Platinum jewellery outlets are banking on the steady fall in the demand for retail gold to push up their sales especially with the entrance of more Indian men into the market.

Author: Shivom Seth
Posted: Monday , 16 Jul 2012

MUMBAI (MINEWEB) -

It may not really be a battle of yellow versus white, yet. But, with gold prices hitting the roof in rupee terms, Indians are turning to other alternatives such as platinum to satiate their hunger for precious metals jewellery.

Conventionally, platinum prices have always been ahead of gold but the upsurge in gold prices in recent years has brought the two precious metals closer and closer together.

According to the Platinum Guild International, there are close to 422 outlets in India offering platinum jewellery. Moreover, an increase in retail outlets offering platinum and rising consumer purchases have driven platinum jewellery demand up by a third to 2.5 tonnes in 2011.

Platinum, one of the rarest of rare metals, entered the Indian jewellery market over a decade ago and continues to play first cousin to gold in a market, which for centuries, has been afflicted by the `yellow' fever.

In one sense, the battle between gold and platinum also represents the conflict between the traditional and the modern. ``Platinum jewellery does not evoke memories of family gatherings, marriage, festivities,'' remarks Swapna Kale, a housewife from central Mumbai, who has been buying gold on almost all occasions and especially at most Indian festivals.

Swapna may be right, but the white metal represents the more modern India, one that is veering away from buying gold only on auspicious occasions. For example, diamonds set in platinum far outshine those in gold, and that is what retailers like Tanishq are banking on.

Tanishq is India's largest jewellery retailer and currently operates 137 stores in 80 cities. It has a plan to open 45 stores this year. Tanishq was selling platinum in 30 stores up till now but plans to expand sales to 100 stores this year.

Other jewellers, too, have created a means to offer elegant platinum jewellery to smaller towns and rural markets. Leading independent family jewellers are showcasing platinum jewellery side by side with gold jewellery and especially in chain stores with brands like Orra.

In India, platinum is imported in the form of bars and jewellery.

The battle certainly remains unequal. After all, around 960 tonnes of gold were consumed in India in 2011, as against a mere four tonnes of platinum. The platinum market in India is not only battling gold; it is also fighting a mental block because still, people do not believe that platinum will fetch the kind of return on investment as gold.

Yet, platinum jewellery purchase in India grew by a third to 2.5 tonnes in 2011, according to a report by precious metals refiner, Johnson Matthey.

In the face of the `traditional' pressure from gold, the growth graph of platinum-based jewellery has been inching its way up. So much so, that almost all leading retailers now have separate counters for the white metal and even exclusive platinum stores, clearly an indication of its growth story.

The number of stores retailing platinum jewellery have gone up by 70% to 100% over the last three years. The Platinum Guild International, a body set up in 1975 to promote the sale of platinum, has already gone on record to state that in the last couple of years, the white metal has gained momentum due to aggressive marketing.

So what has changed? A discernible change in buying habits and the price factor. More and more men are becoming buyers of platinum jewellery, a nascent trend that has been observed by retailer.

Ten years ago, when platinum was introduced in India as jewellery, it was more than twice as expensive as gold.

But with gold prices going north and platinum prices falling, today, the price difference between the two is not much. A gram of gold, including wastage and making charges, comes to about $51 per gram as compared to $58 per gram for platinum.

With the Platinum Guild planning to intensify retail expansion in 2012 across Tier II cities, the annual consumption is set to go up by about 25%. As of now, platinum jewellery makes up about 3% of the total $61.3 billion precious metal jewellery sales in India.

Data released by the World Gold Council notes that demand for the yellow metal in India fell 19% in the January to March quarter, 2012. Platinum retailers are banking on this steady fall in the demand for retail gold to up their sales in the coming years.

iPad Version: Picture - A saleswoman displays platinum rings for the camera at a jewellery showroom in New Delhi: REUTERS/Parivartan Sharma

Source: http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=155162&sn=Detail&pid=102055