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ROCKS ON THE BLOCK
Important weddings are scheduled to take place soon in Saudi Arabia. The elite set of Hong Kong, Taiwan, Singapore, and the rest of Southeast Asia is suddenly getting richer--and bigger. China's rags-to-riches capitalists are diversifying their assets. The Sultan of Brunei, the wealthiest person in the world, is involved, of course. It's the holiday season in the West, and wealthy Americans and Europeans are feeling flush.
Add together all these goings-on among the monied classes, and it makes for a huge surge in demand for important, big-ticket gems and jewelry--the stunners that cost hundreds of thousands, even millions of dollars. "People are throwing around money like it's pocket change," says New York diamond dealer Saul Goldberg.
Surprisingly, a lot of that cash is landing at Sotheby's and Christie's, best known as art auctioneers. During 1993, the two companies sold a record $365.3 million worth of gems and jewelry--up 40% (chart). Jewelry far surpassed the auctioneers' sales of Old Masters, contemporary art, and every other line of business except Impressionist and Modern paintings.
CERTAIN MYSTIQUE. High-end jewelry auctions have been strong virtually everywhere, but especially in Geneva. During one mid-November week, buyers--largely Arabs and Asians--competed mightily for the lots on offer there. A 100.36-carat flawless diamond fetched $11.88 million at Sotheby's, and the 78.54-carat "Archduke Joseph" diamond ring brought $6.46 million at Christie's. "In the world of gems, there's no hotter place to be than Geneva for the late fall," says Henry Barguirdjian, president of Van Cleef & Arpels Inc., the U.S. branch of the Parisian jeweler. He credits the auctioneers with creating a mystique about buying jewels at auction.
These spectacular auction successes are rearranging the top-of-the-line jewelry business. More private buyers are heading directly to the auction rooms to buy baubles, not to Harry Winston Inc., Tiffany & Co., or other posh jewelers. "Of course, this impacts our business," says Barguirdjian, who was hired last summer to beef up Van Cleef's marketing efforts. Jewelers are getting hit by the new competition just as sales are rebounding after several tough years.
At the other end of the chain, gem-cutters and manufacturers are bypassing the retailers, too, putting their biggest and best pieces directly on the auction block. The practice, while not unheard of in the past, is much more common now. "The advantage you have is that the auctioneers cover the entire world, and your diamond gets greater exposure," says Louis Glick, a 50-year veteran of the diamond business.
Neither auctioneer will say just how much jewelry is coming directly from the trade, but they confirm that it's "a lot." The cutters and manufacturers have warmed to the idea because they're getting paid faster. In the past, retail jewelers usually bought gems outright. But the recessionary climate forced many of them to procure stones on consignment. As a result, the dealer or manufacturer didn't get paid in full until the piece was sold. And that can take even longer than the three to four months dealers usually wait between agreeing to put a stone up at auction and getting paid within 30 days of the sale. The only auction risk: If a piece doesn't sell, everyone knows.
SERVICE, TOO. The auctioneers need the boost they're getting from jewelry: Although art sales are starting to rise again after three years of decline, it will be a while before painting prices return to their 1989-90 peaks (page 132). And their clients are proving susceptible to cross-marketing. "We want [art collectors] to buy jewelry at auction, and they don't traditionally think of us for that," says Diana D. Brooks, chief executive of Sotheby's worldwide auction business. In the future, there might be a reverse flow, too: "Asian wealth will go into jewelry before it goes into Western art," declares John D. Block, Sotheby's jewelry expert.
No wonder the auction houses are leaving few stones unturned to develop the jewelry business. To broaden the market, they're taking jewels on around-the-world tours and throwing parties for prospective clients. They're building sales around famous design houses, such as Cartier and Bulgari, and inaugurating sales in new locations. Christie's, for example, held a small sale in Taiwan in October. And Sotheby's is stressing services: It now cleans jewels, restrings pearls, and makes storage boxes for the pieces. All these efforts parallel what the auctioneers did over the past decade to lure art collectors into the auction rooms.
Obviously, it's working again. The question now is, how long will it last?Judith H. Dobrzynski, with Emily T. Smith, in New York