* Foreign investors eyeing Made-in-Italy to enhance
* Room to grow on Italian market through branding
* Closures of small-sized players to continue
By Stephen Jewkes
VICENZA, Italy, Jan 23 Italy's $8 billion
jewellery industry is drawing interest from Asian and Middle
East investors, keen to exploit Italian style and design as they
battle for market share both at home and abroad, industry
leaders at a major trade fair said.
Once the world's top exporter of jewellery, Italy now has
fierce competition from India, China and Turkey where costs are
lower and quality is gradually improving to internationally
And all at a time when the longest recession in 60 years has
sapped domestic demand and left many Italian firms short of bank
credit to fund development and stay afloat.
According to data from Italian goldsmiths association
Federorafi, the sector has slumped 28 percent since 2001 to
9,000 firms -- most of which are small family-owned companies
unable to compete in a global market.
Corrado Facco, managing director of Vicenza trade fair which
is currently hosting VicenzaORO, said the high-end Italian
jewellery sector was ripe for restructuring.
"Acquisitions will be part of the game in the years to come
as Italy's mainly family-based market restructures to head off
global competition," Facco said.
The trend of acquisitions is becoming fairly well
established. In 2011, French luxury group LVMH snapped
up Bulgari for 3.7 billion euros, offering a 60 percent premium
to market prices.
Last year France's Kering bought a majority stake in
jeweller Pomellato. Italian private equity Clessidra last year
took control of Buccellati to help fund growth in Asia.
Export-focused Italian jewellery is coveted for its design
and quality. But foreign competition, a strong euro, and import
barriers in potentially lucrative markets like India have taken
In response to competitive forces, Italy's jewellery
industry - Europe's biggest - is increasingly focusing on
top-end products where the price of the metal is not the only
factor in determining the value of a piece.
Facco says the industry has received attention from China,
Russia and the Middle East, as well as the United States, with
mounting interest from private equity.
"We've seen acquisitions in recent years of companies like
Pomellato and Bulgari and it's not over. We should see something
very soon from a Middle East player," he said, without giving
Roberto Coin, famous for its fancy diamond and gold
jewellery, has posted double-digit sales growth since 2009 and
expects turnover growth this year of 15 percent. It has already
been approached by big names.
"A lot of foreigners are looking and we've had a series of
offers but are not interested. The door is always open in life
but we've already turned down the best. Go figure," owner
Roberto Coin told Reuters on the sidelines of VicenzaORO, one of
the world's top gold jewellery fairs.
Italy's recession prompted the industry to turn increasingly
to exports to boost growth, pinning hopes on a boutique business
model to market the Made-in-Italy brand across the globe.
"Small-sized firms used to be a guarantee of personalisation
and originality but today it's simply a limit on growth. Many
now need, at the very least, distribution partnerships to
survive," Stefano De Pasquale, director at Italian goldsmiths
federation Federorafi, told Reuters during the fair.
De Pasquale said he was aware of growing interest in the
sector from investors from Asia where demand for Italian
jewellery is growing.
Many foreign operators are looking for Made-in-Italy brands
to burnish their reputation and leave behind their images as
cheap mass producers.
But even on the Italian market, where demand fell around 20
percent last year, there is space for growth for bigger players,
says the CEO of top Italian jeweller Damiani, pointing
to the top multiples LVMH paid for Bulgari.
"Italian players are small and around 90 percent of the
jewellery sold here is unbranded. Like in fashion, brandisation
will accelerate and open up opportunities," Guido Damiani said.
But change is coming anyway.
"Italy's jewellery sector is old with many businessmen close
to retirement age and facing generational change. The sector
will consolidate simply by closures," he said.
(Editing by Keiron Henderson)