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Jan 20, 2010
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Italy's jewellers focus on virtue of staying small

By
Reuters
Published
Jan 20, 2010

By Jan Harvey

VICENZA (Reuters) - Italian jewellers are resisting pressure to consolidate in difficult economic conditions, preferring to gamble on their reputation for inspirational pieces produced by boutique-style manufacturers.

Damiani
Photo: www.damiani.com

An estimated 20 percent drop in exports from Europe's biggest exporter of manufactured gold jewellery and a slump in global jewellery sales in 2009 raised the possibility of more small, family-owned Italian jewellers consolidating to survive.

But even as they struggle to compete with rivals including India and Turkey, Italy's jewellers hope consumers will opt for the added value they say is offered by smaller, more specialised production.

"Real jewellery is not made by industries where they have 2,000, 4,000 craftsman," said Giuseppe Aquilino, president of the Italian jewellery retailers' association, on the sidelines of the Fiera di Vicenza trade fair.

Italian jewellers have struggled to be competitive in producing mass market goods, pinning their future on the boutique business model to market the Made in Italy brand.

Giuseppe Corrado, president of the gold producers' division of Vicenza's Associazione industriali, said fiercely independent Italian producers were resistant to the idea of tie-ups.

"(Italian jewellers) don't want to lose Italian leadership -- 'Made in Italy' still has to remain the strongest concept for production," he said. "The added value is creativity, ideas and new design."

Even Damiani, one of the jewellers at the most exclusive end of the global jewellery market, said it is taking a more innovative, less classic direction in its latest collection.

NEW DESIGNS

Italian jewellers at the fair, the largest in Europe's biggest jewellery manufacturer, say they expect retailers to increase buying after a period of destocking in 2009.

Many new designs will contain a lower proportion of gold however, as prices of the metal remain elevated after hitting record levels last year above $1,200 per ounce on the back of an investment boom.

Other metals like silver and materials like leather and wood are being used more widely, jewellers say, and new designs are often made to contain a lower volume of metal.

Roberto Neri, owner of jeweller Mulino d'Oro, said he sold 20 percent more pieces in 2009, but using 20 percent less gold.

"The price of gold has determined some of the concern in selling jewellery, because the high price of the raw material has increased the target points of some of the products," said Augusto Ungarrelli of jeweller Vendorafa.

He said gold price volatility, however, was more of a worry.

More stability in the bullion market -- where per-ounce prices swung between $800 and a record $1,226.10 last year -- will help jewellers plan costs and reassure buyers that their jewellery is not liable to quickly lose value.

HAMSTRUNG

Italian jewellers also say they are hamstrung in the international market by unfavourable export regimes in the United States and China.

Italian exports to the United States are taxed at a higher rate to products from non-E.U. countries like Turkey, they say, while import duties to China -- except via Hong Kong -- are high.

Roberto Ditri, Fiera di Vicenza's new chairman, says addressing this is a priority. "We keep discussing this problem but I believe it is time to solve it," he said.

China, one of the few major economies not to enter recession in 2009, is an interesting market for Italian jewellers, Daniela Invernizzi, the World Gold Council's Italian representative, said.

She said Italian jewellers must focus on high-end design and innovation to fight competition from mass-market manufacturers. "Italy... cannot compete in the mass market any longer because of competitors like Turkey, like China, India," she said. "(But) Italy is ahead on design."

(Reporting by Jan Harvey; Editing by Veronica Brown)

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