Titan To Senco: Jewellers' Insights On India's Evolving Gold Consumption

India's age-old love affair with gold has taken an interesting turn, as consumers increasingly view the yellow metal not only as a symbol of adornment, but also as an investment option. Recent updates from leading gold retailers highlight this dual purpose, reflecting how preferences are shifting amid fluctuating gold prices.

This evolving gold consumption trend is poised to impact jewellery companies in significant ways. As rising sales of gold bars and coins gain momentum, jewellers face challenges in maintaining topline growth and margins. Unlike jewellery, which generates substantial revenue through making charges, the sale of bars and coins offers limited profitability. Moreover, the ongoing shift in consumer preferences, coupled with the subdued volume growth in studded jewellery, could exert additional pressure on margins in the near term, potentially leading to a decline in overall profitability.

According to Titan's fourth quarter business update, its domestic jewellery operations showcased an impressive growth of approximately 24% year-on-year, largely driven by a significant rise in gold prices. Remarkably, the sale of plain gold jewellery rose by about 27% year-on-year, while gold coin sales surged by a staggering 65% year-on-year. This trend underscores the growing inclination of Indian consumers to invest in gold not just for its aesthetic appeal, but also its value.

Interestingly, Titan had observed a similar pattern in Q3, when gold jewellery sales grew by about 24% YoY, and gold coin sales registered a notable increase of approximately 48% YoY. However, this shift in preferences had a marginal impact on the product mix, with the share of studded jewellery dipping by roughly 1% YoY.

Senco Gold Ltd. also shared robust results for Q4, buoyed by strong wedding season demand. The company reported a 23% YoY growth in retail operations and an 18.4% same-store sales growth. This was achieved despite rising gold prices, leading to Senco Gold’s highest-ever Q4 revenue of over Rs 1,300 crore. Coin and bullion sales contributed to 4% of total sales, further reflecting consumers’ appetite for gold as a prudent investment choice.

As per P N Gadgil's Q3 presentation, India's gold consumption patterns are set to shift notably. The share of bars and coins in total gold sales is projected to rise from 34% in FY23 to 38% by FY28, with jewellery accounting for the remaining portion. This forecast underscores a growing preference for gold as a form of investment, alongside its traditional role in adornment.

This evolving consumer behaviour demonstrates how Indians continue to uphold gold's cultural significance while simultaneously embracing its economic advantages.