jshepherd
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This is an article I wrote for The Valuer in Australia. The latest issue is dedicated to pearls as a Grahame Brown memorial issue.
Understanding the ever-changing market for cultured freshwater pearls
Freshwater Pearls, the last century
The cultured freshwater pearl industry has a history of nearly 100 years. Just after Mikimoto began culturing beaded akoya pearls and before the world even knew of the existence of black pearls from the Pinctada margaritifera, Dr. Masao Fujita was culturing freshwater pearls in the Hyriopsis schlegeli mussel in Lake Biwa, Japan.
Over the last century, cultured freshwater pearls have remained primarily in the shadow of their cultured marine pearl cousins, often misunderstood, frequently misrepresented and nearly always underappreciated. Still today, the term “cultured freshwater pearl” conjures up images of Rice Krispie shapes, and orange and yellow dye-saturated colors to many in the industry.
Freshwater Pearls, the last decade
Today, freshwater pearls are quickly disrupting earlier conceptions and opinions. Nearly all production has moved from Japan to China, and from the inferior Cristaria plicata Chinese mussel to the superior Hyriosis cumingi Chinese, and the Hyriopsis schlegeli Japanese mussel in China. The Chinese, with their wealth of labor, land and new-found capitalistic drive, have brought freshwater pearls to a new level. Today’s best freshwater pearls rival the beauty of a fine akoya or South Sea strand, yet they are solid nacre and cost a mere fraction of their beaded rivals.
In 2006, China produced an estimated 1,500 metric tons of freshwater pearls. While much of the production is lower-end material--nearly half of the total is unsuitable for finished jewelry--there is that small volume--less than 1/10th of a percent--that's gem grade. How can such a small percentage have an effect on consumer and industry opinion? That tiny percentage is about 1.5 metric tons a year, or nearly 50,000 strands.
Constant Changes
The cultured freshwater pearl industry, unlike the Tahitian, South Sea and akoya industries, operates in an environment with little to no constraint. China’s vast size, combined with the strong drive for success, has created an environment where producers are free to set their own rules. They determine how long the mussels stay in the water, the cultivation methods, and the sizes and qualities presented as raw material to the processing factories.
Cultured freshwater pearl wholesale and retail buyers must be on top the constant changes in the Chinese industry to understand everyday business and accurately value their purchases. The most important changes, and the easiest to miss, involve material size and ratio at the processing factory level.
When 0.9 means 1 and 16 means 16.5
A little-known fact in China is that the size and length of a hank or the size range of a lot of loose pearls can often determine how long ago the pearls were harvested. That’s an important consideration because freshwater pearls can lose luster if not stored and cared for properly, or if over-treated during processing. The pearls' age can be determined because material sizes are constantly declining. There was a time when a temporary strand of pearls graded as a 7.0-8.0 mm strand was sold as a 16.5-inch, 7.0-8.0 mm strand. That typical princess length would knot to an average of 18 inches. That time is long gone.
The first dip in material sizing happened at the turn of the century. As material pricing fluctuated, producers realized they could lower the sizes of their lots and strands by a mere tenth of a millimeter and increase their profit by a full 10 percent. 7.0-8.0 mm strands became 6.9-7.9 mm. Buyers barely noticed that tiny difference. There was some confusion, but there was also quick acceptance.
A slight drop in strand length followed. By 2003, a temporary strand of freshwater pearls no longer knotted to 18 inches. The new standard was 17.5 inches. The processing factories were then able to pocket the pricing advantage.
Size declines have continued unabated for the past five years, with a drop of approximately 0.1 mm every other year. Eventually, the industry had no choice but to take notice.
Today
The biggest change in material size happened in the past year. Today, a factory-size material strand of 7.0-8.0 mm pearls actually measures 6.5-7.5 mm. But that’s not the end of the story. Just over a year ago, that same strand would have measured 6.6-7.6 mm. About half of the pearls would have fallen in the upper 50 percent size range, with the other half in the lower 50 percent range. With current material sizing, the situation has changed dramatically. Now, only 25 percent of the pearls fall in the upper range, and 75 percent fall in the lower range.
What does this mean for buyers and sellers?
Knowledge is the first and most important tool a wholesale or retail buyer has. Understanding sizing is key to understanding pricing and value. By comparing a supplier's historical sizing and pricing, a buyer can determine how much negotiation is necessary to get an appropriate price. If a buyer is dealing directly with a factory, a discussion of hank sizing has to take place.
Many buyers now source cultured freshwater pearls in half-size increments similar to those in the wholesale akoya business. Instead of buying full millimeter sizes, buyers can now focus on sizes like 7.5-8.0 mm, or 8.5 to 9.0 mm.
How these changes affect value
Unfortunately, in many circumstances the sizing changes haven't reduced buyers' prices. This might be due to a lack of knowledge on the buyer's part or by misplacing trust in a supplier. Many buyers have been burned. But that doesn't change the fact that their recent purchases have a lower value. A strand of down-sized cultured freshwater pearls--both in the percentage ratio and size range--are as much as 20 percent lower in value.
On the opposite side, those buyers who choose the more expensive half-millimeter sizing have dramatically increased the value of their purchases. For example, a strand of pearls that measures 7.0-7.5 mm is composed of the largest 25 percent of material-size 6.5-7.5 mm pearls, increasing the value by as much as 50 percent. Taken a step farther, if a strand is 7.5-8.0 mm pearls, it's now composed of material purchased as 8.0-9.0 mm, downsized to 7.5-8.5 mm, of course. This dramatically increases the value over any full size 7.0-8.0 mm strand whether it's composed from real-size materials or downsized.
Conclusion
Every buyer, seller, or valuer must stay abreast of the changes in the cultured pearl industry so he or she can provide the best possible product or service to the customer. Considering the lack of information available in so many parts of the industry, that can be a challenging prospect, especially when secretive producers and suppliers benefit greatly from the confusion.
Cultured freshwater pearls are becoming increasingly popular with fine jewelry suppliers, designers and astute consumers. Aside from keshis, they are the only cultured pearls produced today that are close in composition to the natural pearls of the old days. While Chinese freshwater cultured pearls are by no means the only choice for consumers, they will undoubtedly soon become the first choice. The vast range of sizes, shapes, colors, qualities and prices provide unequalled consumer choice for an affordable gem.
Understanding the ever-changing market for cultured freshwater pearls
Freshwater Pearls, the last century
The cultured freshwater pearl industry has a history of nearly 100 years. Just after Mikimoto began culturing beaded akoya pearls and before the world even knew of the existence of black pearls from the Pinctada margaritifera, Dr. Masao Fujita was culturing freshwater pearls in the Hyriopsis schlegeli mussel in Lake Biwa, Japan.
Over the last century, cultured freshwater pearls have remained primarily in the shadow of their cultured marine pearl cousins, often misunderstood, frequently misrepresented and nearly always underappreciated. Still today, the term “cultured freshwater pearl” conjures up images of Rice Krispie shapes, and orange and yellow dye-saturated colors to many in the industry.
Freshwater Pearls, the last decade
Today, freshwater pearls are quickly disrupting earlier conceptions and opinions. Nearly all production has moved from Japan to China, and from the inferior Cristaria plicata Chinese mussel to the superior Hyriosis cumingi Chinese, and the Hyriopsis schlegeli Japanese mussel in China. The Chinese, with their wealth of labor, land and new-found capitalistic drive, have brought freshwater pearls to a new level. Today’s best freshwater pearls rival the beauty of a fine akoya or South Sea strand, yet they are solid nacre and cost a mere fraction of their beaded rivals.
In 2006, China produced an estimated 1,500 metric tons of freshwater pearls. While much of the production is lower-end material--nearly half of the total is unsuitable for finished jewelry--there is that small volume--less than 1/10th of a percent--that's gem grade. How can such a small percentage have an effect on consumer and industry opinion? That tiny percentage is about 1.5 metric tons a year, or nearly 50,000 strands.
Constant Changes
The cultured freshwater pearl industry, unlike the Tahitian, South Sea and akoya industries, operates in an environment with little to no constraint. China’s vast size, combined with the strong drive for success, has created an environment where producers are free to set their own rules. They determine how long the mussels stay in the water, the cultivation methods, and the sizes and qualities presented as raw material to the processing factories.
Cultured freshwater pearl wholesale and retail buyers must be on top the constant changes in the Chinese industry to understand everyday business and accurately value their purchases. The most important changes, and the easiest to miss, involve material size and ratio at the processing factory level.
When 0.9 means 1 and 16 means 16.5
A little-known fact in China is that the size and length of a hank or the size range of a lot of loose pearls can often determine how long ago the pearls were harvested. That’s an important consideration because freshwater pearls can lose luster if not stored and cared for properly, or if over-treated during processing. The pearls' age can be determined because material sizes are constantly declining. There was a time when a temporary strand of pearls graded as a 7.0-8.0 mm strand was sold as a 16.5-inch, 7.0-8.0 mm strand. That typical princess length would knot to an average of 18 inches. That time is long gone.
The first dip in material sizing happened at the turn of the century. As material pricing fluctuated, producers realized they could lower the sizes of their lots and strands by a mere tenth of a millimeter and increase their profit by a full 10 percent. 7.0-8.0 mm strands became 6.9-7.9 mm. Buyers barely noticed that tiny difference. There was some confusion, but there was also quick acceptance.
A slight drop in strand length followed. By 2003, a temporary strand of freshwater pearls no longer knotted to 18 inches. The new standard was 17.5 inches. The processing factories were then able to pocket the pricing advantage.
Size declines have continued unabated for the past five years, with a drop of approximately 0.1 mm every other year. Eventually, the industry had no choice but to take notice.
Today
The biggest change in material size happened in the past year. Today, a factory-size material strand of 7.0-8.0 mm pearls actually measures 6.5-7.5 mm. But that’s not the end of the story. Just over a year ago, that same strand would have measured 6.6-7.6 mm. About half of the pearls would have fallen in the upper 50 percent size range, with the other half in the lower 50 percent range. With current material sizing, the situation has changed dramatically. Now, only 25 percent of the pearls fall in the upper range, and 75 percent fall in the lower range.
What does this mean for buyers and sellers?
Knowledge is the first and most important tool a wholesale or retail buyer has. Understanding sizing is key to understanding pricing and value. By comparing a supplier's historical sizing and pricing, a buyer can determine how much negotiation is necessary to get an appropriate price. If a buyer is dealing directly with a factory, a discussion of hank sizing has to take place.
Many buyers now source cultured freshwater pearls in half-size increments similar to those in the wholesale akoya business. Instead of buying full millimeter sizes, buyers can now focus on sizes like 7.5-8.0 mm, or 8.5 to 9.0 mm.
How these changes affect value
Unfortunately, in many circumstances the sizing changes haven't reduced buyers' prices. This might be due to a lack of knowledge on the buyer's part or by misplacing trust in a supplier. Many buyers have been burned. But that doesn't change the fact that their recent purchases have a lower value. A strand of down-sized cultured freshwater pearls--both in the percentage ratio and size range--are as much as 20 percent lower in value.
On the opposite side, those buyers who choose the more expensive half-millimeter sizing have dramatically increased the value of their purchases. For example, a strand of pearls that measures 7.0-7.5 mm is composed of the largest 25 percent of material-size 6.5-7.5 mm pearls, increasing the value by as much as 50 percent. Taken a step farther, if a strand is 7.5-8.0 mm pearls, it's now composed of material purchased as 8.0-9.0 mm, downsized to 7.5-8.5 mm, of course. This dramatically increases the value over any full size 7.0-8.0 mm strand whether it's composed from real-size materials or downsized.
Conclusion
Every buyer, seller, or valuer must stay abreast of the changes in the cultured pearl industry so he or she can provide the best possible product or service to the customer. Considering the lack of information available in so many parts of the industry, that can be a challenging prospect, especially when secretive producers and suppliers benefit greatly from the confusion.
Cultured freshwater pearls are becoming increasingly popular with fine jewelry suppliers, designers and astute consumers. Aside from keshis, they are the only cultured pearls produced today that are close in composition to the natural pearls of the old days. While Chinese freshwater cultured pearls are by no means the only choice for consumers, they will undoubtedly soon become the first choice. The vast range of sizes, shapes, colors, qualities and prices provide unequalled consumer choice for an affordable gem.
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. When I looked at the tag "made in Japan", "made in China", I finally figured out they call Japanese akoya as akoya and akoya with Chinese origin as "cultured". Besides my obsession with Tahitian pearls, I think FW is exceptionally beautiful. Because they are 100% nacre but cost less than akoya, that makes that even better.
