By Alexey Tarasov

The Russian jewelry market is experiencing new economic realities that are impacting its players differently depending on the scale of their businesses.

On one hand, the suspension of international brands' activities in Russia has freed up a portion of the market, seemingly allowing for growth and the occupation of niche spaces. On the other hand, the government introduced a new unified tax system in 2022, applicable to players of any scale, imposing a 20% tax rate compared to the previous 6% tax on income or 15% tax on the difference between income and expenses paid by individual entrepreneurs.

When considering the fact that prices of precious materials have risen over the past three years, mandatory labeling of all jewelry has been introduced—a complex and costly procedure—and sanctions have been imposed, the high tax burden may be the last straw for many. According to Uvelir.info, it will affect 14,000 Russian jewelry companies, which account for over 90% of the market participants.

Dry statistics reveal that small independent jewelry brands and individual artisans have been the hardest hit. These are the very artists who deliver high artistic standards and contribute to the evolution of the jewelry art. Shortly before the New Year, their social media accounts warned of the inevitable price increases for their creations.

In August 2022, the jewelry market was stagnant, and in November, together with the Guild of Jewelers of Russia, it predicted a minimum price increase of 20%.

"For 'small' jewelers, the legislative changes have been dramatic. They are of no consequence to large manufacturers, but they have practically suffocated those working in the artistic segment. Many jewelers have simply left the market and pursued other endeavors. Currently, Gokhran is attempting to establish a special status for 'artist-jewelers,' and the results will be presented to the government for consideration. However, the outcome of this formality remains unclear," believes Elena Veselaya, expert and author of the book "Jewelry Art of Russia in the 21st Century."

The situation for the development of the jewelry business is not optimistic, but it cannot be said that Russian brands and labels reduced their activity in 2022. On the contrary, they attempted to expand their informational and physical presence in every possible way.

Major and influential premium brands like Alrosa, Miuz Diamonds, and Mercury, as well as smaller brands such as Parure Atelier, Chamovskikh, and Cluev, presented new collections, worked on design, emphasized the investment value of precious stones, and actively created newsworthy events.

"The departure of Western brands has undoubtedly opened up new opportunities. Now, it is up to us. The taste and level of demands from the Russian audience are very high, and we have to work hard to truly astonish them," believes Yuri Tolmachev, Vice President of the jewelry house Chamovskikh.

This claim is supported by analysts from the jewelry brand Sokolov, the largest in the country with a retail network of 420 stores targeting mass-market consumers.

Two major foreign brands have remained in the Russian market with boutiques in Moscow—French brand Korloff, which operates through the company Richtime, and British retailer De Beers, represented by a Kazakhstani retailer.

In search of new clients, jewelers have actively expanded their presence in the East, especially since selling jewelry to the West has been hindered by embargoes for the past year.

Ilgiz Fazulzyanov, the most renowned Russian artist-jeweler, whose solo exhibition took place at the Moscow Kremlin in 2016, openly stated that his unique collection of 30 rings, "On the Top," was primarily targeted at collectors from the Middle East, particularly in light of the upcoming opening of Ilgiz F. showroom in Abu Dhabi.

Parure Atelier, Chamovskikh, Yana Jewellery, Liza Borzaya, and Epic Jewellery have also set their sights on the East. Parure Atelier is opening boutiques in Kazakhstan and the UAE this spring. Although these regions were already being considered by the brand over a year ago, they now acknowledge that they are following the Russian diaspora to Dubai.

Yana Jewellery, which has been successfully operating its boutique in the Maldives' One & Only Reethi Rah hotel for the past three years, is currently preparing to open two stores (not just jewelry, but also fashion) in Dubai. Since August 2022, Yana Jewellery, along with another Russian brand, Liza Borzaya, has been available in the Middle East through the online platform Theodore & Co., alongside renowned Western jewelry and watch brands.

In addition, from 2019 to 2021, Liza Borzaya participated in the prestigious Couture Show in Las Vegas, which led to international popularity for the brand. However, with the Western market closed off, the brand is now seeking new opportunities elsewhere. In the fall of 2022, the brand participated in the largest jewelry show in Asia, JewelLuxe, in Singapore, and immediately experienced commercial interest in its creations.

The Russian jewelry market is navigating through these new economic conditions, grappling with increased taxes, rising costs, mandatory regulations, and shifting consumer dynamics. While smaller independent jewelers face significant challenges, larger brands are actively adapting their strategies, exploring new markets, and focusing on delivering exceptional quality and design to captivate the discerning Russian audience.

As the industry evolves, it remains to be seen how these factors will continue to shape the Russian jewelry market and its players. The ability to innovate, diversify, and adapt to changing circumstances will be crucial for the long-term success and growth of the industry.

In Moscow, a showroom was also opened in Stoleshnikov Lane, which is expected to eventually expand into a boutique. "Over the past year, Liza Borzaya has attracted new customers who are genuinely surprised to discover the high quality of jewelry in Russia. People here knew so little about domestic brands," says Elizaveta Borzunova, the owner and creative director of the brand. However, the pioneer of Stoleshnikov Lane in Moscow was ultimately the flagship boutique of Alrosa Diamonds.

Another brand, Epic Jewellery, began its expansion into the East with Dubai, opening a representation there and conducting a series of client events in Bahrain, with plans for further expansion. Since 2013, the brand has had an office in Bangkok and a showroom in Hong Kong, and they are set to participate in Art Central, a parallel program of Art Basel 2023 in Hong Kong.

Independent artist-jeweler Igor Uchevatov, one of the few in Russia creating jewelry from innovative titanium, participated for the first time in the Hong Kong International Jewellery Show in 2022 and this year in the Thailand Gems & Jewelry Fair in Bangkok. The prospects for development in the East are apparent for Russian jewelers, although results may not be immediate.

On the Western front, the same path is currently closed. Only the brand Elena Okutova continues to participate in the international exhibition Gem Geneve in Switzerland, thanks to the patronage of Vivien Becker, the chief curator of the Vivarium exposition and a renowned jewelry expert. The exhibition invitation for jewelry innovator Alexey Zubov (Zubov Atelier) from PAD in London was withdrawn in 2022. Epic Jewellery's partnership with a leading European design institution also fell through, although they do not disclose the institution, hoping for a future revival of the project.

The current situation within Russia has compelled independent masters to come together in communities, invent new formats, and collaborate. Parure Atelier has created capsule collections in collaboration with Snezhana Georgieva, the owner of the winery "Zolotaya Balka," and with the Stanislavsky and Nemirovich-Danchenko Moscow Musical Theater, specially designed for the premiere of the ballet "The Nutcracker." The focus on the social and theatrical audience proved to be successful.

Liza Borzaya has formed a partnership with the Russian mining company "Poldnevsky Demantoid," one of the largest suppliers of vivid green garnets (previously purchased by Tiffany & Co., which led to an increase in prices for this precious stone), resulting in a joint jewelry collection called "Demantoid."

Epic Jewellery, the jewelry partner of the Shchusev Architecture Museum, presented a jewelry collection created for the exhibition "Falconry. Architecture of Light." Diana Dzhanelli, the creative director of Dzhanelli Jewellery, designed jewelry for the first solo concert in Moscow by the singer Zivert, and the one-of-a-kind necklace was auctioned off in support of Konstantin Khabensky's charitable foundation. Petr Aksenov has expanded his jewelry brand, Axenoff Jewellery, to include accessories and interior items, transforming it into a lifestyle brand.

A kind of "talent club" was formed a few years ago around the Ilgiz F gallery when Ilgiz Fazulzyanov, as a master, decided to provide a platform for independent talents to exhibit and sell their work. This format continued in 2022, and the community of a dozen masters now organizes intimate exhibitions for potential clients.

Unexpectedly, the company "Expo-Park. Exhibition Projects," a longtime organizer of the "Antique Salon" and "Art Moscow" exhibitions at the Gostiny Dvor, has also come to the aid of Russian jewelers. In 2022, they decided to strengthen their jewelry section called "Jewelry Street," which featured stands from around 30 established names, including Podnebesnaya & Podnebesny, Chamovskikh, Liza Borzaya, Elena Okutova, "Argentov Jewelry House," Maxim Demidov, Mikhail Milyutin, Mousson Atelier, and others.

Changes have also taken place in the realm of specialized exhibitions, or rather, the only two that existed. The All-Russian Exhibition, Congress, and Competition J-1, which served as an alternative to the long-standing conservative and subjective institution Junwex from 2020 to 2022, has been temporarily put on hold. "Exhibitions play an important role in connecting jewelers with end consumers," says Dina Nasyrova, co-owner of J-1 and brand manager of Ilgiz F. "We managed to bring together the best of global experience and create a worthy project, but conducting it in Russia today is financially unsustainable." It is possible that in 2023, J-1 will become part of the Eurasian Economic Union and be held in Bishkek.

The Russian jewelry industry is undergoing significant transformations, driven by economic conditions, shifting consumer preferences, and the need for market adaptation. Independent jewelers are seeking new opportunities, expanding into international markets, and forming collaborations to showcase their craftsmanship and unique designs. While challenges persist, these innovative approaches and community-driven initiatives offer a glimmer of hope for the future of the Russian jewelry market.