Ultraexclusive luxury is riding a wave of unparalleled wealth — and it could just catapult uberexpensive jeweler Graff into a $1 billion brand.
"We are in times we have never seen before," said Henri Barguirdjian, the tall, imposing and charming president and chief executive officer of Graff, America. "There's more money than ever floating around."
High-end diamond jewelry sales are brilliant, due in part to an influx of new buyers. Young billionaires starting in their early 30s from places like Russia, Dubai, Macau, Kazakhstan and India are gobbling up large and important stones. Whereas top jewelers once had to compete for the small crop of middle-aged and elder consumers, now it seems there are enough to go around.
To service its seemingly ever-growing clientele, Graff is expanding with four new stores — including, notably, its first two boutiques in Asia. The 3,500-square-foot store in Tokyo, slated to open this week, is located in the city's Marunouchi, across from the Imperial Palace and not far from Ginza. The Hong Kong store is situated within the Peninsula Hong Kong and will open next spring.
The firm also will open a store on Geneva's Rue du Rhone early next year, while a long-planned new Manhattan flagship designed by Peter Marino also will open next year.
The average sales transaction? $400,000.
Barguirdjian seems astounded by his clients.
"We are really living in unbelievable times," he said. "We're trading with much younger clients than jewelers a generation ago. These are self-made businessmen and -women in their 30s and 40s — very young people."
While these clients are new to purchasing $1 million diamond suites, they are educated about the goods.
"They are very keen and sharp about the quality they receive," Barguirdjian said.
The company now has 13 stores and may go up to a total of 20. There would be more, but, due to limits of supplies, it's just not possible.
"The level of product we sell is so special, so there will never be 50 stores," Barguirdjian said. "Graff would become just a company. Not what we are now."Barguirdjian said that, in the past three years, there has been tremendous growth. Graff Diamonds, owned by Londoner Laurence Graff, saw sales leap to $400 million last year from $90 million in 2000, with aftertax profits soaring from $11 million to $48 million, according to a recent profile of the owner in Forbes magazine. Barguirdjian confirmed the numbers, adding transactions in his stores can take anywhere from five minutes to a couple of years to complete.
The goal is to bring the brand to the $1 billion mark and beyond. "Why not?" Barguirdjian mused. "The sky's the limit."
Graff has carved what was the small niche of selling million-dollar pieces into a full-fledged market rife with customers. It's helped by the fact that it owns its own mines, making it a completely vertical operation. But, while the company is arguably at the top of the pyramid in the uberexpensive jewelry category, Chopard and Leviev are rising competitors.
On Asia, Barguirdjian said: "Being an international brand, we need to be in Asia. It's the market of the future....Asians and the Japanese in particular are the [number-one] luxury consumers in the world."
Last spring, one Asian client purchased a 267-carat colored diamond necklace for $30 million.
The brand's current space on Madison Avenue, at 800 square feet, is such that people have to wait on occasion for one of the four selling desks — and Graff customers don't like to wait. The new store a bit further down on Madison Avenue is 5,600-square feet on two floors, with private rooms for clients.
Graff's clients also buy contemporary art, homes in high-profile resorts, yachts, planes and fleets of extraordinary Italian sports cars. But diamonds are a newer venture for them.
"There's a tremendous amount of uncertainty out there," said Emanuel Weintraub, president and ceo of Emanuel Weintraub Associates. "There are a huge amount of people with an awful lot of money. A lot of [large diamond sales] are being fueled by uncertainty in the marketplace."
Weintraub said that essentially, those who can are hedging diamonds.
"It has to do with preservation of wealth," said Weintraub. "It's subprimed by the credit crunch, which is a tremendous issue. So you if you say, 'I'll spend several million on some diamonds,' that's always going to have a value.""Today's billionaire is yesterday's millionaire," said Carol Brodie, chief luxury officer of Curtco Media, which publishes Robb Report, a favorite "catalogue" of the moneyed community. "There are more ultra-net-worth individuals than ever before. Someone with $10 million net worth is at the low end of the spectrum. These people have learned how to spend their money. They will buy anything that is rare or one of a kind."
The money is coming from a number of places and is notably international and not American. The wealth out of Russia comes from the metals business, such as aluminum or steel; oil, and even insurance and other financial services. Oil, obviously, is a big profit maker in Dubai. Also, those in finance, namely hedge funds and traders, are bringing in the revenue in locales from London to Hong Kong.
Men are the primary customers at Graff, but Oprah Winfrey, Imelda Marcos and Victoria Beckham are a few of its well-known female clients. And the company likes to serve its clients well.
"We entertain them. We throw a good party," said Barguirdjian. "You work hard, but you play hard, too."
In July, the firm held a client party in Monte Carlo, Monaco, which Barguirdjian said lasted until "the wee hours." The private soirées can be outlandish, sometimes with lions and other attractions. Competing companies such as Chopard, Van Cleef & Arpels and de Grisogono throw similar client events, mostly in resort destinations like St. Barth's and Saint Moritz.
But, while Graff is opening more stores worldwide, Barguirdjian is always more than willing to hop on a plane and travel to his clients: Palm Beach, Fla., in the winter; summer in London, and Monte Carlo.
How will Graff fare if the credit crunch dives into a recession?
"A recession would affect us less than others," said Barguirdjian. "I'm not saying [our clients] are recession-proof. Nobody is recession-proof."
But with so much money washing about — and hedge funds and other investors increasingly on the lookout for acquisitions — the question is whether Graff would ever be a takeover target. Barguirdjian dismisses the idea."Mr. Graff said a long time ago that he brought up his son [François Graff] to be his successor," he said.
As for whether the company is gearing up to be sold, he added: "I don't think it's in the cards — for now."
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