Within the frames of a recent survey performed by De Beers Group Marketing for the world’s largest diamond mining company, it was discovered that female diamond jewellery occupies leading positions in the gifts hierarchy of the Persian Gulf countries.
43% of Gulf women value diamond jewellery more than other gifts, including de-luxe watches, clothes designed by prominent couturiers, perfumes and even holidays spent abroad.
In the Middle East, people prefer to give diamond jewellery as gifts more than in any other corner of the globe.
Garret Penny, Managing Director of De Beers, believes that the diamond market has demonstrated its stability and avoided crisis. According to Mr. Penny, positive signals are emanated by retailers in India and China. However, according to him, it is yet early to render a verdict on the situation in the U.S.A. retail segment and one has to wait until Christmas time.
The U.S. National Retail Federation predicts a 4% rise in pre-holiday sales amounting to $474.5 billion. Jewellery is to become one of the most popular goods. 23.8% of American consumers would like to get jewel as gifts.
At the same time, the consumer trust indicator in the American market of de-luxe goods (Luxury Consumption Index provided by Unity Marketing) in the third quarter dropped to its lowest value of 87.3 points since 2004.
This index was based on a poll among more than 1 000 luxury buyers completed on October 1, 2007. The poll participants’ average income was $150 200 and their average age was 46.3 years.
Expenses for luxury goods, including accessories, jewellery items and watches, rendered the lowest index value in the course of the poll, while expenses for de-luxe services went up by 11%. Pamela Danziger, President of Unity Marketing, stressed that, as the poll results proved, wealthy buyers preferred purchasing services (travels, beauty parlors (spa saloons) and restaurants) to luxury items.
Danziger explained that the market for wealthy people was now more segmented than it used to be earlier, and due to this, it was more sensitive to changes of economic development cycles. In Danziger’s opinion, this trend is to be taken into account when forecasting the pre-holiday sales situation.
In 2007, De Beers is expecting their business in the mainland China (The People’s Republic of China) will grow by 12%-13% due to stable demand.
Christina Hudson, Marketing Director of De Beers Group (Greater China), said changing buying habits on the mainland over the past decade have seen it become one of the fastest growing markets for diamonds.
“When we started marketing on the mainland in 1993 diamonds had no emotional significance for mainlanders compared with jade and other jewelry,” she said. But tastes have gradually changed over the past period, especially when it comes to wedding jewelry. In 2006, about 40% of mainland women bought diamond rings for their weddings.
The average price per diamond sold was around $2 800 - 3.5 times higher than the market average. The average carat per piece sold has gone up from 0.25 to 0.41 carats. The thriving economy of the People’s Republic of China is driving demand for luxury goods such as diamonds, which makes up about 2 percent of the global diamond market in terms of sales. The Gem & Jewelry Trade Association of China predicted the overall trading value of jewelry in China could hit $2.7 billion by 2010. However, Yu Huimin, General Secretary of the Diamond Administration of China speaking at the Antwerp Diamond Conference operated much smaller figures. He referred to the expert outlooks, which estimated the total Chinese jewellery market in 2010 at $2.5 billion, but possibly, he meant diamond jewellery only.
The Verdict Research Company predicts that by 2010, the Asia-Pacific Region will come close to the U.S.A. luxury consumption scale levelling with Europe. Japan included, APR will take over 36.2% of the market almost nearing Europe with its 36.4%. According to analysts, watches and jewellery will be second to fashion cosmetics and perfumes in the consumption pattern.
The gold demand in the third quarter of 2006, according to the World Gold Council, went up by 30% reaching a record amount of $20.7 billion. The gold demand in the U.S.A. dropped by 13%. However, according to the Council, the demand for medium and high price jewellery products remains brisk as before.
The gold demand in India zoomed by 5% and this was a bit smaller growth compared with the first six months due to higher gold prices.
At the same time in China, the gold demand leaped by 25% not in the least influenced by higher gold prices. The Middle East countries maintained their demand stable; in Saudi Arabia, it rose by 19%, in UAE by 10%, in Egypt by 15% and in the Gulf countries taken as a whole by 3%.
Turkey hit a new record with its demand reaching 86.3 tons. The gold demand in the jewellery industry reached a second high indicator for the whole statistics history. High purchasing capacity of the population and the high lira/dollar exchange rate permitted stable prices.
The gold demand in the Russian jewellery industry, according to the Council, continues its upward trend growing by 23% to an amount of 22.4 tons. The Council explains this by increased incomes of the population and by rapid development of the retail trade segment.
The Council believes that investment interest to gold will be preserved and along with price stabilization the countries, which happen to be its largest buyers in the jewellery segment (India, China and the Gulf countries), will quickly adapt to a new price level.
