Wealth gap vs jewellery demand
A global divide in wealth distribution is increasingly being felt. This gap has created a great demand for high-end jewellery across the world.
The world is divided into the ‘haves and have nots’. An all-pervasive disparity in global wealth distribution is quickly gaining ground in the past few years, especially accelerated by a post-pandemic market. This apparently wide wealth gap between the high-income and low-income cohorts can be felt across all avenues of life, be it something as humongous as real estate or as everyday as jewellery.
Laying the groundwork with this rapidly expanding divide between the rich and the poor, Paul Ziminsky, a leading diamond industry analyst, opines that high-end jewellery is experiencing a sudden surge in demand. In contrast, the market for affordable jewellery is unexpectedly witnessing an unprecedented decline.
Other notable personalities in the field have also made similar comments. The Global Head of Consumer and Retail Research at HSBC, Erwan Rambourg says that even though the fashion industry is facing a wane, “buyers of high-end jewellery are proving to be a lot more resilient than the average luxury consumer”. Echoing his thoughts. Outgoing Chief Executive, Cyrille Vigneron, describes high-end jewellery as “one of the fastest growing segments”.
Understanding the Divide
The world remains deeply and unfairly divided, with wealth inequality reaching staggering levels. Globally, the wealth distribution is highly concentrated in the hands of a small percentage of the population. The richest 1 percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much as the bottom 99 percent of the world’s population, reveals an Oxfam report. This extreme concentration is similar to patterns seen in specific countries like the U.S. and India.
In the early 1990s, the richest 1% of Americans owned 17% of the nation’s total wealth. This figure has now increased to 27%, according to data from the U.S. Federal Reserve. Meanwhile, the wealth held by the American middle class has declined from 37% to 27% during the same timeframe.
Mirroring the same trend, India also witnessed a significant shift in wealth distribution particularly in favour of the rich. The wealth held by India’s richest 1% rose from around 13% in the early 1980s to 40.1% by 2023.
Image Courtesy: Vogue
Responding to the Demand
Shedding light on such statistics helps put things into perspective as wealth inequality has fuelled the affluent class’s appetite to spend more on luxury jewelry, with markets responding to the rising demand from this clientele.
Luxury brands have come forward to respond to this economic shift and have cards in motion to continue appeasing the growing interest of this elite group.
An increase in the marketing and promotion budget for ‘high jewellery events’ (jewellery around and above the six-figures price point) following recent success was announced by Richemont, the parent of Cartier and Van Cleef Arpels.
In a similar vein, the parent of Tiffany & Co., LVMH was reported saying “we are embarking on a journey which is to progressively increase the average price of what we sell…not just by raising prices, but by selling more expensive items.”
India is also witnessing a wave of affluent buyers allured by the charm of highend jewellery. Jean-Christophen Babin, CEO of Bvlgari says “We are probably the only global jeweller to have Indian products such as the mangalsutra and the kada,”. Continuing, he mentioned that their mangalsutra collection, costing over 4 lakhs, is usually always sold out at the stores. To keep up with the high demand, they continue to roll-out unique and expensive designs such as the recent Mangalsutra sautoir necklace, a perfect blend of Roman heritage with Indian traditions.
Titan Co. Ltd., India’s leading jewellery retailer with a 7% market share, reported a 19% increase in jewellery sales, reaching Rs. 8,575 crores ($1.03 billion) for Q2 FY24, ending on 30th September 2023. This growth was driven by strong demand for high-value items, with the company experiencing robust double-digit increases in both the number of buyers and the average bill value per buyer during this period.
All that Shimmers is Diamond
Diamond, as one of the most costliest and precious stones, has experienced a surge in its valuation, with biddings for this shimmering jewel exceeding millions of dollars.
In an astonishing power move and display of love for high-end jewellery, in 2023, a 17.61-carat pear shaped diamond, called the Blue Royal, exceed expectations and was sold at $44 million at Christie’s Geneva, going above and beyond the estimated $35 million. Another notable gem is the ultra-rare pink-coloured diamond, the Eternal Pink that comes at a weight over 10 carats and the highest colour grade and internally flawless structure. In 2023, it made headlines when an unknown buyer bought this for an incredible price of $35 million. In recent news, a 1.56 carat fancy red diamond, popularly knows as the ‘Argyle Phoenix’ fetched a whopping closing rate of $4.2 million at Phillips Geneva in 2024.
The Market Forecast
The rising popularity of luxury jewellery across the world has influenced the jewellery market rather positively. The global luxury fine jewellery market is estimated to grow at a 6.5% CAGR from 2022 to 2032. It is projected to reach a market valuation of $ 85,887.5 million by 2032.
It is evident that the wealth gap will continue to push the surge in high-end jewellery demand. With its growing clientele, this market has a bright future ahead of it and is positioned in a highly profit-making position. The segment of the jewellery market will expand exponentially while continuously furnishing designs suited to the evolving fashion taste of its target audience.