EU MARKET SURVEY 2004 Jewellery EU MARKET SURVEY 2004 JEWELLERY Compiled for CBI by: Fair Trade Solutions in collaboration with Searce August 2004 DISCLAIMER CBI MARKET INFORMATION TOOLS Although the content of its market information tools has been compiled with the greatest care, the Centre for the Promotion of Imports from developing countries (CBI) is not able to guarantee that the information provided is accurate and/or exhaustive, and cannot be held liable for claims pertaining to use of the information. In the case of the market publications, neither CBI nor the authors of the publications accept responsibility for the use which might be made of the information. Furthermore, the information shall not be construed as legal advice. Original documents should, therefore, always be consulted where appropriate. The information does not release the reader from the responsibility of complying with any relevant legislation, regulations, jurisdiction or changes/updates of same. 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CONTENTS REPORT SUMMARY 5 INTRODUCTION 9 PART A: EU MARKET INFORMATION 11 1 PRODUCT CHARACTERISTICS 12 1.1 Product groups 12 1.2 Customs/Statistical product classification 13 2 INTRODUCTION TO THE EU MARKET 14 3 CONSUMPTION 16 3.1 Market size 16 3.2 Market segmentation 22 3.3 Consumption patterns and trends 32 4 PRODUCTION 37 5 IMPORTS 44 5.1 Total imports 44 5.2 Imports by product group 52 5.3 The role of developing countries 59 6 EXPORTS 63 7 TRADE STRUCTURE 66 7.1 EU trade channels 66 7.2 Distribution channels for developing country exporters 73 8 PRICES 74 8.1 Price developments 74 8.2 Sources of price information 77 9 EU MARKET ACCESS REQUIREMENTS 78 9.1 Non-tariff trade barriers 78 9.2 Tariffs and quotas 88 PART B: EXPORT MARKETING GUIDELINES: ANALYSIS AND STRATEGY 89 10 EXTERNAL ANALYSIS: MARKET AUDIT 91 10.1 Market development and opportunities 91 10.2 Competitive analysis 96 10.3 Sales channel assessment 98 10.4 Logistic requirements 102 10.5 Price structure 103 10.6 Product Profiles 105 11 INTERNAL ANALYSIS: COMPANY AUDIT 107 11.1 Product range and design 107 11.2 Product standards, quality and production capacity 110 11.3 Logistics 112 11.4 Marketing and sales 113 11.5 Financing 115 11.6 Capabilities 115 12 DECISION MAKING 116 12.1 SWOT and situation analysis 116 12.2 Strategic options & objectives 117 13 EXPORT MARKETING 118 13.1 Matching products and the product range 118 13.2 Building up a relationship with a suitable trading partner 120 3 13.3 Pricing and drawing up an offer 122 13.4 Handling the contract 124 13.5 Sales organisation and promotion 126 APPENDICES 1291 1 DETAILED IMPORT/EXPORT STATISTICS 130 2 USEFUL ADDRESSES 138 2.1 Standards organisations 138 2.2 Sources of price information 140 2.3 Trade associations 141 2.4 Trade fair organisers 143 2.5 Trade press 144 2.6 Other useful addresses 146 3 LIST OF DEVELOPING COUNTRIES 148 4 USEFUL INTERNET SITES 149 4 REPORT SUMMARY This survey profiles the EU market for precious jewellery, costume (or fashion) jewellery and hair accessories. It emphasises those items, which are relevant to exporters from developing countries, and highlights six selected EU markets and looks at the ten Accession Countries. In Part A, up-to-date market information is given on consumption, production, imports/exports, trade structure, prices and the major EU market access requirements. As an exporter, you need this basic information to draw up your Market Entry Strategy (MES) and Export Marketing Plan (EMP) in order to penetrate these jewellery markets successfully. To assist you here, CBI has developed Part B, where Export Marketing Guidelines provide background and a methodology for an external, internal and SWOT analysis. These analyses are needed for your decision - whether to export or not -. Furthermore, essential guidelines are given on using your marketing tools effectively to build up this export venture. The appendices at the end of the survey include contact details of trade associations, trade press and other relevant organisations. The survey excludes jewellery repairs and second-hand (antique) jewellery and the major focus will be on jewellery for personal use, worn on the body or on clothes, which are sub-divided as follows: Jewellery Material content Type of products Precious jewellery Precious metals: gold, platinum, silver (with hallmark). - Earrings Base metal clad with precious metals. - Neckwear Jewellery with precious stones (diamonds, sapphires). - Rings Jewellery with pearls and semi-precious stones. - Bracelets or wristwear - Brooches, pendants Costume jewellery Base metals (plated with silver and/or gold). - Anklets, belly chains Costume jewellery A variety of other materials ranging from brass, - Piercings copper, stainless steel, titanium, plastic, wood, - Cuff-links and studs plastic, leather, horn, shells, imitation pearls, - Others e.g. badges etc. crystal, recycled material and all sorts of beads. Hair accessories Plastic, rubber, horn, wood and other materials. - Hair clips, pins etc. Consumption The EU is the world’s second largest jewellery market, after the USA. Total jewellery retail sales in the 15 EU member countries were estimated at € 21,324 million in 2003, 85 percent of which was generated in the six selected countries. Italy is the largest EU market, accounting for 27 percent of total EU jewellery sales, followed by the United Kingdom (19%), France (15%), Germany, Spain and the Netherlands. Between 1999 and 2003, jewellery retail sales in the selected EU countries rose by 8 percent, from € 16,853 to € 18,190 million. Major EU economies registered low or zero increases in 2003 as recession continued to affect most of Europe. The precious jewellery market was worth € 15,438 million and accounted for 85 percent of jewellery sales in the selected EU markets. It has been traditionally linked to special family occasions. Women for themselves made the majority of purchases. White metals, platinum, precious stones, diamonds and pearls are popular, and yellow gold is popular again. However, consumers have been cautious in their spending on precious jewellery. The costume jewellery market represented 15 percent, or € 2,752 million, of total EU jewellery retail sales in 2003. However this segment accounted around half of jewellery sold in the EU in volume terms, with shares being particularly high in France (65%) and Spain (58%). The costume jewellery market has expanded significantly in recent years with a greater variety of types introduced, ranging from neckwear to toe-rings, hair accessories to piercings. Costume jewellery is an impulse purchase, particularly for the teenage market. This is due to the lower prices of costume jewellery in comparison to precious jewellery. Demand for all types of jewellery is becoming more fragmented and the future market will be driven by: Older women being fashion aware over a longer period of time. More branding and the integration of jewellery into all areas of fashion New users (children, teenagers, men) and the increased importance of celebrity endorsement. More design features in jewellery using less expensive precious metals and coloured stones. More personalised, less formal jewellery. 5 The development of fashion in jewellery follows that of the clothing sector very closely. Both precious and costume jewellery now include a far greater fashion element in styling than was the case a decade ago. Some important key trends are: • Retro chic borrows from elegance and nostalgia, expressed in jewellery by long beaded necklaces, dog collars with pendants, cabochon rings with small disks, and rhinestone brooches • Funky colour reflects a funky, sexy theme, expressed in jewellery by waist chains with charms, long dripping chain and pendant earrings, badges and giant rings, cuff bracelets • Specific trends which are more product specific include dramatic yet tailored designs, not daring but eye-catching; yellow gold is back featuring glamorous designs with warm-coloured gems; bold rings with hefty coloured gemstones; textures, satin finishes, meshy flexible constructions, diamond-intensive brooches; platinum – with and without diamonds; the return of coral and turquoise, sometimes with pearls; new necklace shapes; colour in all forms; longer and more dramatic earrings; more versatility including stackability, reversibility and convertible designs • Longer-term trends essentially relate to the post 2001 era. Terrorism, slumping stock markets, unemployment, disease outbreaks like SARS create a particular mood which feeds into the jewellery trends of tomorrow. Consumers will want items that are personally relevant, that invoke safety, security and stability, offering real value rather than an image. Production In 2002, the turnover of the 17,012 companies in the selected EU countries was estimated at € 14,452 million. Most manufacturers are small business employing up to 10 people and turning over less than € 500,000. They tend to specialise in one particular jewellery type and produce original designs. Italy is the world’s largest manufacturer of gold jewellery and accounted for around 68 percent of the EU output (330 tonnes in 2003), mainly produced by the small specialised factories in the Vicenca area.