Rapaport Magazine
Colored Gemstone

Buying Brisk in Tucson

The mood was upbeat at the Tucson gem and jewelry shows.

By Deborah Yonick
Enthusiastic exhibitors used words like “epic,” “fantastic” and “surpassing expectations” to describe business at the all-important annual gem and jewelry trade fairs held in Tucson, Arizona, from January 30 through February 6. If perception is half the battle, things are looking good. Confidence has improved and the mood is upbeat.

Attendance by prestige retail jewelers attending the by-invitation-only fair, Centurion, rose about 36 percent over 2010, which in turn had seen an approximate 20 percent increase over 2009, reported show manager Howard Hauben. “Exhibitor and retailer reports coming throughout and after Centurion 2011 reflect great satisfaction with this year's event quality and results,” he said.

The American Gem Trade Association (AGTA) also reported an increase in buyer attendance at its GemFair, despite weather issues nationwide that interfered with travel to the event. Buyer attendance was up 5 percent over 2010, according to a statement by the group, building on a 7 percent increase from the previous year. Attendance figures were not available at press time from Gem & Jewelry Exchange (GJX) and Gem & Lapidary Dealers Association (GLDA) but vendors at the two shows reported robust opening days, bursts of business and serious buyers on hand.

Buying was so brisk throughout the Centurion jewelry fair that New York designer Frederic Sage said he didn’t have time to stop to eat lunch during any of the three days of the show, which opened the weeklong calendar of events on January 30. At GLDA, master goldsmith Hilde Leiss of Hamburg, Germany, said she made her expenses the first day of the show. Bill Larson with Pala Gems, Fallbrook, California, described the AGTA fair as a “monster” selling event, which he attributed to pent-up demand unleashed.

Throughout the shows — and in general, at their businesses back home — dealers said they’re reassured that the economy is on the mend. New York gem and jewelry wholesaler Jack Abraham, exhibiting at Centurion, said his January 2011 sales were on par with total sales for the first three months of 2010. Specializing in fine sapphire, ruby, and emerald, Abraham described wealthy consumers as always having the money, but now they’re willing to spend again.

The Foreign Influence

This year’s Tucson shows attracted a greater number of foreign traders, particularly from Asia. “We made sales to buyers from China, Thailand, Korea and Taiwan, where economies are strong,” said Gina Taylor of Taylor Gem Corp., Lincoln, California, noting that she sold large individual pieces, as well as lots in a variety of gems, including emerald, tourmaline, topaz and gems that display the optical star effect.

Larson concurred: “There was a lot of Chinese money at AGTA. Many Thai dealers were buying large lots of tourmaline and individual gems at high prices to fill orders for the Chinese market. Chinese buyers also were here to buy directly.” He said demand for tourmaline is likely up because material from Mozambique is becoming more difficult to come by.

Yesterday’s suppliers are today’s consumers, explained Martin Rapaport, chairman of the Rapaport Group, in a keynote speech at the Centurion show. Forecasting how the industry will evolve over the next decade, Rapaport cited the impact of globalization, with the extensive increase in demand coming from rapidly developing nations like China and India.

“This means diamond demand will grow in these countries at a faster rate than in America and it’s very possible that we’re going to see Chinese and Indian companies paying higher prices for diamonds than American companies can afford,” Rapaport explained. “Currencies also are changing. The dollar’s getting weaker as foreign countries grow at a faster rate and export more diamonds, more industry and do more business.” He advised jewelers to consider buying back diamonds from customers to access goods at better prices.

James Peach of United Pearl Co., Camden, Tennessee, concurred. “There is a wave of diamond goods being recycled back into the U.S. market. Baby boomers love diamonds and were big buyers. Now, the baby boomers born around 1945 are starting to sell off those diamonds in large numbers and it’s expected that trend will continue for the next 20 years. Diamonds are being mined, so to speak, by literally thousands of jewelry stores in the U.S. Many jewelers I talk to say they’re buying diamonds off the street from consumers for less than the wholesale price.”

Satisfying Demanding Customers

Several years of austerity have created a depth of demand, observed retail management consultant Kate Peterson, president of Performance Concepts, Montgomery Village, Maryland, who spoke at Centurion “They've also created a much smarter, more demanding consumer,” she said. “Our industry as a whole is being challenged to step up to meet new expectations. Better products, better values and better buying experiences will define the winners going forward.”

This new breed of consumer was reflected at the Tucson shows. “Buyers are looking for the best their money can buy,” explained Los Angeles–based designer Erica Courtney, noting that “best” is relative to budget.

Jewelers at the show were restocking best sellers, responding to customer requests and searching for new and unique items to inspire consumers to spend.

At Centurion, 18-karat alloys marketed as Royal Purple, Denim, Chocolate and Black Gold and produced by the Henderson Collection of Charlotte, North Carolina, stood out for Kit Heffern, president of Elleard Heffern Fine Jewelers of St. Louis, Missouri.

Profit Potential of Color

“Colored stones have become more important to the jewelry industry for their variety and profit potential,” said Niveet Nagpal of the Los Angeles–based Omi Gems. “They will continue to gain market share in the next few months and years over other product categories.”

Exhibiting at AGTA, Nagpal explained that many jewelers told him they now realize the importance of adding color to their merchandising mix in order to grow their business and increase profitability. “Jewelers who know how to buy and sell colored gemstones have been more successful in the tough economy,” he said.

Among the classic favorites, blue and fancy color sapphires are always popular. “We sold a good amount of sapphire in finer quality from small to large,” reported Nagpal, who also saw greater interest in alexandrite and spinel. “We sold quite a few different stones at different price points. That’s very encouraging to see.”

Forecasting a renaissance in gemstones, Constantin Wild, lapidary from Idar-Oberstein, Germany, exhibiting at GJX, cited such stones as imperial topaz, aquamarine, tourmaline and moonstone as steady sellers.

Wild sees rising interest in color among rapidly developing nations like China, India, Brazil and Indonesia, who have a growing number of new middle- and upper-class consumers. “They want top quality — in gems, that relates to cut and finish,” he said, noting that ten years ago, only simple stones were being cut in China and now, the finest specimens are gobbled up by the Middle Kingdom.

Abundance of Pearls

Chinese freshwater pearls continue to captivate the market. Demand, said Peach, is especially strong for large, baroque Chinese freshwater cultured pearls in strands and loose pearls in sizes from 15 mm to 18 mm. He also cited firm sales in moderately priced South Sea cultured pearls in all colors, and keen interest in his company’s finished line that mixes South Sea and Chinese freshwaters with .925 silver and leather.

There was much ado about conch pearls in Tucson. Exhibiting at the Centurion and AGTA shows, New York pearl house Tara featured an extensive collection of natural conch pearl jewelry set in platinum with diamond briolettes. New York diamond house Rawat partnered with Tara, supplying the diamond briolettes for the collection, which Tara’s Sonny Sethi said took two years to develop.

New Gems Excite

Tucson’s “hottest rock” is Ethiopian opal, declared Jerry Romanella of Commercial Mineral Co. (CMC), Scottsdale, Arizona. He, of course, might be a bit biased since CMC is a leading distributor of cut material from the Wegel Tena opal deposit in the Wollo Province of Ethiopia. Romanella described the wide selection of play-of-color goods as “beautiful and cheap.” Discovered in 2008, the deposit is producing mainly white opal, with some brown opal, fire opal and colorless opal found in the mix. Sizes reach 30 carats to 40 carats, with prices per carat wholesaling from $75 to $85.

According to a Summer 2010 report in Gems & Gemology, this deposit is a source of significant quantities of high-quality, white, play-of-color opal, which is more popular with consumers than the mostly brown material found in Mezezo, 124 miles south of Wegel Tena. Production has been significant, with more than 3,300 pounds of rough extracted to date, the report stated, and it has the potential to become a leading supplier of opal globally. Another advantage is that the opaque-to-translucent opals from Wegel Tena are more stable than that from Mezezo, which has a tendency to craze.

The Turkish gem zultanite — mineral diaspore — also nabbed special buyer attention at Centurion. Partnering with designers like Erica Courtney and Rhonda Faber Green is helping increase recognition of this unique gem and both artists launched new collections around the stone at Centurion. Zultanite’s color-change properties are distinctive, ranging from kiwi greens with flashes of canary yellow under sunny skies, to rich champagnes in traditional indoor lighting and raspberry hues in candlelight.

In commercial production since 2006, the parent company Zultanite is concentrating on building the market for its gem by initially working only with eye-clean material in large sizes and top-quality cuts, according to Gavin Linsell, the company’s marketing director. Courtney and Green, who both did well with the gem at Centurion, like zultanite for its soft silky colors that complement everything, its lack of enhancement and its environmentally friendly approach to production. Loose zultanite in the 1-carat to 3-carat range wholesales for $118 to $500 a carat.

Looking Ahead

Rapaport told his audience at Centurion that free, fair and transparent markets would be essential to success moving forward. “The United States is becoming much more aware and sensitive to social issues. The fundamental idea that you should be responsible for what you buy is as much an issue for consumers as it is for the diamond and jewelry trade,” he stressed. “Jewelers are expected to maintain a high level of ethics when selling their products. They need to know exactly who their suppliers are and where the products are originating.”

But probably the biggest issue, said Rapaport, is change. “Change is continuous and we’re going to see a decade of unprecedented change and jewelers must learn how to anticipate it and deal with it to be successful.”

*Pictured: Pink sapphire ring from Omi Gems

Article from the Rapaport Magazine - March 2011. To subscribe click here.

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