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Italian Jewelry Market Enters Slowdown

Higher raw material costs grip the country's market, causing sales to turn negative.

MILAN — The Italian jewelry industry may have registered a 3.6 percent increase in revenues in 2011 compared with 2010, but the scenario is far from encouraging, as evidenced during a recent conference organized by Club degli Orafi Italia, an independent association of major players operating in the sector.

“After brilliant performances in the first part of the year, revenues started showing a slowdown in the summer months, before turning negative in the last quarter,” commented Stefania Trenti, industry director of bank Intesa Sanpaolo’s studies and research department.

According to Italy-based independent research and consulting company Prometeia, the industry has registered a 20 percent loss since 2006. The explanation lies in the downturn of the Italian market, which has suffered from a progressive reduction in family incomes and increases in the cost of raw materials, which, in turn, hike up retail prices.

Jewelry has still fared better than the clothing sector, thanks to exports, particularly outside Europe, where Italian fashion still plays a pivotal role.

As reported by ISTAT, the Italian Institute of Statistics, the country’s jewelry exports were up 12.8 percent in 2011, confirming the country’s slot as the third-biggest jewelry exporter after India and the U.S.
Switzerland helped boost growth in Europe, as an important hub for the high-end fine jewelry sector.

While business in the United Arab Emirates, the U.S., and Libya and Tunisia, which were both recently affected by political turmoil, suffered losses last year, the Chinese market is growing.

“We noticed a big change there,” Trenti said. “If until very recently goods directed to China passed through Hong Kong, in 2011 direct exports to the country grew 40 percent.”

Financial forecasts provided at the conference highlighted how increasingly significant the Far East and new markets including Malaysia, Thailand and South America are expected to be in the coming years.

“In 2016 across the emerging countries, there will be about 270 million people with annual incomes of around $30,000,” said Alessandra Benedini, industrial analyst at Prometeia. “This will determine a huge increase in the number of customers interested in buying niche and luxury products.”