Gold jewellers in India, the world's biggest market for the precious metal, say they are turning to diamonds to hedge dropping gold sales.
Diamond sales sparkle as sellers reduce prices
MUMBAI // Gold jewellers in India, the world's biggest market for the precious metal, say they are turning to diamonds to hedge dropping gold sales, which have been hit by rising prices. Consumers have started viewing diamonds as an attractive investment as prices have dipped, for the first time, by 20 per cent, while gold prices have recently hit historic highs. Sandeep Kulhalli, the vice president of retail and marketing for Tanishq jewellers, said gold jewellery sales were on a par with last year, which experienced 10 to 20 per cent growth. Diamond sales, however, were up 35 per cent so far this year compared with the same period last year, he said.
"We are looking at increasing our diamond collections and are looking to promote diamonds more actively than gold," Mr Kulhalli said at the India Retail Forum in Mumbai. Jon Wright, the retail manager for Euromonitor International, said the trend was worldwide. "Gold-based goods remain popular, but there has been stronger growth in other areas of jewellery, with many pointing to the growth in diamond-based jewellery goods," he said.
Gold jewellery sales worldwide have been hit hard by the economic downturn and high prices. Gold last closed at US$1013.99, a steep mark-up from $695.40 in October last year. In India, where gold is an essential purchase for weddings and religious festivals such as Diwali, the price has been further pushed up because of the weak rupee. India's gold jewellery demand fell 31 per cent in the second quarter to 88 tonnes, according to the World Gold Council. In the first quarter, sales were down 52 per cent at 34.7 tonnes compared with the same period last year.
Gibson Vedamani, the executive director of Kirtilal Kalidas Jewellers, said his company was incorporating more diamonds into its jewellery because of lower prices. "People have started going for diamond-studded jewellery rather than going for pure gold accessories. So that's the strategy we adopt," Mr Vedamani said, adding that the popularity of diamonds had helped keep overall sales afloat. Suppliers dropped their diamond prices about six months ago to clear their stockpiles, which had built up as thrifty consumers stopped buying the precious gem, he said.
Méhul Choksi, the chief executive of the Gitanjali Group, said that while diamond sales had increased 40 to 50 per cent this year compared with last year, the amount of gold sold had fallen by 10 to 15 per cent. "The prices have increased so much in a small time," he said. "The Indian audience is very clever and sharp. They invest at the right time." To counter this, Gitanjali is focusing on opening more stores featuring diamonds, and into smaller markets which have fewer organised retailers, he said.