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Russia's Goldrush Ends as Costume Jewellery Becomes National Norm

With Russian's love of chunky jewellery on the wane, demand for synthetic gems and imitations pieces has soared.

Photo: Old gold: Giving way to its contemporary, costume counterpart in modern-day Russia. (Shutterstock.com)
Old gold: Giving way to its contemporary, costume counterpart in modern-day Russia.
Photo: Old gold: Giving way to its contemporary, costume counterpart in modern-day Russia. (Shutterstock.com)
Old gold: Giving way to its contemporary, costume counterpart in modern-day Russia.

Of late, Russians have been spending less and less on jewellery. It's a trend that has been spurred by a variety of different factors. Firstly, authentic and expensive jewellery has come to be seen as a little unfashionable, vulgar even. For some, it's even reminiscent of the Soviet era, a time when apartment walls might be covered in plush carpets, while the furniture could be wholly utilitarian and when ubiquitously unimpressive Lada cars might be 'pimped' with expensive trinkets by their proud, but profoundly misguided owners.

Another factor, of course, is cost. On one side you have the fact that incomes in Russia dropped 1.3% in real terms in the first six months of the current year, according to figures recently released by the Russian Statistics Authority. Alongside this, the value of gold on the global markets has continued to climb, while the rouble exchange rate has continued to decline. Inevitably, this has had a knock-on effect on the domestic jewellery industry.

Traditionally, only the Bank of Russia bought more gold domestically than the volume collectively purchased by the country's jewellery industry. Over the past five years, though, the volume of gold purchased by the Russian jewellery industry has fallen to 41 tons from 74.8 tons, with cumulative sales totalling US$3.7 billion in 2018.

The average weight of an item of Russian-manufactured gold jewellery has also fallen over the past five years, dropping to 1.87g from 2.69g – an overall decline of 35%. Over the same period, the volume of jewellery sold in Russia also decreased, falling to 31.85 million in 2018 from 48.51 million items in 2013, with its 34% decline closely tracking the reduction in weight of the average item.

The same five-year period also saw Russia toppled from its position as the world's leading gold producer, with China and Australia stepping up to take first and second place respectively. As of the end of last year, Russia's annual gold production was down to 281.5 tons, putting it marginally behind Australia (312 tons) and well adrift of China (399.7 tons). It's a far cry from the mid-1990s, when Russia's gold production peaked at 600 tons a year.

As well as a fall in the average weight of jewels being utilised, there is also a clear move to replace them with synthetic analogues. Indeed, it's now quite common to see sitall – a glass ceramic first manufactured in the Soviet Union – take pride of place in certain jewellery items. For those insistent on more traditional adornments, most Russian jewellery manufacturers tend to opt for gems imported from Southeast Asia, which allows them to diversify their collections and try new designs at a relatively affordable cost.

In terms of favoured designs, while bracelets and earrings are no longer as popular as they once were among Russian consumers, demand remains high for wedding rings and chains. While most married Russians opt to wear a wedding ring, a significant number also habitually sport a cross on a chain. By and large, though, this is no longer an indication of any religious affiliation, but rather the honouring of a long-standing tradition. The hefty chains with outsized links that were favoured back in the 1990s – typically complemented with an oddly hued leather jacket and an unnecessarily ostentatious Swiss timepiece – have now, however, been superseded by less chunky and far lighter designs.

It's now generally accepted within the industry that imitation / costume items account for the majority of sales in the country's jewellery market. The obvious exception here is the luxury sector, where such globally renowned brands as Tiffany and Bulgari continue to be keenly sought out. Such well-to-do buyers, though, are thin on the ground beyond the confines of Moscow, St Petersburg and one or two other notably affluent Russian cities. Given the geographical differentiation in the two market segments, it's perhaps not surprising that e-commerce has emerged as the purchase route of choice for the many non-metropolitan Russian ladies on the lookout for reasonably priced, easy to access imitation / costume jewellery items.

A more recent development on the part of Russia's jewellery retailers is a move to encourage consumers to trade in older, Soviet-era items for more contemporary pieces. This sees these high gold content heritage pieces recycled into items more in keeping with modern tastes and re-sold by the retailers and their partner channels. As it's cheaper to procure gold directly from consumers than via the official state channels, this allows for a significant widening of profit margins.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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