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The World Gold Council, a non-profit association of the world’s leading gold mining companies, has launched its wedding jewellery collection under the brand ‘Azva’. Azva symbolises the seven vows that every couple takes on the day of their marriage. After its success with gold coin sales in India, WGC is entering the market again when gold prices are at new high. WGC is confident of replicating the success story.
Formed out of seven strokes in 22-karat gold, Azva collection perfectly marries both traditions of yesteryear with modern interpretation of the seven promises, said David Lamb, Managing Director, World Gold Council in an interaction with Business Line .
What is the thought behind WGC entering the gold jewellery market?
The bridal category in India accounts for about 50 per cent of the gold jewellery market. It is the absolute foundation. Our focus is on women in the age group of 18-30. Young Indian women are not going to do anything merely because their mothers did it. There is no shortage of design in the market. Herein lies the opportunity — our idea sits above every individual design. In short, Azva is jewellery for your life and not for your locker.
Why should retailers focus on Azva rather than concentrate on their own brand?
The trust on purity that comes along with the brand promoted by WGC will attract retailers. We are getting a lot of enquiries from retailers already. To start with, we have tied up with eight leading manufacturers. Azva will be launched in Mumbai, Chennai and Delhi. We will roll out to another 15-20 new markets by the end of next year. The bridal set will be available in 70-75 grams. We want the brand to be established in 5-10 years.
Is this the first time that WGC is getting into the jewellery business?
We launched a bridal brand for the first time in China called Xifu about three years ago. It is a complete package for weddings which is what consumers want. Currently, Xifu Wedding has 10 per cent market share in China and sells about 50 tonnes a year.
How does the Chinese gold market compare with other countries?
China has a long cultural association with gold. It is the biggest gold producing country in the world. More gold is mined in China than Africa or in America. Jewellery that Chinese buy is largely 24 carat. Retailer margin in China is very low. In America, the margins are as high as 50-60 per cent, but in India it is just 10-12 per cent above the spot price. There cannot be any comparable goods where you can get back 90 per cent of the value.
Where do you see demand headed this year?
Though the foundation for gold demand is strong, it has been impacted by the macro economic developments across the world. So far, this year we are looking at 10 per cent decline in demand in rupee terms and volume-wise it may fall by 30 per cent. In other parts of the world, gold is playing an important role in the new financial architecture. For example, we may be selling less gold jewellery in America than what we did five years ago, but central banks across the world have emerged as net buyers under their reserve asset management. Overall, the market has reversed.
Has mine production improved?
Supply from mines is extremely tight. Mine production is not increasing. We are looking at 2,500-2,700 tonnes of production a year from large-scale mining. No major deposits have been found in the last couple of decades and many of the existing deposits are getting more difficult to mine. Clearly as you go deeper, the cost increases. Our belief is large-scale mining. There could be only 50,000 tonnes of gold left underneath as opposed to 170,000-180,000 tonnes mined since the beginning of time. About 40 per cent of the world’s need will be met with recycled gold.
What next after Azva?
We are looking at jewellery for young women to buy and wear before their wedding. Indian women are earning much more than their counterparts in other countries. They have five to six years of single and professional life before getting married. I think diamond products are there in their given space, but India’s real love affair is with gold jewellery. Diamond penetration in the Indian market is 8-10 per cent.
>suresh.iyengar@thehindu.co.in
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