Gold shines for Italy's high-end jewellery trade

Italy's once-dominant jewellery industry will likely grow more polarised this year as prices of precious metals and stones soar, hitting mass market jewellers while high-end jewellers are confident of doing well.

Still the world's leader in design, Italian jewellery has been hit hard by surging gold prices and lost its top production ranking in fierce competition with India, China and Turkey which have lower labour costs and have improved quality.

"There is an ongoing polarisation of the market," Daniela Invernizzi, Italian representative of the industry-funded World Gold Council, told Reuters on Sunday at an international jewellery fair in Vicenza.

"The high-end is not suffering (from the high gold prices). Those who suffer most are in the "i-pod" segment of jewellery which costs between 200 euros and 1,000 euros," Invernizzi said.

Italian high-end jewellers attending the fair said they were cautiously optimistic about this year after betting on exclusive bespoke items which helped them counter the backlash of soaring gold prices and boost sales in 2007.

"2007 was a very good year because of our strategy of focusing on the very high segment of the market," said Filippo Picchiotti, chairman of the family-run Picchiotti, makers of bespoke diamond jewellery with price tags of up to $1.5 million.

Picchiotti said he hoped his company would repeat this year a 10-15 percent rise in sales it had last year. Picchiotti, as did many other high-end jewellers, managed to pass on rising costs to consumers who effortlessly splash out on big ticket items.

But the spending appetite of middle class consumers has been moderate recently with choices shown often in favour of a new mobile phone or a holiday trip rather than jewellery, hitting particularly hard mass market goldsmiths.

"I think this segment will die out eventually," said Paladino Orlandini, designer of exclusive gold jeweller Atelier Orlando Orlandini.

WGC's Invernizzi disagreed, saying Italian manufacturers of machine-made gold chains can still stay ahead of competition thanks to new technologies allowing them to make lighter weight pieces with sophisticated designs.

 

DIFFICULT U.S MARKET

Mass market consumer sentiment on the key U.S. market soured in the second half of 2007 as the mortgage market crisis and strong euro, versus the dollar, restrained buying power, jewellers at the Vicenza fair said.

Italian jewellery sales in the United States fell 7.5 percent to 486 million euros ($718.1 million) in the first nine months of 2007, accounting for a 14.6 percent share of total Italian jewellery exports in the period -- a far cry from 25 percent a few years ago.

But top end jewellers said their clients have not been put off by credit market woes or strong gold prices.

"We sold less items there, but of a higher price," said Picchiotti, adding his group's sales in the U.S. market were stable last year.

Designer Roberto Coin, who sells in Northern America a lion's share of his exclusive diamond-rich jewellery, said sales to one U.S department store jumped 50 percent last year, with items priced at $20,000-40,000 selling especially well.
Source: guardian