India, China may equal US jewellery market by 2015: Survey

India and China's jewellery market will grow to equal the US market by 2015, while the global jewellery sales is likely to grow at 4.6 per cent year-on-year to touch $185 billion in 2010 and $230 billion in 2015. It could even touch the $280 billion mark with collective industrial efforts by 2015 at a CAGR of 6.7 per cent.

The above projections are given in the survey "The Global Gems and Jewellery: Vision 2015: Transforming for Growth" carried out by KPMG for The Gems and Jewellery Export Promotion Council (GJEPC) of India. The survey was released on December 11.

The survey gives an overall scenario of the global jewellery industry. Currently, the US market is 30.8 per cent while India's is 8.3 per cent and China has 8.9 per cent market share.

While the Indian market will grow along with the global market, India's share, in value terms, in the diamonds processing industry will decrease to 49 per cent by 2015 from the present 57 per cent.

At the same time China's share in the sector will increase to 21.3 per cent. The survey also states that by 2015, around nine per cent of the world's diamonds, in volume terms, will be processed locally by mining countries, with Angola, Namibia, and Botswana emerging as profitable CPD centres in Africa.

The study also says that during this period the diamond jewellery will be the slowest growing segment at a CAGR of 3.3 per cent.

The survey reveals that Palladium is expected to establish itself as an alternative metal for jewellery fabrication, while gold and diamond jewellery will continue to dominate the market together, accounting for about 82 per cent.

The survey states that other luxury goods market is posing a great threat to the jewellery market. Growth in the industry will be slow as compared to that expected in other luxury goods categories such as watches, perfumes. For example, luxury apparel, a $100 billion market today, is expected to grow at 10-15 per cent over the next seven years.

However, Neelesh Hundekari, director (advisory services), KPMG India, said, "Transformation is necessary for growth. The industry has the potential to successfully ward off competition from the luxury goods industry and preserve its traditional domination in the market. The industry needs to defend jewellery as a category and explore newer markets, while professionalising family businesses."

Sanjay Kothari, chairman, GJEPC, accepting the challenging times ahead as predicted by the survey, said, "The report has thrown lot of challenges and time has come when every individual player in the Industry will have to work efficiently and professionally for taking the industry to the next level. I urge the entire Industry and trade organisations world wide to play a pivotal role as facilitators and work in synergy for betterment of the Industry."

To realise its potential by 2015, the industry would have to focus on the growing demand for jewellery as a category and strengthen industry-level and enterprise level capabilities.

These programmes need to be initiated within the next 12-18months for its benefits to be realised over the next 10 years.

As per the survey figures, the size of the global gems and jewellery industry is estimated at $146 billion at retail prices in 2005.

The industry has grown at an average compounded annual growth rate (CAGR) of 5.2 per cent since 2000. Jewellery sale is concentrated in eight key world markets, which corner more than three fourth of the world's market. The US is the world's largest market for jewellery and accounted for an estimated 31 per cent of world jewellery sales in 2005.

Fragmentation of supply sources and slow diamond jewellery growth will make the rough diamond industry more demand sensitive. The rough diamond industry has seen trends such as increased fragmentation of rough diamond supply, emergence of new mines, local benefication movement in mining countries and a bull-run in precious metal prices.

Jewellery fabrication has been affected by accelerating fashion cycles, relative factor costs between manufacturing and consuming nations, and volatile metal prices have fuelled a drive towards moving fabrication to low-cost countries.

The eight key scenarios that are likely to impact the industry include mining countries encourage local benefication and capture a share of the polishing industry, supply sources get fragmented and rough supply increases, consolidation occurs across the jewellery value chain and existing centres of the industry lose out in favour of new ones.

The other factors are substitutes such as synthetic diamonds and non-precious metals capture a share of the precious jewellery market, demand for plain gold jewellery declines, large emerging retail markets such as China and India organise and consolidate, jewellery loses out to competing luxury goods. The survey also suggests action programmes for the Industry.