White is the New Yellow

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According to a survey conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), “The rising gold prices are forcing a change in women’s jewellery-buying habits, and therefore, nearly 76% of jewellers are focusing on platinum-based diamond jewellery over traditional gold and silver jewellery, to tap the changing preferences of domestic consumers.”

Consumers are increasingly turning to platinum jewellery in preference to gold as a result frequent price fluctuations in gold and silver. Customers, who have always been aspiring to own platinum jewellery but have not been able to do so because of the price, are taking advantage of this opportunity. According to the ASSOCHAM recent survey, the share of platinum and diamond jewellery in the overall gold jewellery has increased significantly over the past one year and is likely to reach about 30-35 per cent of the total gold jewellery sales in the year 2015.

But despite its decade-long presence in India, is still not known to people in many parts of the country. It is available only in 60 major cities and 800 stores. There are certain ‘consumer barriers’ and ‘mental blocks’ to its acceptance. Floroscent interviewed Vaishali Banerjee, Country Manager, Platinum Guild International –India and Colin Shah, Managing Director, Kama Schachter to find future outlook of platinum as investment tool and as jewellery in India.

Platinum Very Rare…Very You!

Vaishali Banerjee, Country Manager, Platinum Guild International India, says platinum is definitely a beautiful metal for the ‘modern Indian woman’. “Platinum has a great store of value because it is a very precious and rare metal. Over the years it has appreciated, but platinum is 30 times rarer than gold. India’s consumption of gold is higher than the annual metal production for platinum. It is a very precious and rare metal and is an excellent store of value. But it isn’t gold.”

 

She says gold has always been playing a significant role in Indian cultural traditions and is often used as a means of storing wealth. While platinum has been established as a symbol of deep everlasting love and today forms a significant part of the gift of love segment between couples, parent-daughter or child, siblings and other milestone occasions.

Platinum does not evoke memories of tradition, of family festivities, grand celebrations with loved ones. Platinum would go well with Western evening wear but certainly not with the traditional attire that Indian women tend to wear to weddings or other family functions. It doesn’t go well with typical Indian outfits. A thin platinum necklace will surely go unnoticed if worn with a silk sari.

However, Colin Shah, Managing Director, Kama Schachter, said, “White is the new yellow today. Increased awareness of platinum and the marginal difference between the prices of platinum and gold are the key factors of the popularity that the metal has gained.”

“Affordability also plays a prominent role here. In the recent times especially during the festive season we have seen and increased demand for light weight diamond jewellery studded in platinum which is not only affordable but also looks trendy and nice,” he asserted.

Platinum is still in the process of gaining popularity as compared to gold and diamond in the country. At present, consumption of gold stands at 300-350 tons in India, whereas consumption of platinum is only 10 tons. Hence remember that the market is not mature enough if you are planning to buy platinum from an investment perspective. Platinum is not here to displace gold or other metals in the market. But it is definitely going to find a place in the market, all its own.

Next Investment Tool

Indian investors always had a fascination towards precious metals and stones owing to their hedging ability against rising inflation and economic uncertainties. While investing in gold and silver has been going on for years, another investment avenue that is blooming for past few years is platinum. Colin Shah said, “Precious metals have always been considered as great investments. With increased prices of gold platinum and diamonds are the next investment tools. While investing in gold and silver is like an age old tradition, platinum and diamonds offer good investment opportunities.  I also feel that jewellery today is more purchased for use than investment.”

On the investment side too, platinum is seeing an upsurge which has prompted Johnson Matthey, a precious metal refiner, to launch platinum ounce bars in India shortly.  Vaishali Banerjee, country manager (India), Platinum Guild International, said, “Platinum has a great store of value because it is a very precious and rare metal. Over the years it has appreciated, but platinum is 30 times rarer than gold. India’s consumption of gold is higher than the annual metal production for platinum. It is a very precious and rare metal and is an excellent store of value.”

“Platinum has broadened its appeal amongst multiple consumer segments. Our research has shown that consumer demand for platinum is mainly driven because of emotional occasions or needs and not for investment. Platinum has always been of great value and today that is enhanced. Market reports suggest that consumers today want to upgrade to platinum. This is especially the case for their diamond or gem set jewellery. Platinum’s naturally white luster from deep within is able to reflect the fire of precious stones like no other metal.   Becasue of its eternal nature and innate strength, precious stones are held firmly and securely for a lifetime and your jewellery can be handed down as heirloom pieces,” she added further.

Paradigm Shift

Ten years ago, when platinum was introduced in India as jewellery, it was more than twice as expensive as gold. Now with gold price skyrocketing, the price differential is marginal. A gram of platinum, including wastage and making charges costs little over than of gold. And it also has resale value. Small jewellers have already gone ahead with platinum products. Retail chains are gradually following. As a new jewellery trend, platinum is finding increasing interest.

“Indian consumer needs are changing and there’s a great demand for lighter and smarter designs among modern Indian women. This has resulted in an incline towards platinum,” says Vaishali Banerjee. Platinum jewellery’s retail presence has grown significantly across 800+ stores. In addition to metro markets, Tier 1 and 2 cities are also seeing the opportunities in platinum and we expect this to continue as the demand from consumers increase.

 

A recent qualitative and quantitative survey conducted across key metros in India shows very high awareness levels at 90% and high demand, with growing consumer confidence and positive sentiment for buying platinum jewellery. The younger generation identifies strongly with the precious white metal. The inherent properties of platinum, its eternal nature, rarity and modernity are the key motivators for the young.

Colin Shah feels the metal has a special appeal that Indians are now coming to appreciate. There is a paradigm shift in the preference of jewellery that consumers want today. “Platinum is rare and so there is an element of ‘aspiration’ involved in the desire to own it,” he says. This, along with the idea of buying something different that has a contemporary touch makes it click well with young buyers.”

“There has been a change in definitely. Earlier it was more and investment than a necessity and today necessity is given more importance than investment. Also the rise of demand in diamonds or platinum is a new trend among consumers. During the recent festive season Kama has also witnessed an increase in the sale of diamonds studded platinum jewellery both online and at the store,” he adds.

Target Group

According to PGI, consumer research study across India have found out that the consumer demand within the younger segment is quite high and awareness has deepened.  The market has developed from very small jewellery under 5 grams to an entire range of jewellery for women in rings, bracelets, chains and pendants, necklaces, platinum love bands for his and her. Last year we launched a new segment of bangles which has tapped great consumer interests. And there is also an entire range for men of rings, bracelets, chains and cufflinks.

Vaishali Banerjee said, “Consumer research indicates that platinum appeals to the upwardly mobile younger audience between 18 – 35 age group, single, engaged, married or living in a metro/ mini metro who have a very strong relationship with the jewellery category. The significance consumers attach to love and commitment has always been there and it continues.  And as consumers look to platinum to celebrate their love and future together, relationship jewellery remains a key focus for platinum in India.  Over a period of time the innate values of platinum lent itself to a broader target audience. These are a more discriminating audience who appreciate the intrinsic value in precious jewellery; they seek the very best metal and the very best gemstones.”

Men Prefer Platinum

“Platinum has broadened its appeal amongst multiple consumer segments. A very new entrant is men taking to platinum. Through the ages, the most discerning of men have preferred platinum when it came to their jewellery. The look of platinum and its weight appeals to men as it is understated, yet sophisticated and elegant,” said Vaishali Banerjee.

After wristwatches, sunglasses and shoes, now platinum rings, cuff links and kadas are on men’s shopping list. The understated look of platinum and its weight appeal to men more. Men aged between 20 and 35, who are usually students or youngsters who’ve just started working, are more aware of platinum than their parents. They spend between ` 20,000 and ` 75,000 on platinum rings and pendants at the store.

Outlook of Platinum

According to a recent qualitative and quantitative survey conducted across key metros in India shows very high awareness levels at 90% and high demand, with growing consumer confidence and positive sentiment for buying platinum jewellery. The younger generation identifies strongly with the precious white metal. The inherent properties of platinum, its eternal nature, rarity and modernity are the key motivators for the young.

Since its launch in 2000 and there is a strong domestic market which has been growing. End of 2008, we initiated a robust consumer programme in partnership with the trade and have noted a 600% growth since then. Vaishali Banerjee, said, “Specifically over the last 3-4 years we have seen a strong growth of over 30 – 50% per annum, in consumer sales. About 4 tonnes was the offtake of India for last year as per government approved import figures. This makes India the 4th largest consumer after China, Japan and US.”

She adds, “Indian market’s scope of growth is accelerating at a fast pace. The Directorate General of Commercial Intelligence and Statistics (DGCIS) government recognised import figures for platinum show a growth of 28% in Q1 (Import figures of platinum for January to March 2012 – 1.1 Tonnes and for January to March 2013 it grew to 1.4 Tonnes)”.

India is the newest market for the Platinum Guild International, and we are extremely positive as the growth potential in our country is enormous. The first indicators are reassuring that we are on the right path. There has been a significant growth witnessed over the last two years. Newer markets like India have seen 100% growth, while existing markets have seen a 40 to 60% rise.

In today’s time enquiries are coming in equal numbers from smaller towns. “Traditionally, the metal wasn’t found in India and it was only about a decade ago that it started selling here. It might be a small share of the business, but has a bright future. Customers are well aware about platinum jewellery,” says Colin Shah.

According to the ASSOCHAM recent survey, the share of platinum and diamond jewellery in the overall gold jewellery has increased significantly over the past one year and is likely to reach about 30-35 per cent of the total gold jewellery sales in the year 2015.

Long Way to Go

The problem with platinum market is at a very nascent stage today. Very few jewellers sell platinum jewellery in India. It is most popular in the urban areas and the metros. Hence, jewelers don’t really compete in this segment to form an aggressive pricing policy. Secondly, buyer cannot track the prices and there are chances that prices may vary for the same quantity and quality of the metal from one jeweller to another. Thirdly, the typical pieces one finds at jewellery showrooms are either thin chains or rings with not much ornamentation. Which is why, despite the elitist tag, and despite heavy promotions featuring movie stars platinum has still failed to cut ice.

All authorised platinum retailers’ stock hallmarked platinum jewellery, which comes with a quality assurance card with a Unique Identification Number (UIN) and every piece bears the purity hallmark of “Pt 950”, stamped inside the piece. This also serves as an assurance of a ‘buy back’ programme. In order to assure consumers of the purity of platinum jewellery across authorised retail outlets, Platinum Guild India Pvt. Ltd has appointed Underwriters Laboratories (UL Inc, USA) to check the authenticity of platinum jewellery, audit and monitor its Quality Assurance Scheme. Most retailers offer a buy-back on platinum jewellery much the same way like other precious jewellery. The policies are dependent on the retailer.

However, promoting platinum in India hasn’t been a cakewalk for PGI. With awareness about platinum being almost nil 10 years ago, the huge task for PGI was getting customers past the “What is this metal and why should we buy it?” stage says, Banerjee.

Colin Shah said, “PGI has definitely been instrumental in creating awareness among the consumers about the metal. The thoughtful marketing strategies, advertising campaigns have been key drivers for platinum to become popular among the discerning consumers and retailers”.

Banerjee of Platinum Guild says the metal has, in the last couple of years, gained momentum, thanks to aggressive marketing. “But, we know we have a long way to go,” she admits.

Being optimistic and looking forward to emerging changes recently there is a growing trend of young brides who are looking at platinum as a part of their wedding trousseau.  Retailers have seen young consumers convincing their parents to buy platinum as a gift to celebrate occasions. Platinum is mostly received by the young as a gift from parents or grandparents across milestone occasions in their lives.

The outlook for platinum jewellery in India is quite positive, despite the current churn in the economy. Fundamentally India’s jewellery market is an integral part of its ethos and in addition it has a growing young population. Therefore in the long term the outlook for platinum jewellery is strong. The existing prices of platinum, however, offer great investment opportunities to the smart investor to jump on the investment bandwagon. With gold prices reaching astronomical highs, more and more Indian investors are now looking at diamonds and platinum as an equally lucrative investment opportunity

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