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Branded jewellery sales on upswing despite soaring price of yellow metal

27-January-2004
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Branded jewellery sales on upswing despite soaring price of yellow metal

The upward swing in gold prices has affected jewellery sales in the traditional jewellery market. On the other hand, branded players such as Tanishq and Oyzterbay, which offer lightweight and gem set jewellery are seeing a spurt in sales.

In the last four years, gold prices have appreciated over 50 per cent. In December 2003, prices stood at $400 per troy ounce, the highest price in a span of 13 years. Before 9/11 it was $270 per troy ounce. In India, the gold prices have gone up to Rs 600 per gram.

However, in Tanshiq outlets, brisk business is happening. The branded jewellery major has had a sales growth of around 30 per cent in the last two months, said Tanishq CEO Mr Harish Bhat.

Oyzterbay, another branded jewellery player, has also been seeing a steady growth of over 50 per cent on a month-on-month basis, according to the company CEO Mr Vasanth Nangia.

While retail prices of plain gold jewellery had gone up in line with the increase in gold prices, diamond and other gem set jewellery have remained around the same levels. Forty five per cent of Tanishq’s sales come from diamond and gemsets form a ‘big part’ of Oyzterbay’s collection.

According to Tanishq CEO Mr Harish Bhat, in the last few months the market has been going through two predominant trends. ‘‘We see attractiveness of gold as investment going up significantly. Secondly, there is a growing interest in diamond jewellery’’.

Mr Nangia feels that though demand for gold has actually taken a beating, but there is a definite shift towards low value and lightweight items and gem set collections. According to him, Oyzterbay’s growth comes from the fact that the company does not deal with heavy gold jewellery.

Branded players’ success also comes from the contemporary designs they offer and high purity of the gold that they promise. ‘‘With prices going up, people are demanding 91.6 purity gold. With each per cent of impurity they lose more than what they used to earlier’’, Mr Bhat said.

Interestingly, while branded jewellery is on the upswing, traditional jewellers are in a tight spot. Heavy set jewellery sales have taken a major dip. Confirming this, a prominent jeweller in the South Mr Antony Paul, ‘‘Sales have been affected. People still buy for weddings and such occasions, but the volumes have definitely come down’’, he said. As per the latest Gold Fields Mineral Service Ltd (GFMS - a London-based consultancy and research firm focusing on international gold and silver markets) report the situation is not going to improve for the jewellery segment in the near future. To quote from the GFMS Gold Survey 2003-update 2 dated January 15 2003, ‘‘the jewellery sector had a pretty grim 2003 thanks to higher prices, Iraq war, SARS and so on. Some of these are behind us but high prices are not. It is going to hit the price sensitive Asian markets’’. GFMS forecast gold prices to continue rallying over the first half of the new year, possibly surpassing $450.

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