* Signs of recovery seen in the US, Middle East, South East
* Italy jewellers see mixed demand in emerging markets
* Domestic market still weak, recovery expected in 2014
By Agnieszka Flak
VICENZA, Italy, Sept 9 Export-focused Italian
jewellers are seeing sporadic signs of recovery in key foreign
sales, offsetting deep-rooted weak demand at home, industry
officials at a major trade fair said.
The euro zone's third largest economy is battling with its
longest postwar recession, which has put some small and
family-run jewellers out of business.
But with 70 percent of the jewellery produced in Italy
destined for export, manufacturers see some reprieve.
"The Italian market is still weak, while exports, in
particular to the Far East, Middle East and the United States
are picking up," said Massimo Carraro, chief executive of
jeweller and watch maker Morellato Group.
Exports from Italy, Europe's top jewellery manufacturer and
exporter, rose 2.6 percent to 1,951 tonnes during the first five
months of this year, a report released at the VicenzaORO trade
fair showed. In value, they increased 6 percent.
Italian goldsmiths' federation Federorafi said exports of
gold-based jewellery may still fall by a single-digit this year,
but start recovering from next year.
High-end jeweller Roberto Coin expects sales to grow at a
double-digit figure this year, while Picchiotti, known for its
pieces with diamonds and other gemstones, sees growth in its
markets in South East Asia and flat sales in the United States.
"What we see more is a trend of people wanting to buy unique
pieces with high-value gemstones," said Umberto Picchiotti, the
Mid-sized firms said they were optimistic for the Christmas
season, when they often make a huge chunk of their sales.
Italian jewellery's share of export markets has shrunk in
the past decade as lower cost producers China, India and Turkey
have benefited from improving design skills and new technology.
The United States is the primary market for most Italian
jewellers and is likely to stay so for the medium term. Sales
performance in emerging markets has been mixed, jewellers said.
WEAK HOME MARKET
A recovery in the home market will largely depend on Italy
leaving its economic woes and political uncertainty behind.
"The interest in high-end jewellery has not disappeared, but
affordability is still an issue," said Stefano de Pascale,
Federorafi's director. "Should the recession end next year, we
expect demand to return and there could be a reverse in trends."
Italy's jewellery sector has been plagued by structural
challenges, including a fragmented market made up of 9,000 small
and mostly family-owned firms, fake copies and imitations of
Italian designs abroad and unfavourable export regimes.
De Pascale said Italian products were taxed abroad at rates
of up to 25 percent, while foreign jewellers importing into
Europe pay minimal duties and often none at all.
"If the trade barriers were removed, our exports would
immediately jump 20 percent," he said. He hopes a bilateral deal
with the United States could be struck by the end of next year.
Jewellers like Carraro and Coin are pinning their future on
a boutique business model to market the "Made in Italy" brand,
focusing on high-end design, innovation and craftsmanship.
Both insist their companies are not for sale, although
various small and big players have become the target of buyers,
mainly from abroad, looking for long-term high-value brands.
Carraro and Coin said, however, they would be open to buying
other companies with high-value brands instead.
To manage gold price volatility and reduce their exposure to
prices, which hit a record around $1,900 an ounce in 2011, but
now trades around $1,380, many small and mid-sized producers
have turned to other materials in their designs, including
leather, textiles, wood and ceramics.
(Reporting by Agnieszka Flak; editing by David Evans)