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Italy's jewellers in Asian, Middle East sights

Jan 23 2014, 18:19 IST
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Italy now has fierce competition from India, China and Turkey where costs are lower. Reuters Italy now has fierce competition from India, China and Turkey where costs are lower. Reuters
SummaryItaly's $8 billion jewellery industry is drawing interest from Asian and Middle East investors.

Italy's $8 billion jewellery industry is drawing interest from Asian and Middle East investors, keen to exploit Italian style and design as they battle for market share both at home and abroad, industry leaders at a major trade fair said.

Once the world's top exporter of jewellery, Italy now has fierce competition from India, China and Turkey where costs are lower and quality is gradually improving to internationally marketable standards.

And all at a time when the longest recession in 60 years has sapped domestic demand and left many Italian firms short of bank credit to fund development and stay afloat.

According to data from Italian goldsmiths association Federorafi, the sector has slumped 28 percent since 2001 to 9,000 firms -- most of which are small family-owned companies unable to compete in a global market.

Corrado Facco, managing director of Vicenza trade fair which is currently hosting VicenzaORO, said the high-end Italian jewellery sector was ripe for restructuring.

"Acquisitions will be part of the game in the years to come as Italy's mainly family-based market restructures to head off global competition," Facco said.

The trend of acquisitions is becoming fairly well established. In 2011, French luxury group LVMH snapped up Bulgari for 3.7 billion euros, offering a 60 percent premium to market prices.

Last year France's Kering bought a majority stake in jeweller Pomellato. Italian private equity Clessidra last year took control of Buccellati to help fund growth in Asia.

Export-focused Italian jewellery is coveted for its design and quality. But foreign competition, a strong euro, and import barriers in potentially lucrative markets like India have taken their toll.

In response to competitive forces, Italy's jewellery industry - Europe's biggest - is increasingly focusing on top-end products where the price of the metal is not the only factor in determining the value of a piece.

CHINA, RUSSIA

Facco says the industry has received attention from China, Russia and the Middle East, as well as the United States, with mounting interest from private equity.

"We've seen acquisitions in recent years of companies like Pomellato and Bulgari and it's not over. We should see something very soon from a Middle East player," he said, without giving further details.

Roberto Coin, famous for its fancy diamond and gold jewellery, has posted double-digit sales growth since 2009 and expects turnover growth this year of 15 percent. It has already been approached by big names.

"A lot of foreigners are looking and we've had a series of offers but

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