““MADE IN ITALY”MADE IN ITALY”JEWELS IN THE INDIAN MARKETJEWELS IN THE INDIAN MARKET

New Delhi, 5New Delhi, 5thth July, 2008 July, 2008

Claudio Maffioletti, General ManagerTHE INDO-ITALIAN CHAMBER OF COMMERCE AND INDUSTRY

c.maffioletti@indiaitaly.com, www.indiaitaly.com

THE INDIAN JEWELLERY INDUSTRY THE INDIAN JEWELLERY INDUSTRY AN OVERVIEWAN OVERVIEW

Three hundred thousand traditional jewellers•96% unorganised retail•4% organised retail

2 Major segments •Gold Jewellery: 80% of the market •Diamonds & Gemstone studded Jewellery: 20% of the market

Total exports - €10.7 billion in 2006-07 and €13 billion in 2007-08 (provisional)

Total imports - €8.8 billion in 2006-07 and €11 billion in 2007-08 (provisional)

World’s largest diamond processing (cutting and polishing) country

FDI upto 51% in single brand retail stores has been allowed by the government

Multi-national jewellery brands such as Tiffany, Cartier, Zales and Harry Winston, Bulgari interested to come to India

RETAIL SCENARIO IN INDIARETAIL SCENARIO IN INDIA

Reliance Retail is planning an aggressive entry into the jewellery retail market through its about 400 to 500 jewellery retail outlets and stores across the country.

Damas India part of one of the largest jewellery retail outlets in the world launched its flagship store in August 2005 and is adding 16 new stores.

Swarovski, the global crystal goods manufacturer and marketer plans to set up 30 stores by 2009, from the current 13.

Italian luxury silverware manufacturer, Greggio Argento, has set up two exclusive stores in Mumbai and Delhi, through a marketing tie-up with Gitanjali Lifestyle.

Mumbai-based Vardhaman Developers plans to build four jewellery malls in the city and is already set to launch Jewel World-Mumbai’s first jewellery mall

Dubai-based Joy Alukkas has recently opened its largest showroom in Chennai

Gold Souk India has plans for bringing 100 Souks in 100 months

Item Duty

Rough Diamonds 0%

Cut & Polished Diamonds 0%

Rough Coloured Gemstones 0%

Cut & Polished Coloured Gemstones 0%

Gold/Silver Jewellery (Plain & Studded) 11.40%

Platinum Jewellery (Plain & Studded) Rs. 200 per 10g

Gold/Silver/Platinum Branded Jewellery 13.76%

Rough Pearls 5.15%

Processed Pearls 5.15%

Rough Synthetic Gem Stones 0%

Unworked Coral 5%

IMPORT DUTIES IMPORT DUTIES Effective for the year 2008-2009Effective for the year 2008-2009

RESEARCH TARGETRESEARCH TARGET

This research targets Italian jewellery companies– with more than 75% of turnover from export– who spend more than 10% of turnover for promotion abroad in the

mature market– who spend less than 10% of turnover in the emerging market

The topics of focus are:– Is exhibiting still an important tool for Italian companies in India?– Which marketing strategy is to be adopted for marketing Italian products

in India?– What kind of agreement is required for entry of foreign companies in

Indian market?– What is the perception of “Made in Italy” Brand in India?– What is the role of associations and other promotional bodies in

Jewellery sector?– What is the target?

THE INTERVIEWEDTHE INTERVIEWED

• Jewellery manufacturers (8)• Dealers (20)• Designer and Consultants (5)• Associations (2)• Media (5)

TOTAL: 40

RESEARCH OBJECTIVE RESEARCH OBJECTIVE & ANALYSIS& ANALYSIS

Three sections

Section A: Exhibition as a tool aims at defining the role of international exhibiting initiatives held in India as a tool for effective promotion of jewellery products

Section B: Made in Italy Brand • focuses on the level of recognition and appreciation that “Made in Italy” products have acquired in the Indian market• tries to detect the specific features which distinguish Italian products as unique

Section C: the Indian market • aimed at identifying the most effective market entry and branding strategies • specific focus on the most required materials and jewellery categories• highlights the difficulties and bottlenecks Italian brands might face while entering the Indian market.

83% of the target population believe that exhibitions are an important tool for Italian companies in India

94% appreciated the quality of international exhibitions in India (see chart)

Quality of International Exhibitions in India

26%

23%

45%

6%Excellent

Very Good

Good

Ordinary

SECTION A SECTION A EXHIBITION AS A TOOLEXHIBITION AS A TOOL

Does Italian Jew ellery distinguishes itself from Indian Jew ellery?

53%35%

12%

distinguishes

blends w ell

unusual design

“Made in Italy” as a brand is widely recognised (83% of target audience), although 17% highlight the fact that Italian jewellery potential is not fully exploited.

The identity of Italian jewels style brings out an interesting insight: • 53% of the interviewed said Italian design distinguishes itself from the Indian one • 12% identify its unusual design as a distinctive feature• whilst 35% think the possibilities to blend the Italian and Indian styles is a successful formula.

Extreme adaptability of the two styles and the possibility to offer the market a wide portfolio of solutions

SECTION B – “SECTION B – “MADE IN ITALY”MADE IN ITALY”

However

Italian jewellery is a success in India, on the other hand

its potential is still not completely exploited.

57% define the response of the Indian market to Italian jewellery as good 43% think it is either very good or overwhelming

The response of Indian market towardsItalian jewellery has been

14%

29%57%

overwhelming

very good

good

The approach to the Indian market has been experienced in different ways:

42% of the interviewed people it did not entail any particular problem 35% encountered hurdles due to difficulty in finding the right partner in India

(35%) 10% due to red-tape entailed in the bureaucratic processes

Introducing Italian brands in India is

35%

42%

10%

13%

hard task

smooth sail

bureaucratic adventure

other

SECTION C SECTION C THE INDIAN MARKETTHE INDIAN MARKET

Most effective entry strategy for Indian market

24%

54%

22%

only distribution

co-branding

solo branding

54% agree that being associated with an Indian brand already present in the Indian market, availing of a well-established distribution channel is the best way to approach India.

only distribution is advisable for those Italian brands which do not have the capacity to deal with a large volume of orders required by the Indian partners

“Solo branding” is recommended for those brands which can already count on a well-established reputation worldwide

Most suitable location where to sell “Made in Italy” jewellery

shopping malls (47%), which ensure a high footfall of potential customers, crucial in defining the Italian product identity

stand alone shops (37%), they are crucial in defining the product identity

Effective ways to market Italian jewellery

47%

37%

8% 8%

shopping malls

stand alone shops

5 star hotels

duty free shops

Most effective ways of building Italian brands

8%15%

42%

35% fashion show s

hoardings

magazines

TV

most effective ways of brand building and promotion are magazines and TV programs/ads

fashion shows are considered as ancillary exercises to strengthen the impact of the former

Associations and Trade Promotion Councils carry out promotional activities aimed at widening the customers’ and general public’s awareness through business delegations, fashion shows, seminars and conferences

Categories of jewellery most popular amongst the Indian consumers

25%

23%16%

8%

9%

8%

11% Plain gold

Studded Gold

Ethnic Type

Enamel

Silver

Gold mounting

Hallow Jewellery

Material and categories of jewels most appreciated by the Indian market: plain gold (25%) studded gold (23%) ethnic jewels (16%)

Share of consumers

61%

30%

9%

Upper class

Upper middle class

Middle class

Age Segments

23%

42%

35%

15-25

25-35

35 & above

61% jewellery products purchased by upper class (more than 20.000 € income per year

upper middle-class (from 15.000 to 20.000 € per year) and middle class (from 10.000 to 15.000 € per year) account for the remaining 39%

Jewellery purchasers (42%) belong to the age group between 25 and 36 years old (this is the span of time when most couples get married, especially in metro cities)

35% are over 35 years old interestingly 23% of the market

share is captured by consumers aged between 15 and 25 years old

CONSUMER SEGMENTATIONCONSUMER SEGMENTATION

CONCLUDING REMARKSCONCLUDING REMARKS

Opportunities for Italian Jeweller companies and designers:

Gems & jewellery industry is among the fastest growing industries in the country

Increased purchasing power and disposable income of the middle class resulting in consumption growth of gems and jewellery by about 11% in the five-year period preceding 2006-07

The growth of the affluent class Indian government facilitating imports of jewellery products through

favourable trade policies Local production is the most advantageous solution both for Italian design

products and for mixed designs due to:– Low cost of production– Availability of skilled labour– Ready availability of most materials in the Indian market– long-established tradition in jewellery crafting and manufacturing

Founded in 1966

Six offices throughout India

More than 1000 members

More than 60 professional staff

16 desks from Italy

Affiliated to Assocamerestero

IICCI – AT A GLANCEIICCI – AT A GLANCE

IICCI - IICCI - BUSINESS ASSISTANCEBUSINESS ASSISTANCE Preliminary Activities• Market analysis for products• Assistance in developing market entry strategies

Partner Selection• Identification of trade partners (manufacturers, suppliers, exporters, importers, agents, distributors)• Identification and selection of partners for industrial and financial collaborations• Organisation of individual B2B meetings• Corporate and financial information on potential partners

Establishment of Operations• Legal consultancy and support in finalising trade, industrial and financial collaboration agreements• Registration of trademarks & patents• Setting up of representative offices, branch offices, subsidiary companies and joint ventures• Comparative analysis for selection of locations • Assistance in acquiring and setting up commercial or industrial units• Setting up of sales networks• Marketing and promotion activities• Scouting and selection of staff• Interpretation and translation

IICCI- PROFESSIONAL TRAININGIICCI- PROFESSIONAL TRAINING

• Italian language courses, general and customised for individuals and companies

• Sommelier courses for food & wine industry professionals• Participation of Indian students in Italian fashion and design

courses • Participation of Indian chefs in professional courses in Italian

cuisine• Development of sector specific technical assistance projects

IICCI - IICCI - PROMOTIONAL ACTIVITIESPROMOTIONAL ACTIVITIES

• Seminars & conferences

• Technical workshops

• Business delegations

• Participation in fairs & exhibitions

• Sector analyses & reports

• Publications

• Media interaction

• Special events

• Networking events

OOUURR

DDEESSKKSS

Thank youThank you

Claudio Maffioletti Claudio Maffioletti General ManagerGeneral Manager

c.maffioletti@indiaitaly.comc.maffioletti@indiaitaly.com