Gold rush for jewellery brands in south India

Big jewellery businesses in southern India are signing movie stars to endorse their brands 
Chennai: Tamil movie star Suriya walks around a pristine beach dressed in a casual suit that’s nearly the same colour as the sand, and reminds viewers that “life is beautiful”—especially when it’s filled with jewellery from Malabar Gold and Diamonds.
Suriya is only the latest south Indian film actor to throw his celebrity weight behind a jewellery brand— and by the look of it, he isn’t going to be the last.
The big four in the jewellery business in southern India–Malabar Gold, Kalyan Jewellers, Joy Alukkas and Jos Alukkas–are signing movie stars to endorse their brands in the hope that they will be able to sway their myriad fans to the jewellery stores.
They have increased advertising budgets across media to combat a slump in demand, overcome competition from small retailers and facilitate their expansion to new locations and markets. Whether it’s in print or on television, the brands are working hard to seduce shoppers into ignoring the steep price tags on their gold jewellery and precious stones.
Domestic demand for the yellow metal was hammered down in the first quarter of 2012 by a new tax on jewellery, increases in the import duty for gold and the volatility of the rupee, according to World Gold Council (WGC).
In the second quarter of 2012, jewellery demand saw its steepest decline to 124.8 tonne, down 30% year-on-year from 179.5 tonne, said WGC
Meanwhile, the jewellery category has witnessed a surge in advertising spending in the last three years, said Sriram Sharma, vice president-Bangalore, Starcomm Worldwide. Growth may have been slower at 25% between January and June, compared to 34 % for the same period in 2010, but the spending is growing nonetheless, he said.
At 77%, the bulk of advertising on gold jewellery is in print—advertisers say female shoppers often carry along clippings of jewellery ads to showrooms—but it’s on television that mostly male movie stars of south India are doing the hard sell.
Before signing Suriya, Malabar Gold featured music director Illayaraja and Hindi actor Hema Malini in Tamil Nadu. Tamil actors Madhavan and Vijay endorse Joy Alukkas and Jos Alukkas, respectively.
“Without a celebrity endorsing the brand, it is difficult to create mass appeal and brand recall,” said Varghese Alukka, managing director of Jos Alukkas.
The mascot changes depending on the state being targeted. Malayalam film star Mohanlal endorses the Malabar gold brand in Kerala.
Kalyan Jewellers is endorsed by popular actors from each of the four film industries in the south: Prabhu in Tamil Nadu, Akkineni Nagarjuna in Andhra Pradesh, Shivaraj Kumar in Karnataka and Dilip in Kerala.
Malabar spent Rs.75 crore on advertising last year and expects to spend Rs.100 crore to build up its brand this year, said, Abdul Salam, group executive director of Malabar Gold and Diamond.
Kalyan Jewellers, which has 35 retail showrooms, 15 more outlets in the pipeline and plans to expand in western and northern markets, expects to double its advertising budget to Rs.150 crore this year, said chairperson and managing director T.S. Kalyanaraman.
Kalyan’s push towards northern markets has led to Amitabh Bachchan and Aishwarya Rai Bachchan being added to its list of celebrity endorsers. Bachchan recently joined Prabhu for an elaborately storyboarded television commercial that staged a reunion between Bachchan playing a school teacher and Prabhu, a grateful pupil.
“This is the first time south and north stars have collaborated together for a commercial on this scale,” said V.A. Shrikumar, director of the commercial. He has directed another commercial in which Aishwarya Rai Bachchan takes a dip in a pool of gold.
Each of the television spots has distinctive storylines to distinguish one brand from the next. Product displays are woven into densely plotted scripts that emphasise the values that the brands claims to represent. Vijay talks about a return to roots theme in the Jos Alukkas commercials, while Madhavan hardsells the purity of Joy Alukkas products—he plays a police officer who arrests a bunch of people for selling impure gold in one television spot.
“The idea is to create a pull,” said Anil Sathiraju, associate vice president and head, south, for DDB Mudra Group. Mudra Creative handles the Joy Alukkas account. “The product advertising is different for each brand and they all want to say a different story.”
The jewellery brands were spending close to Rs.300 crore on advertising and brand building initiative across print and television, estimated Sathiraju. “They have increased their spends,” he added. “They cannot survive without advertising”.
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