Men grow cold as girls grow old,
and we all lose our charms in the end.
But square-cut or pear-shaped,
these rocks don’t lose their shape,
Diamonds are a girl’s best friend.
(From Gentlemen Prefer Blondes)
In the run up to Diwali this year, leading English language dailies have been replete with full-page advertisements from companies that sell branded diamond jewellery. Actors such as Bipasha Basu or Kareena Kapoor and Salman Khan gawked through the pages of national newspapers endorsing various diamond brands.
Of course, the newspaper publishers aren’t complaining. Their advertising revenues are up at least 20% over the festival season last year thanks to heavy promotions by jewellery and other brands (mostly luxury watches, consumer durables and retail).
Also Read Shuchi Bansal’s earlier columns
But the sudden surge in diamond advertising can be explained. For a start, Indian consumers are buying more diamonds this season and the branded jewellery companies have seized the opportunity.
Mehul Choksi, promoter of the Rs6,500 crore Gitanjali group explains that the reducing gap between gold and diamond prices is pushing up sales this year. Gold prices rose by 30% compared with diamonds that increased by 15%, he says. Choksi should know: he’s created close to 15 jewellery brands in the country.
A report prepared by retail consultancy Technopak Advisors pegs the number of diamond jewellery brands in the country today at 50. Last year, that is in 2009, diamond consumption rose by 15-17%. However, in 2010, the diamond jewellery market has grown by 40-45% over last year. For some of the branded players, the growth has been a stellar 65%.
The Technopak study attributes consumers’ growing inclination towards diamonds to ad campaigns. “The interest in diamonds is driven by promotions by players,” it states, predicting a 30-40% growth in the category over the next few years.
Advertising is crucial as gold jewellery in 22 karat and above still constitutes 80% of the market with the balance comprising diamonds and gemstone jewellery. Clearly diamonds still have a lot of catching up to do. It explains why diamonds were being pushed heavily through advertising this season. There’s no need to market gold as it sells for investment purpose, Choksi says, justifying some of the full page campaigns for his brands.
Clearly, increased gold prices and growing awareness propelled by heavy advertising have affected diamond consumption. That’s not all. Rise in income levels and the growing number of women joining the workforce are also pushing up the sale of diamonds.
Going forward, there will be a couple of key growth drivers for diamond jewellery. The Technopak report says that more and more diamonds will be bought in the gift category. Also, the share of diamond jewellery in purchases related to weddings will go up.
Last but not the least, diamond consumption will grow as it is increasingly considered trendy and fashionable, triggering a gradual shift in preference from gold to diamond in urban India.
Little surprise, then, that organized retailers such as Tanishq and Gitanjali target young customers through their promotions for diamond jewellery.
However, consumers must also understand why modern retailers are happily pushing their rocks. The margins they enjoy in this category are much higher—between 40% and 50% in the least—than what they make in gold.
To connect the growth rate numbers flaunted by the diamond retailers to the ground realities of consumer mindset, here’s a fascinating real life story narrated by a friend. It reflects that rocks can also rock the marital boat.
This friend’s brother, who works for a prestigious law firm, was tying the knot with his long-time girlfriend. But suddenly a piece of rock caused severe tension between the bride-to-be and the groom.
The bride’s wealthy sister settled in Dubai emailed pictures of some wedding rings. Enamored by one of them, and unmindful of the price tag that ran into a few lakhs, the young bride-to-be asked her fiancé to buy it. It did not fit his Rs30,000 budget, he explained. Tears were shed and tempers ran high as the bride’s sister offered to pick up the tab for the ring, infuriating the boy in the process. The situation did not improve when the sister modified her offer and asked the boy to repay her in instalments for the coveted solitaire.
The bride sulked through her wedding as the groom put his foot down. But the episode clearly illustrates the emergent craze for rocks among Indian consumers.
Wonder what Marilyn Monroe’s take on the incident would have been.
Time rolls on and youth is gone
and you can’t straighten up when you bend
but stiff back or stiff knees
you stand straight at Tiffany’s…
Shuchi Bansal is marketing and media editor with Mint. Your comments are welcome at firstname.lastname@example.org