India

With its burgeoning economy, focus on technology, and rapidly rising middle class, India is already a force in the jewelry industry. Investment in state-of-the-art equipment coupled with an endless supply of inexpensive, English-speaking labor make India a manufacturing powerhouse. Domestically, middle-class hunger for consumer goods, including jewelry, is reminiscent of the postwar boom in the United States, but on a much larger scale. India has serious infrastructure problems, such as an onerously bureaucratic government and a substandard public health system, but its entrepreneurial spirit is likely to override, if not eventually correct, these issues.

Dubai and the Gulf States

Already an important player in the diamond-trading world, Dubai, United Arab Emirates, also boasts the highest per-capita consumer spending on jewelry (approximately $2,500 annually per capita). With its beautiful beaches, modern buildings, luxury shopping, relatively secular society, and First World standards, Dubai is quickly becoming one of the world’s top tourist destinations, along with the rest of the Persian Gulf region (comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates). The tiny region—population 37 million—ranks fourth in worldwide jewelry consumption and accounts for 10 percent of the world’s diamond consumption.

Advertising Based on Evolving Relationships

Both the Diamond Trading Company and Platinum Guild International tapped into the same sentiment for their new advertising and product campaigns this year: That a couple’s relationship is a series of progressive moments, not a single defining moment. Both the DTC’s “Journey” campaign and PGI’s “Gone Platinum” campaign are backed by consumer research and should resonate well with shoppers in 2007.

Palladium

Palladium—the precious white metal that’s less expensive, lighter, and more malleable than platinum—will break out in 2007. In 2006 a consortium of mining interests, jewelry makers, and designers set the stage by launching Palladium Alliance International to promote it. At least a dozen well-known jewelry makers and designers (including Scott Kay and Frederick Goldman) have created palladium jewelry lines, scores of retailers have added them, and at least three luxury watchmakers (Cartier, Parmigiani, and Ulysse Nardin) say they will produce palladium watches.

Up-Marketing

With Wal-Mart selling engagement rings, Sam’s Club selling diamond necklaces, and Target offering pearl and precious-stone necklaces, expect other low-end or discount retailers to adopt this concept in 2007. Two trends bode well for it: high sales of designer clothing and accessories at the same stores (e.g., Isaac Mizrahi for Target) and a general increase in consumer bargain hunting, even among the wealthy.

Greater Expectations

Size matters. Remarriages, trade ups, and affluent couples demanding stylish rings are all sparking a trend toward more sophisticated bridal jewelry and designs suited for bigger diamonds. Even younger couples are joining in: Government research shows that couples between the ages of 25 and 34 have the second-highest per-household jewelry expenditures in the United States, fueled largely by engagement ring purchases.

High-End Cell Phones

A few companies are producing expensive mobile telephones meant to last. Features include precious-metal and gemstone adornments, titanium or steel casings, and sturdy microscopic engines. Some allow remote uploading of software upgrades, and others offer concierge services at the press of a button. All models complement fine jewelry.

One-of-a-Kind Jewels

More consumers are looking for “something different”—but they still want to be fashionable—and designers are accommodating them. Often based on unusual gemstones, “one-off” collections allow manufacturers like Bergio—known for more-traditional styles—to offer something unique. Designer Robert Wander for Winc uses natural gemstones and on-trend designs for creations that are highly personal but totally wearable. And newcomer Sevan became one of the most-talked-about designers in Las Vegas this year with his one-of-a-kind creations.

Celebrity Brands

In the past few years, supermodel Heidi Klum, fashion designer Diane von Furstenberg, and rock star Tico Torres have launched jewelry lines (for Mouawad, H. Stern, and Miami Steel, respectively). Now that the fine-jewelry industry understands the power of celebrities, it’s learning that their influence multiplies when the celebrities are the designers, not just the pretty faces in advertisements. Benefits include increased consumer awareness of the brand and the introduction of a jewelry company to the celebrity’s fan base. Expect to see more collaborations between celebs and jewelry companies in 2007.

Resilient Watch Market

Although the U.S. watch market has been dented by devices like cell phones and iPods that also tell time, a resurgence in watch sales is expected to translate into 10.6 percent growth next year and a $9.5 billion market by 2010. That’s according to a research report from Packaged Facts, which also found that two-thirds of U.S. adults buying a watch are women.

The Male Self-Purchase Market

More men are buying jewelry for themselves, and 2007 may represent a tipping point. According to a consumer trend study by GQ, men in the so-called “Xoomer” generation (ages 25–39) are heavily inclined toward spending on luxury products, including jewelry and fine watches. They’re 15 percent more likely than baby boomers to pay a premium for luxury goods, 68 percent more likely to increase their luxury spending over the next 10 years, 41 percent more likely to pay more for men’s jewelry, and 50 percent more likely to pay more for men’s watches. Spurring the trend are growing sales to men of stainless steel, titanium, and tungsten jewelry.

Canadian Diamonds

Whatever the consequences of the movie Blood Diamond, consumer awareness of conflict diamonds is growing, and that will boost sales of Canadian diamonds. Nongovernmental organizations may flinch at this, since it doesn’t help Africa (and arguably hurts it), but without a clear message from anyone about how consumers should tackle the issue, this may be the easiest way for well-intentioned consumers to assuage their consciences.

Digital Millennials

The 82 million Americans between the ages of 14 and 25 will begin to wield their considerable economic influence. Members of this generation grew up in a world that had always been electronically connected, and the mobile phone is their most important device—the lifeline to their social network. The social network is fundamental to their buying process. “They rarely make a purchase without peer approval,” says Kelly Mooney, chief experience officer at Resource Interactive, a consumer insights company in Columbus, Ohio. To reach them, says Mooney, retailers must support the engagement of their social networks.

Diamonds on Watches

Diamonds are becoming widespread on both men’s and women’s midprice casual and workplace timepieces, with a number of women’s watches sporting up to three bezel rows of diamonds. Next year, demand for more caratage will be driven by both retailers and consumers, and the trend will be strong even at more-affordable price levels.

Mechanical Watches

As demand for mechanical watches grows, look for more automatics (timepieces with self-winding mechanical movements), once an expensive category but now available at popular prices (e.g., the Timex Automatics series, E. Gluck’s Trump collection, and Fossil’s new automatics for men and women). Popular fashion lines are jumping in with higher-price automatics such as the Skeleton Automatik from designer Marc Ecko, the Turbina men’s automatics from Michele, and Fendi’s first diver’s watch. New U.S. brand Von Dutch’s edgy models include the automatic Angel. Stylish automatics for women are available from Blancpain, Daniel Mink, Hamilton, Hublot, JeanRichard, Louis Erard, Maurice Lacroix, Parmigiani, Perrelet, Roger Dubuis, and Versace.

De Beers in America

De Beers has settled most of its U.S. legal problems, Jonathan Oppenheimer of the De Beers board of directors recently visited New York to speak at the Clinton Global Initiative, and the company recently appointed a “U.S. representative” to deal with social issues. The signs and portents all point to De Beers finally establishing an official U.S. presence next year. Meanwhile, De Beers LV, its retail chain, will continue to open stores in America, including one planned for Las Vegas.

More Changes at De Beers

De Beers is planning changes to its Supplier of Choice policy. Executives haven’t said what they’ll be, but here’s what to look for in 2007: offering credit to sightholders, charging sightholders to participate in De Beers’ marketing programs, and a less-centralized distribution system in which each country sells its own diamonds to local factories.