younger-consumer-may-prefer-18-and-14-carat-gold-jewelry-in-india
Finance & Markets

Younger consumer may prefer 18 and 14 carat gold jewelry in India

Experts anticipate that the jewelry market in India is en route to make significant structural changes in the near future with pundits predicting the overall market share for lower carat and light weight jewelry. 18 and 14 carat jewelry in India will soon emerge as a dominating force in the market challenging the long reign of the 22-carat gold in the Indian market. The Covid-19 pandemic along with a combination of economic, demographic, and cultural factors have been identified for this potential change.

India is known for its profoundly traditional market for gold jewelry in which wedding and festive purchases serve as the catalyst for demand and supply. Combined they account for 60-65% of total consumer purchases. It is in this backdrop that 22-carat plain gold jewelry singlehandedly dominates the market in the present market environment.

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However as aforementioned rising prices, evolving customer behaviour patterns and everchanging demographics have led to major shifts in the market structure, an impact of which can be witnessed in the evolution of product segmentation and weights. The past five years have seen market prices surge over half of what it was in 2016.

This has caused customers in India to plan their purchased with a fixed budget in mind and remain within those limitations. The surge in the price of jewelry has altered the longstanding product choice, with customers increasingly switching over to lightweight jewelry options or reduce their overall purchase all together.

As per Metals Focus, market research in India has revealed that there has been an average 10% reduction in the weight of jewelry. Wedding sets in particular have felt this weight reduction. Factoring in the rise in the price of the Indian Rupee (INR) and the scourge of the Coronavirus pandemic, market pundits forecast that this trend will only continue at a far more rapid pace this year and will continue to have a bearing on a customer’s budgetary considerations.  

Significant alterations in product segmentation have also been seen. This has especially been the case for bridal jewelry, which despite being a vast market category has suffered a major setback in terms of overall sales since 2016. A factor identified for this change have been the evolving dynamics of Indian weddings.

Marital celebrations are gaining far more prominence, with added small-scale events like bachelor parties, musical nights and hiring of profession wedding photographers and videographers both for both pre-during-post weddings. These practices have become the norm in Indian wedding culture. Adding to this is the prevalence of destination weddings and honeymoons abroad.

These new types of wedding expenditures accumulate and take away from the overall wedding budge. Budget previously allocated for purchase of bridal jewelry has now been diverted to meet other wedding expenses.

It has also been found that the market share for daily wear jewelry has soared from an estimated 35-40% to roughly 40-45%. This is said to be driven by the strength in the gold price and a rising youth demographic in India with more than 50% of the country’s population below the age 35 years of age, and have shown a preference towards lightweight jewelry, for its lack of heft and increased affordability.

Going by International Labour Organisation figures, women currently account for just 20% of India’s work force however these figures are expected to rise and with it the share of daily wear jewelry is also expected to rise with the increase of more women in the work force and a market increase in lightweight 18 carat gold jewelry being the dominant range.  

As aforementioned, the Indian jewelry market is currently dominated by the 22 carat, making around 80% of retail sales by weight. However increasing gold prices and a below 35 demographics is likely to encourage buying of lower purity products. These trends have already been felt by the market in Indonesia and Vietnam and have been driven broadly by the same factors.

In the former, more than 40% of consumption is in the form of 9 and 10-carat jewelry, whereas in the latter 14 and 18-carat together account 40-45% of retail sales. While Bureau of Indian Standards (BIS) regulations may be a deterrent factor in the sales of jewelry below 14-carat, lower purity jewelry should continue to gain market prominence despite 22-carat remaining the dominant product in the Indian market.

Written By

Frontier India News Network

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