28/12/2004

Pearl sales are expected to continue its strong upward swing in 2005 and many are hoping to push the double-digit growth they enjoyed in 2004 into the New Year and to start generating more profits from pearls, producers and dealers worldwide told Jewellery News Asia.
The situation of increased demand and stable production in 2004, which translated into increased prices for most categories is expected to continue into 2005 with dealers expecting even more confidence in pearls at both wholesale and retail level.
Chief executive officer of the largest South Sea pearl producer in the world, the Paspaley Pearls Group in Darwin Australia, John Kelly, said: "Sales in the final quarter of 2004 have been steadier than we have seen probably since the events of September 11, 2001. We hope this trend continues into the first half of 2005 and barring uncontrollable events such as terrorist attacks and political changes, this steady demand would be very positive for the industry as a whole."

In addition to renewed confidence in the trade the main reason for optimism is that pearls are riding a strong wave of consumer popularity as they have moved into the centre stage of fashionable jewellery. In 2005  many are expecting pearls to be used on catwalks of fashion as well as to see increased placement on celebrities.

Anticipation for stronger consumer demand is also a result of more companies announcing plans to create or intensify their spend on branding and promotion of pearls. The expectation is that pearls will become even more aspirational and prestigious among consumers than they have ever been before.
Head of the Pearl Division of the Golay Group in Lausanne, Switzerland, Peter Fischer said in addition to being a hot fashion item, other reasons for promising sales growth in 2005 are:

Profit margins on pearl jewellery are more attractive compared to other categories of jewellery, such as diamond, gold or platinum jewellery.
From a consumer's view, South Sea and Tahitian pearls are more accessible than carat diamonds and have as high a perceived value and prestige factor as carat-size diamonds.

"Retailers are seeing the profit margins and those who previously focused mainly on gold and diamond jewellery are more receptive to showcasing pearl jewellery and diversifying into pearl sales," Mr Fischer said.
Strong growth expected in US, Asia Growth is expected to continue in the world's largest pearl market, the United States where most dealers reported between 10 percent and 25 percent growth in 2004.

Edward Mastoloni of Frank Mastoloni Sons Inc said: "We are very optimistic about the future of the pearl business. There is a nice upward movement in sales in the United States and we are looking forward to continued growth."

Growth in other markets in Asia is also expected to be strong. Demand which showed a strong upward trend in 2004 in several markets, particularly Hong Kong, Taiwan, Korea and the Philippines is expected to increase further and dealers are very optimistic about increasing sales in Asia's largest potential markets - China and India.

Supply situation

However some are predicting shortages in some categories of South Sea and Tahitian pearls and are expecting greater price increases for these. Among categories that are expected to show increases are gold and some finer qualities of white South Sea pearls as well better quality Tahitian particularly with strong body colour.

Overall producers are expecting quality to improve too because environmental conditions have improved over the past two years particularly for South Sea pearl production.

Joseph Taylor, managing director of Atlas Pacific Ltd in Australia which operates farms in Indonesia, said Indonesian production is likely to see better quality compared to 2004 because environmental conditions in Indonesia have been better over the last two years. "There has been significant improvements in the survival, growth and retention of pearls after operation at our farms. It is hoped that improved quality will help maintain price."

Mr Coeroli said Perles de Tahiti's promotional budget is not expected to increase in 2005 but they are planning a global marketing approach that will involve co-operation between Perles de Tahiti, pearl traders and the French Polynesian Government to facilitate promotions at retail level. "In 2005 we will focus our promotions on the main markets: the United States Japan, China, France, Spain, Italy, Germany, Switzerland, the Middle East and India. Based on results of recent auctions we expect 8mm to 9mm pearls to be the best sellers in 2005 and all colors are expected to be popular. Loose pearls are expected to retail between US$100 to US$1,000 and for an average necklace regardless of the shape of the pearl from US$1,500 to US$2,500, Mr. Coeroli said.

There is optimism that high value items will continue to sell well. In 2004 there was a resumption in demand for necklaces but they still expect best-selling items to be white South Sea necklaces with wholesale prices from US$5,000 to US$20,000 and Tahitian strands from US$2,000 to US$5,000. While 9mm to 11 mm is expected to sell strongly, many are anticipating a renewed demand for 12mm and above.

Prices for some necklaces with larger sizes have increased more than 30 percent. The increased demand and upward price movement is mainly for necklaces with sizes15mm and above. For example necklaces that used to sell for about US$60,000 now sell for between US$70,000 and US$80,000 a strand, dealers said and predict a further upward movement in price for this type of merchandise.

They said they are expecting to enjoy strong growth in gold pearls but are hopeful that the increasing amount of dyed and treated pearls on the market will not affect their sales.

They expect consumer demand for natural colors to increase further in 2005 as has been seen in the gemstone business as a result of the increased availability of enhanced goods. "There is growing demand for natural colours and we expect this to increase further," managing director of Jewelmer International Co-operation in the Philippines, Jacques Branallec said.

"The active participation of exhibitors and buyers in the September Hong Kong fair and its buoyant atmosphere are a strong proof that the market is improving and buyers are returning. More importantly, the good results of the Paspaley and Robert Wan auctions, which were held concurrently with the fair, have showed that people have regained confidence in the South Sea pearl and the Tahitian pearl, and the pearls' prices stay stable despite the falling prices of other types of pearls."

Mr. Shimizu anticipates the prices of the two pearls to be stable next year, given the help of the production factor as well. He said that regarding South Sea pearls, Australia's production is likely to remain stable and Indonesia's to decrease significantly owing to the high mortality rate and shortage of oysters. Therefore, although output from the Philippines is expected to rise slightly, the overall production in 2005 should not increase dramatically, and should be 1,400 kan the highest. In the case of Tahitian pearls, production is likely to continue to drop. All these will help stabilize the pearls' prices, he said.

"However, despite the favorable factors, sellers may not necessarily make good businesses. There are so many suppliers that buyers can choose from. To be chosen, one has to offer goods that are consistent in quality and prices, and be reliable so that buyers are confident that they won't get any treated pearl without notice. Establish a good reputation, then buyers will return, and business will go well," Mr Shimizu said.