X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Branded jewellery: That 'gold'en touch - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 21, 2007

    Branded jewellery: That 'gold'en touch

    India is the world's largest consumer of gold and third largest consumer of diamond jewellery after Japan and USA. The jewellery market in India is estimated to be around US$ 15 bn, second only to the US (US$ 40 bn) and is followed by China (US$ 11 bn). The jewellery market in India is second to the fast moving consumer goods market. Globally, branded jewellery accounts for only 8% of the total market of US$ 70 bn. While in India of the total jewellery market, the branded segment accounts for a minuscule 2%. Further, it is very fragmented and dominated by the unorganised sector.

    The trend so far and the potential ahead...
    Branded jewellery has been a relatively recent phenomenon in India, with most jewellery retailed in the unorganised sector. While there are more than 2.5 million jewellers in India, the number of jewellery brands can be counted on one's fingers. As mentioned earlier, organised or branded jewellery accounts for merely 2% to 3% of the total jewellery retail market in India, which underlines the fact that there is huge potential. The jewellery sector in India has grown at a CAGR of 9% in the past two years as against that organised jewellery sector has showcased over 30% CAGR during the same period. This is mainly on account of jewellery retailing in India undergoing a slow transformation from a largely unorganised sector to a more organised one. The majority of traditional jewellers cater to the local population and most purchases are made on trust and on the basis of the reputation of the local jewellers. However, with the growth in retail sector and introduction of new formats such as boutiques and supermarkets etc, Indian customers are displaying growing preference for quality, designs and branding.

    Factors driving growth of the jewellery market...
    Storehouse value to fashion accessory: The growth of the jewellery market in India is spurred by factors such as occasions of wear and purchase. The entire way that people buy jewellery is changing, and younger women - who are buying for fashion, rather than investment - are driving the change. In India till three to four years back, jewellery purchases were made on few traditional occasions such as Diwali, Aksahy Tritiya etc. However, with the increase in the number of working women and changing lifestyle, jewellery is gaining importance as a fashion accessory.

    Government initiatives: The Government of India has taken initiatives to stimulate the growth of the gems and jewellery industry given the industry's critical importance in Indian exports. SEZs and Gems and Jewellery Parks have been set up to promote investments in the sector. Also, 100% FDI is permitted in the sector through the automatic route and increased investment by industry bodies (DTC, PGI, WGC) is spurring rapid growth of the branded jewellery market in India. The Foreign Trade Policy (2004-2009) has exempted service tax on services (related to exports), which are rendered abroad. Cutting and polishing of gems and jewellery is treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act. It has also made the import of polished diamonds completely duty free. All this has fuelled growth within the sector.

    Value added services: The introduction of value added services such as the certification of gold and diamonds, and lifetime return and buy-back scheme has further fuelled the growth of the organised jewellery segment. Such trade practices have resulted in the perception of superior quality associated with branded jewellery.

    Emerging trends: On account of media proliferation, overseas travel, customers being more exposed to western lifestyle, changing attitude, increasing disposal incomes, there has been a shift in demand from mere traditional handcrafted jewellery to branded machine made jewellery. Earlier jewellery was considered as an investment, however, now it is looked upon as a fashion accessory or an everyday wear product. The occasions of purchases have also witnessed a change. For instance, previously purchases were made during marriage or festival seasons, while nowadays wearability and gifting dimensions have led to demand throughout the year. Traditional designs have been replaced by fashionable and lightweight jewellery. Further, growing interest in white gold and newer precious metals and the like is also generating significant interest.

    To conclude...
    The jewellery purchase is sensitive to both income growth and price increases. However, healthy economic growth, increasing disposal incomes, changing attitude and lifestyle changes have led to the growth of the retail sector and jewellery segment in recent years. While the branded jewellery industry is still in its infancy, it is expected to benefit from the current retail boom and is expected to growth at a CAGR of 40% in the coming three to four years. Thus the expected growth rates indicate that this segment will corner a significant share of the jewellery market going forward.

     

     

    Equitymaster requests your view! Post a comment on "Branded jewellery: That 'gold'en touch". Click here!

      
     

    More Views on News

    Titan: Jewellery Business Lights up the Quarter (Quarterly Results Update - Detailed)

    Aug 10, 2017

    However, growth at these levels are unlikely to be sustainable.

    Avenue Supermarts Ltd. (IPO)

    Mar 7, 2017

    Equitymaster analyses Initial Public Offering (IPO) of Avenue Supermarts Limited.

    Titan: Beating the Demonetisation Blues (Quarterly Results Update - Detailed)

    Feb 14, 2017

    Titan Industries declared its results for the third quarter of financial year 2017 (3QFY17). While topline growth was 14.7% YoY, net profit grew by 13.1% YoY during the quarter. Here is our analysis of the results.

    Titan: Margin Improvement Saves the Day (Quarterly Results Update - Detailed)

    Nov 16, 2016

    Titan Industries declared its results for the second quarter of financial year 2017 (2QFY17). While topline growth was flat, net profit grew by 23.5% YoY during the quarter. Here is our analysis of the results.

    Titan: High Gold Prices Spoil the Show (Quarterly Results Update - Detailed)

    Aug 9, 2016

    Titan Industries declared its results for the first quarter of financial year 2017 (1QFY17). The company reported 3.3% YoY increase in sales, while net profit fell by 16.3% YoY during the quarter.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS