Global jewellers have rapidly adjusted marketing techniques to counter Covid and the market is beginning to slowly revive. Online advertising is rising to encourage buyers to visualise potential purchases that they can not touch, feel and examine closely.
Ahead of the Chinese Year of the Ox and Valentine’s Day gift buying, jewellers are more confident. Marketing is being concentrated on Gen Y–25 to 40 years– who are moving into peak earnings and savings; are getting engaged and married and having babies.
According to Statista, the data firm, global jewellery demand totalled $229 billion in 2019. The biggest markets are the US, China, India and Japan while Italy designs and manufactures jewellery. According to several jewellery firms, online “zoom” sales boosted demand of items such as “keep safe” pendants and necklaces. Since people couldn’t spend on travel, they used spare cash to buy luxury design jewellery.
Down in the first half of 2020 but better afterwards
In volume terms, global jewellery sales were well down in 2020. But the 20 per cent increase in gold prices boosted value levels.
According to the World Gold Council there was a serious slide in gold jewellery demand. Diamond miners De Beers, Alrosa and Antwerp gem dealers also report that there was a shaky time for producers, cutters and jewellers.
Similarly to other businesses, the big dip in trade occurred in the second quarter of last year followed by a revival in the third quarter and then a nervy fourth quarter when there were renewed lockdowns. Several large jewellery companies failed in Europe and North America. A weak rupee, debt and lockdown, hurt Indian consumption. But the consumer recovery in China raised jewellery sales there and helped stabilise turnover for miners and manufacturers.
For insight into booms and busts take a look at Neil’s books. They can easily be found via his author page on Amazon .
Neil’s financial thrillers Trader Jack- The Story of Jack Miner and its sequel Jack of Diamonds have had excellent reviews which include comments on the in-depth research into gold and gold share trading, diamond markets and financial bubbles and crashes.
Children 8 to 12 have also enjoyed the anti-war fantasy, Butterfly Battle- The Story of the Great Insect War. It had exceptional reviews.
Gold trends
The volume of gold jewellery demand in 2020 dropped to 1,411 tonnes, its lowest annual level in two decades, estimates the World Gold Council. Covid 19 and record prices were to blame. The tonnage sold was 34 per cent lower than 2019 levels and although there was a recovery in the second half of 2020, the volume of tonnes sold “remained very weak. In value terms however, demand rose from an 11-year low of $29.6 billion in the first half of 2020 to $51.6 billion in the second half.
Diamond dip and revival
Similar trends were evident with diamonds. De Beers reported that its sales of rough diamonds fell from $5.39 billion in 2018 to $4.04 billion in 2019 and then slumped to $2.72 billion in 2020. But after selling only $916 million of gems in the first half of last year, sales doubled to $1.8 billion in the second half. Alrosa the Russian diamond miner experienced similar demand for its goods but both companies, the largest producers and distributors of rough, uncut diamonds, slashed production. They intend keeping levels low in the coming year. In this way they aim to balance supply and demand so that they can lift prices.
The strategy is beginning to work. Rapaport, the New York diamond dealing firm said that according to its sources, both De Beers and Alrosa raised prices in their January sale.
They said that demand had improved because manufacturers were restocking after reasonable Christmas sales and “strong trading ahead of the Chinese New Year”.
According to Rapaport’s findings, De Beers raised prices by an average of 4 to 5 per cent and Alrosa by 6 to 7 per cent. The larger, rare diamonds, achieved even higher increases than smaller gems. In the past quarter both companies had begun reversing former price cuts, according to Rapaport. Cutting factories in India also raised polished production to full capacity as shortages emerged and retailers restocked, Rapaport said.
Some traders expressed concern that the surge in rough purchases could lead to an oversupply as Chinese retailers have almost finished preparing their inventories for the upcoming lunar festival.
The World Platinum Investment Council, which promotes the metal for mines, said that demand has increased in China and Japan. Historically people there have enjoyed platinum jewellery. Now relative to gold, prices are cheap. Sterling silver sales have also risen but they are a tiny proportion of the global jewellery market.
© Neil Behrmann. This article was first published in The Business Times , Singapore. For other excellent Asian and other articles try https://subscribe.sph.com.sg/publications-bt/