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While lower-carat gold jewellery is fast becoming popular, David Lamb, global managing director (jewellery and marketing), World Gold Council, in an interview with Sharleen D'souza, says the Indian market is still dominated by 22-carat gold. Edited excerpts:
What is the impact of the six per cent import duty imposed by India on the gold market?
Small changes in import duty tend to be absorbed in consumer behaviour. In the long term, these disappear into the gold price story. However, in the short term, these could lead to confusion and speculation and make people cautious about entering the market. We have to see whether this turns into something consumers are consciously factoring in.
Going by the initial trends, we expect imports in India to be higher than last year. This year, gold imports may stand at 865-965 tonnes.
Owing to the high gold prices, customers are shifting to lower-carat gold jewellery. Would this boost sales in India this year?
There is great potential for this. In the last five to 10 years, lower-carat jewellery has seen growth and acceptance. This is partly generational. Also, growth of diamond jewellery has educated people about the role of 18-carat jewellery. I think lower-carat jewellery accounts for a small fraction of the overall market. But it has great potential. The Indian market is still heavily dominated by 22-carat gold. In the next five years, it is unlikely to account for more than a low single figure as percentage of the overall market and turnover.
How is jewellery demand emerging in the top five markets?
In America, bigger single-statement pieces dominate the market. The ultra premium watch sector is growing where bigger significant investment pieces use the price of gold to justify the steep pricing. In China, two trends are emerging we see growth coming from tier-III and tier-IV cities and more jewellery stores are being opened in cities. These are building market share and market growth; this trend is likely to continue in the short to medium term. Overall, we are seeing a swing-back from lower-carat jewellery to pure gold in China. In fact, as prices rise, people in the Chinese market want higher-carat or pure gold. The other two growth markets are Russia and Turkey; both are fuelled by economic expansion. There is real growth in couples' jewellery pieces that can be worn by a man, as well as a woman. In China, we are also seeing exchanges of gold before weddings. In India, the dominance of bridal jewellery is still prevalent and, therefore, we have entered the market with our own bridal jewellery brand, called Azva.
How are jewellery patterns changing in India?
One can see detachable pendants, which can be de-linked and worn separately. Increasingly, trade has to create patterns and designs that have lives beyond the locker. The emphasis is more on jewellery that works, rather than jewellery merely kept in the locker. Modern women want jewellery that delivers, rather than jewellery that passively increases in value.
How has Azva fared? What are your plans for the brand?
We launched it in a very soft manner in five cities. This year, we would go to 20 cities, keeping in mind the confidence behind it. This is a consciously pan-Indian brand, in terms of design and concept. We don't intend to grow it by extending distribution to more retailers and more cities. By the end of this year, we plan to have only 70 retailers. This sits at a premium point in the market. With its design and craftsmanship, we want to keep it tight and exclusive to retailers who want to work with us and with the brand. It has seen a very encouraging start compared to what we had imagined earlier.
