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When the Vivid Pink, an extremely rare pink diamond, sold for $10.8 million at the Christie’s Hong Kong jewelry auction last December, the sale made headlines. The five-carat gem garnered a record-breaking $2.16 million per carat, an all-time high for a diamond. But perhaps even more significant in the current economy was its owner’s return.

“He more than tripled his investment,” says Henri Barguirdjian, the U.S. president and CEO of Graff, the jeweler that sold the diamond to the gentleman who put it on the auction block. “A very fine diamond or a very fine colored stone of high quality not only retains its value but appreciates over time, even in a year like 2009.”

The Vivid Pink isn’t the only hard asset to shatter records lately. Last fall, the Annenberg diamond, a 32-carat D flawless stone, fetched $7.7 million at Christie’s New York, setting a new record for colorless diamonds at $240,000 per carat. In Geneva, a Christie’s watch auction resulted in 13 world records, including the second-highest price ever for a Rolex ($594,015) and the highest price for any watch sold at auction in 2009 (a 1942 Patek Philippe, which sold for nearly $2.8 million). The previous December, the historic Wittelsbach-Graff diamond, a 35.56-carat, gray-blue stone, achieved the highest price for any diamond ever—a staggering $24.3 million.

“More and more clients are turning toward high-quality diamonds, fine colored gemstones, and also vintage jewels as an alternate but very secure form of investment,” says Rahul Kadakia, Christie’s head of jewelry in New York. Christie’s worldwide sales totaled $338.5 million this year, which is actually on par with the level of auctions seen in 2005—a record year at the time—just before the boom.

While strong auction prices underscore the inherent value of collectible precious goods, the jewelry and watch industry continues to operate in recovery mode. Following the financial meltdown of 2008, sales of nonessential goods, including jewelry and watches, plummeted. Luxury titans such as Tiffany and Richemont reported up to a 60 percent drop in profits in early 2009, while niche jewelers like James de Givenchy of Taffin described business as coming to a literal standstill. “Not even a phone call,” says de Givenchy about the first month of 2009, a period when the designer, known for his appetite for exotic spinels and sapphires, stopped buying stones and started working with the overstock in his safe. “Obviously we had fears. When was the market going to come back? How long can we hold our breath?” By April, his business began to tick again. De Givenchy reports that the past holiday season was his strongest yet, buoyed in part by a strong interest in diamonds—old mine diamonds in particular. “Jewelry does very poorly in uncertainty,” says de Givenchy. “As soon as certainty returns, it often comes back stronger.”

As business trickled back in the final months of 2009, positive holiday sales figures from major companies and independent jewelers suggest that the industry is regaining its luster. Jewelers and retailers alike talk of emerging from the ashes of the financial free fall—but into a luxury landscape that is altogether different. “You can’t coast anymore,” says Paul Blum of David Yurman. “The new customer is more demanding. They want more for their money—they want the whole package.”

For jewelers like Graff and Leviev, whose average sales are $200,000 and $500,000, respectively, the high end is still performing, while the bread-and-butter business has declined. Graff counted a 16-carat vivid yellow diamond ring and an eight-carat pink diamond ring among its 2009 holiday sales. Colored diamonds, including a $9.5 million, five-carat, pumpkin-orange diamond ring, boosted Leviev’s December season. Other big-ticket sales included a 50-carat D flawless diamond ring priced at more than $15 million, and a 44-inch diamond sautoir priced at more than $2 million. (The sautoir is usually a $120,000 investment, but a client requested that it be remade using E VVS quality diamonds, which boosted its price.) “Fewer, finer things,” echoes Naval Bhandari, vice president of sales for Sotheby’s Diamonds. “I get many more inquiries for diamonds of ten to twenty carats than two.”

While Bhandari’s clientele represents the high end of the market, consumers at every price point are demanding more value for their investments. “People are buying with their hearts and their brains,” says Stanislas de Quercize, the worldwide president and CEO of Van Cleef & Arpels, who cites the Christie’s New York October sale of a 1942 Van Cleef & Arpels Ballerina brooch for a record $422,500—almost eight times its price in 1981—as proof of the collectible nature of the company’s designs. California Reverie, a 100-piece high jewelry collection inspired by the American West and unveiled in October 2009 with pieces starting at $45,000, was, de Quercize says, “a stunning success.” And though he would not divulge any information apart from his favorite items (the Desert clip and the Paysage D’Opal pin, for what it’s worth), Van Cleef & Arpels’s parent company Richemont did report a 2.4 percent increase in sales from last year, with Van Cleef and Cartier cited as top performers.

Emmanuel Perrin, the recently appointed president and CEO of Cartier North America, says that today’s client is “more than ever focused on quality, creative design, and timelessness.” Cartier introduced a gold skeleton tourbillon timepiece at the Salon International de la Haute Horlogerie (SIHH) this year. But last November, in an active effort to attract new customers and respond to the economy, the company introduced new pieces to Les Must, an entry-level collection that’s composed of jewelry, watches, gifts, and accessories priced from $80 (for a goatskin business card holder) to $2,625 (for a stainless-steel watch).

As consumers exercise deliberate consumption more than ever before, jewelers found that a little TLC paved the way to a sale. Amedeo Scognamiglio, of Faraone Mennella, says personal appearances have always been crucial to their business, whether it’s a weeklong event at Harvey Nichols in Dubai or lunch with a top client from Saks Fifth Avenue, San Antonio. “We might spend half the day with her and bring fifty pieces for her to try on,” says Scognamiglio, who makes 20 personal appearances each year with his business partner, Roberto Faraone Mennella. “Know your jewelry,” he adds, “but know your jeweler better—that’s a very old Italian rule.” Jonathan Dorfman, co-owner of the independent Boston jeweler Dorfman, says “You have to work harder to get what you used to get.” Last fall he organized a series of events to celebrate an in-store exhibition of three top Italian jewelers. He invited 50 opinion leaders to lunch and an opera performance. Dorfman says he sold 15 pieces as a result, adding, “Gone are the days of the easy $250,000 sale.”

Some jewelers have weathered the downturn by expanding their collections, offering styles at more accessible price points. In the past two years, Stephen Webster, Ippolita, and Roberto Coin have introduced silver- and gold-plated collections with price points between $125 and $4,500. Last month, Beverly Hills–based jeweler Martin Katz introduced a “less blingy” $15,000 to $40,000 entry-level collection when he kicked off the arrival of his pieces at Bergdorf Goodman. (For some perspective: An average Martin Katz hovers between $25,000 and $125,000.) The line was developed, Katz says, in part as a response to the economy.

Some of the biggest luxury brands in the world are hoping that consumers, with their sights set on a new decade, are ready to leave the bitter taste of 2008 and 2009 behind. De Quercize, of Van Cleef & Arpels, believes the way to move forward is to take a quick look back. In 1939 Van Cleef closed its Place Vendôme location, emigrated to the United States and opened a shop on Fifth Avenue. “We believe,” says de Quercize, “that the crisis is not a state—it is a time of change which forces us to plan ahead. The first crisis is birth, the proof being that babies cry. Then things gets better.”

Sales from the Front

To truly get inside the mind of the new jewelry consumer, we asked designers and retailers to divulge telling tales from the year that was.


Lauren Sharfman, CEO Known for its gold bangles [from $595], Ippolita recently introduced a silver line [from $125]. “We used to have day-in and day-out business at every price point; now our sales are at the extreme ends of the spectrum.”

Faraone Mennella

Amedeo Scognamiglio, cofounder “When we first started [in 2001], our best sellers were all under $1,000. This year we sold fifty pieces between $20,000 and $300,000. But versatility is the key to longevity: The Bikini Line collection [$1,540 each] features gold clasps on interchangeable leather straps.”

Janis Provisor

Debi Wisch, co-owner “Our most recent shows in New York and San Francisco were some of our most successful ever, but we sold more [about 30 pieces at each, from $2,000 to $12,000] to fewer clients. And they bought bold colors [like the cherry quartz and white jade piece, $22,000]—even clients who always go neutral.”

Brooke Garber Neidich

Co-owner, Sidney Garber jewelry, Chicago “We refashioned many of our clients’ South Sea pearls by adding double-sided rose-cut diamond chains in between. And the Feather—at $10,000—has been an amazing hit.”

Tito Pedrini

Jeweler and gemologist “I just sold a very rare sapphire to a client who had stopped buying because of the recession. Now he wants to invest in stones. Years ago, people couldn’t care less about gemology. That mentality has changed.”

Aaron Basha

Sasson Basha, president “Over the last few months, we have seen more clients looking for pieces with meaning, like the Baby Shoes [from $1,000] and the protective evil eye [from $500].”


Francesco Trapani, CEO “The overall situation is more encouraging now. We returned to profitability in the third quarter of 2009.This month we opened a new store in San Francisco—our largest in the States. Bulgari is known for focusing on the visual impact of a gemstone. We combine unexpected materials with precious ones—like turquoise with amethyst and diamonds [$25,600].”


Greg Kwiat, partner “If customers are convinced they’re getting long-term value, they buy; if not, no sale. A guy came into the store for a 2.5-carat ring. We talked about how the value of diamonds has held up. He ended up doing a three-carat stone for $15,000 more.”

De Beers

Hamida Belkadi, U.S. CEO “The Enchanted Lotus Collection combined design and the right price point [$1,500–$4,500]. People bought two and three pieces at a time. We had wait lists, which tells us we are going in the right direction.” In February, a few new pieces with pink-diamond accents were added to the line.

Future Forecast

All eyes are on Switzerland. The watch and jewelry industry’s most prestigious fairs—SIHH, which took place in January, and BaselWorld (March 18 to 25)—are important indicators of the state of the markets. Last year, in the midst of the financial crisis, attendance was down about 12 percent at Basel; two dozen companies dropped out completely. Parties were canceled; diamonds disappeared from watch dials.

Jewelers and watchmakers are approaching the 2010 fairs with renewed—if still cautious—optimism. At SIHH, Van Cleef & Arpels introduced a series of high-jewelry timepieces emblazoned with butterfly dials. At the same show (sponsored by parent company Richemont), Cartier showed a gold-and-diamond ladies’ watch with gem-set hours. Ralph Lauren, which unveiled its watch collection at SIHH just last year, updated its Slim Classique with two rows of diamonds on the dial. Chopard, celebrating its 150th year, plans to dazzle BaselWorld 2010 with 150 one-of-a-kind animal-inspired creations (below, a sketch of the Clownfish necklace with moonstones and sapphires). Patek Philippe launched the $79,800 Ladies First Chronograph in November and will show more at Basel than it has in two years. “Consumers seemed to take last year off,“ says Larry Pettinelli, Patek Philippe’s U.S. president. “Now there’s just enough improvement, where people are spending—as long as it’s on something they have really considered.” The idea of a thoughtful investment purchase dominates. Case in point: Chanel timepieces won’t be doing any parties at Basel this year. The company remains mum on what it will debut at the fair but is perfectly clear about one thing: They are there for business and to show their watches.


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