There is good news for jewellers across the world seeking to find an alternative to the slack US market and recession-hit Europe – the Asia Pacific region is becoming a key centre of the luxury world, displacing Europe as the second largest consumer of luxury goods and services. Not only that, investments of passion in general, and particularly more particularly jewellery continues to be a big favourite with the big spenders of this region.

These trends are identified in the Asia Pacific Wealth Report 2011 recently released by global consultancies Capgemini and Merrill Lynch. The report covers eleven core markets: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand, which together account for 95.7 per cent of the region’s gross domestic product (GDP).

It notes that “While HNWI wealth had already overtaken Europe in 2009, Asia- Pacific has now surpassed Europe in terms of HNWI population, expanding 9.7 per cent to 3.3 million, while Europe grew 6.3 per cent to 3.1 million. Asia-Pacific HNWIs’ wealth gained 12.1 per cent to US$ 10.8 trillion, exceeding Europe’s HNWI wealth of US$ 10.2 trillion, where the wealth increase was 7.2 per cent in 2010.

Asia-Pacific is now the second largest region for both HNWI wealth and population, second only to North America.”

In 2010, eight of the 20 fastest-growing HNWI populations were in Asia-Pacific markets, including Hong Kong, Vietnam, Sri Lanka, Indonesia, Singapore, and India. India’s HNWI population became the world’s 12th largest in 2010, entering the top 12 for the first time.

Most significantly, the report points out that jewellery is a strong component of the luxury basket, and that aggregate allocation to jewellery, gems, and watches was 24 per cent in Asia-Pacific in 2010 vs. 22 per cent globally, and 23 per cent in 2009.

A similar report analysing developments in the luxury market in India in 2010 released by Confederation of Indian Industry (CII) and A.T. Kearney points out that the overall market for luxury goods and services has shown a robust growth of 20 per cent in 2010 and is estimated to have reached to US$ 5.8 bn. Luxury products grew by 29 per cent, services 22 per cent and luxury assets rose by 13 per cent. It also says that among all luxury products, jewellery with a growth rate of over 30 per cent surpassed the figure of 21 per cent that the consultancy had projected for the year.

It also notes that while 26 per cent of Chinese luxury consumption is in the ready-to-wear category and 9 per cent is in jewellery, by contrast, 30 per cent of India's luxury consumption is in jewellery, while 20 per cent is in the ready-to-wear segment.

Likewise, while in China, half of all jewellery sales are driven by weddings, 15 per cent is driven by festivals, with family occasions, gifts and impulse purchases accounting for the rest, in India, over 50 per cent of jewellery sales are wedding related. The other major drivers are festivals in India.

However, Neelesh Hundekari, rincipal & Head – Luxury and Lifestyle Practice India, AT Kearney Ltd, strikes a note of caution, saying, “Higher prices have certainly slowed down volume growth. The volume CAGR for jewellery has been around five per cent over the last five years compared to a value growth in excess of 20 per cent.”