Tahitian Price Increase Squeezes Profit Margins

[jshepherd]

Reported from 'Jewellery News Asia'.

12/05/2005
The increase in prices of Tahitian pearls, about 25 percent in Tahiti in 2004 has put pressure on dealers' profit margins, a dealer said.
"Retailers find it difficult to pay the higher prices. This means that dealers have to absorb the price increase partially," said Nicolas Savary, director of Golay in Kobe, Japan.
Mr Savary is concerned that the price increase is not led by demand, Rather by the stronger euro as well as by the reduction in Tahitian production.
Prices of South sea pearls, on the other hand, are stable because "distribution is more organised," he said. He however said that it is difficult to get a whole picture of the South Sea market because production is widespread.
Meanwhile, Mr Savary noted that the shortage in akoya pearls is pushing demand for small-size Tahitian and South Sea pearls measuring 8mm. "They are of high lustre and are in a price range that people are willing to spend these days, from Y250,000 to Y300,000 a strand."

 

[jshepherd]

I found this article especially interesting because last year we decided to take a chance and purchase an entire harvest. We were able to get a low cost per oyster, and the recent harvest was better than expected. This has, in effect, lowered our overall costs by nearly 20%. We finished drilling baroques and drops (we have been able to match approximately 200 strands) which will be selling in the $300-$900 range wholesale, and are currently drilling rounds. What we are finding is that we are now able to use solid A lots for strands in the same price range we were using AB-BC lots in the past. So we can now sell perfect clean, round strands for prices in our AA to AA+ (AB - BC) range from last year, which is approximately a 35% price drop from last years AAA (gem strands - A lots).
I am not sure how long this will last. We are currently in talks for the next harvest as well, and we will only buy on oyster basis again if we can wholesale out the lower lots before the Holiday season.

 

[Caitlin]

Please keep us posted! Are there B quality strands? How would that look in a Tahitian?