Indian Gold Book:Indian Gold Book - Gold Bars Worldwide

GOLD JEWELLERY CONSUMERS
SOCIAL CLASSES
Middle class
Retailers everywhere refer to the impact of economic growth on jewellery consumption during the 1990s.
The National Council of Applied Economic Research (NCAER) estimates that, over the past 7 years, the number of
households of the high, upper middle and middle class has increased by 66%, from 30 million to 49 million, approximately
20% of the 181 million households.
It expects this group to increase over the next 5 years by a further 85% to 91 million households.
Although the NCAER’s income classification by class by Western standards is extremely low (and lower than that estimated
by large retailers), it illustrates the growth in the size of the middle class.
Most large retailers view the emerging “middle class” in both urban and rural areas as their primary target for jewellery sales.
Lower middle class
Retailers observe that “everyone will try to own some gold”.
According to the NCAER classification, the lower middle class accounts for 72 million (40%) of the 181 million households.
55 million households (76% of the lower middle class) are in rural areas. Although their capacity to buy gold each year is
limited, retailers stress that they have a strong commitment to owning and giving gold when they can afford to do so.
Low class
The capacity of the low class to buy gold is reported in most States to be extremely limited.
According to the NCAER, the low class accounts for 59 million (33%) of the 181 million households.
53 million low class households (89% of all low class households) are in the rural areas. Almost all fall below the poverty
line.
Importance of each class to the jewellery market
Trying to obtain a sense of the importance of annual purchases by class is difficult as the NCAER classification does not match
the perception of most retailers.
For many large retailers, for example, the “middle class” category would start at family income levels of Rs 15,000 (US$ 300)
per month. This would put almost all the upper middle and middle class into the “high” class by NCAER standards (although
NCAER does not take into account the impact of the underground economy).
Anecdotal evidence suggests tentatively at this time the following:
Nationally, around 40% (72 million households) have a limited capacity to buy much jewellery each year, unless supported
by a family NRI.
The top 5% (9 million households) may well account for more than 15%, but their commitment to buying extremely large
quantities, compared to the past, is eroding, particularly in urban areas.
The market appears to rely on around 60% (109 million households) for the bulk of annual purchases.
The national breakdown would not apply to individual States, such as the wealthier States in the south and Punjab in the
north.
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“Wearable” gold jewellery – lighter in weight and stylish – is widely regarded as an
important new market segment.
AN INTRODUCTION TO THE INDIAN GOLD MARKET