Gary Tarna experienced quite the sticker shock during a recent online auction of white South Sea pearls; prices were 40% higher than two years prior.
The owner of Hanadama, a wholesaler of top-quality South Sea pearls, is trying to restock inventory but like many pearl dealers now, he realizes the exercise won’t be an inexpensive one.
“We sold out of just about everything last year,” he says of record-breaking pearl sales that started in the fourth quarter of 2020 and continue today. The lack of travel during Covid-19 lockdowns gave rise to a voracious consumer appetite for luxury goods, including fine pearl jewelry.
Tarna has plenty of company in today’s pricy wholesale pearl market. U.S. pearl dealers are facing massive price increases stemming from pandemic problems. Think border closures and quarantine restrictions, which paved the way for transportation headaches for farm employees trying to reach remote places in Australia, Indonesia, and the Philippines. In French Polynesia, Chinese grafters—which represent 80% of the workforce—went home for New Year’s celebrations in December 2020 and to this day have not returned. Overall, fewer South Sea pearl oysters were seeded in 2020 and 2021, meaning the industry is seeing the shortages now.
In Japan, oyster mortality issues are dealing additional blows; by some estimates, Japanese akoya production is down 50% this year. And at many Chinese freshwater pearl farms, labor shortages have led to fewer harvests. The culmination of all these challenges? Fewer pearls and increasing prices.
The pearl-hungry Chinese market, America’s biggest competitor for fine pearls, doesn’t help. Chinese consumers snap up the bulk of available pearls first, and often for higher prices—something that Sonny Sethi of TARA Pearls has taken advantage of.
“I’ve been shipping some of my South Sea goods to Japan and Hong Kong to sell at their higher prices.”
“Overall, pearl prices are up 30% at a minimum,” explains Anil Maloo of Baggins, who sells all varieties but specializes in baby akoyas. “The best-quality pearls are the hardest to find and are going for much higher prices driven by the Chinese buying at auctions.”
Auctions & Influencers
A global shortage of pearls paired with high demand is enough to cause prices to spike, but now the online auctions that have risen from the ashes of the once-robust Hong Kong–based trade fairs are another factor. When white and golden South Sea farmers initially debuted online auctions, most dealers disregarded them; who could accurately inspect pearls through photos and videos? But as the pandemic raged on and two-week quarantine periods in Hong Kong discouraged dealers from visiting, online auctions became more significant—not just for wholesalers but for a growing group of entrepreneurial China–based social media influencers.
Chinese influencers catering to Internet shoppers started bulk buying from farmers, drilling pearls, and setting them into finished pieces. With massive consumer followings, influencers were known for selling hundreds of thousands of dollars’ worth of products in minutes, so they tapped into their own captive audiences. And because the Chinese population is so much bigger than the U.S. population, influencers buy across all price points knowing they’ll likely have a buyer for every acquisition.
“[These influencers] are just eliminating retail stores in China,” observes Eric Yen of Yen’s Pearls. “Farmers are saying, what’s the point of exporting them when we have buyers right in our own market?”
And because the sell-through at these auctions is upwards of 100%, prices continue to rise. Auctions used to take place only a few times a year, but they are so profitable that farmers are having them more frequently, nearly every two months. To adequately stock these events, oysters are pulled out of the water sooner, creating a shortage of bigger sizes over 15 mm.
“The pearls are ready to sell, but if left in the water they could get bigger,” observes Tarna. “Now the bigger the pearl you want, the less the availability.”
White akoya pearls are the classic look most Americans know, and thanks to faux lookalikes on fashion runways and real strands on male pop stars and baseball players, they have become even more desirable. Japanese oyster mortality shortages combined with increased demand and a pre-Covid-19 exercise of some farmers tightening up akoya supply have driven up prices this year by as much as 50%. Akoya pearls grown in Vietnam are also seeing high demand.
Akoya pearl jewelry sales have increased consistently for Peggy Grosz of Assael for the past three years. The akoya’s pop culture popularity and Assael’s jewelry programs in stores like Neiman Marcus are fueling her business’s demand. Jonathan Louttit of Imperial Pearl is also seeing akoya pearl jewelry sales mushroom; he’s seen increases of 100% per year for the past three consecutive years.
“Farmers are telling us demand outstrips supply, and that they aren’t bringing in the numbers they used to,” he explains.
Vincent Peach, known for his pearl and leather jewelry, recalls a time when he couldn’t give away an akoya strand. “I couldn’t put a strand on anyone in the last 10 years, and now everyone wants one,” he says.
By size, the akoya pearl problem is even more noticeable. Both larger sizes over 9.5 mm and under 6 mm in top qualities are hard to find. “Nobody wants to make 6 mm sizes anymore,” observes Joshua Israileff of ASBA USA, a saltwater pearl seller.
Even some purveyors of middle-range sizes—7 mm to 7.5 mm—see a dearth of pearls. “The demand is there,” says Fran Mastoloni of his family’s Mastoloni Pearls. “If I can get them, I can sell them.”
And the top, top-quality goods are even tougher—and pricier—to obtain. “I can’t get anything with a certificate,” says Yen. Dealers say Tennyo and hamage strands are 30%–50% more, depending on size.
But compared to diamonds, “akoya pearl prices are still affordable,” notes Maloo, who’s facing the sting of higher diamond costs in a new line of riviere necklaces.
Untouchable South Seas
Chinese demand for fine white South Sea pearls has driven up prices to sums that U.S. dealers have never seen. Buyers say increases in wholesale prices are as high as 100%
“White South Seas are almost untouchable,” says Mastoloni. “There’s so much pressure from the Chinese, who are buying them sight unseen.”
Finding clean—and large—material is another challenge. “I’ve not seen much in over 12 mm, and the top quality goes to China,” notes Aziz Basalely of Eliko Pearl. Sethi agrees and marvels at the feeding frenzy happening now.
“White South Seas are selling like there’s no tomorrow,” he says. “The Chinese are buying virtually everything by looking at auction pictures. They’re just unstoppable! All the producers of South Seas in Australia and the traders in Hong Kong are sitting on seventh heaven right now.”
Eddie Livi of DSL Pearl may be the lone contrarian in the sourcing arena. “I’m not having trouble sourcing the pearls, just paying for them,” he sighs.
The upside of this challenging market is the retail sales, of which Assael has had some memorable ones. During the 2021 holiday season, the brand sold four top-quality white South Sea pearl strands ranging in retail price from $550,000 to a whopping $1.55 million. While the sales were obviously a reason to celebrate, replacing them will be Grosz’s challenge.
“It was unusual to sell so many at one time, but the high-end market as a whole is just on fire right now,” she says. “People can’t even believe what they’re selling.”
Golden South Sea pearls—while always costly because they are the rarest to find in nature—are experiencing their own price hikes. Still, they’re not as high as the cost of whites. That’s a good thing for Israileff since goldens are extra popular this year among his shoppers.
“The prices are always high, but we’ve had no problems sourcing,” he says.
Basalely agrees. “They’re not cheap, but they’re available.”
For Sethi, the challenge is getting large sizes. “It’s hard to get 14–16 mm—but it’s not as hard as getting white South Seas,” he says.
Tahitians in Short Supply
A perfect storm of pandemic-driven problems in French Polynesia created the current shortage of Tahitian pearls. The absence of skilled grafters, countrywide lockdowns—and the economic hardships they caused many small farmers, some of whom went out of business—and the introduction of new unskilled local grafters leaves the black pearl industry and its fans with prices up to 100% higher. Also problematic: finding those 12 mm and up sizes.
“There’s just nothing over 15 mm,” reveals Imperial’s Louttit.
“Better quality simply may not exist,” ponders Mastoloni, who is currently only able to service accounts that buy mid-range qualities.
Also don’t expect to (easily) find green or peacock-color pearls. Eunice Kwan of Eunice Pearls couldn’t believe how much these Tahitians were selling for in the fourth quarter of 2021. “Prices were crazy—13 mm and up sizes were more than double!” she says.
“We’re paying more than ever on nice-quality multicolor rounds,” reveals Israileff.
Smaller importers, too, are feeling the pinch. Fred Sagues of Black Market Pearls is originally from French Polynesia but now lives stateside, taking several trips home annually to shop. He buys about 15,000 pearls a year directly from farmers that survived the pandemic. At the height of Covid-19, the country was locked down, making overseas shipping to customers limited and sales abroad nonexistent for a spell.
In a recent harvest, Sagues bought semi-baroque and circle pearls and saw his price per pearl skyrocket 43%. Still, he’s not complaining.
“When you pay more, you are guaranteed to get the pearls,” he reasons. “And since the fall of 2020, I’ve never done so well with sales.”
Like saltwater friends, fine Chinese freshwater pearls are more difficult and costlier to source this year. Dealers say prices are up in excess of 100%, depending on the size and type (bead-nucleated pearls cost more). As with the saltwater categories, large sizes over 12 mm and smaller ones—under 6 mm—are harder to find and cost more.
“Prices for freshwaters under 5 mm have more than doubled,” observes Joe Pan of JP Pearl & Jewelry. “There’s a low supply and the work is labor intensive.”
Basalely is frustrated with the lack of sizes over 9 mm. “They’re just nonexistent—the farmers took the mollusks out of the water early because of the pandemic, so the pearls are smaller.”
And while Louttit mourns the lack of 12–16 mm sizes, he really misses sourcing the funky-shaped freshwaters—think petals, coins, and baroques—at live trade fairs in Asia. “Without the trade shows, we just can’t see them,” he says.
For sure, retailers should expect price increases. Based on sales in Asia, auction prices, and demand, many dealers have already raised prices this year—some more than once.
To date, Louttit has repriced everything in Imperial’s akoya inventory. Sethi increased his pearl prices based on what he’s paying for goods from Japan and Hong Kong. And Baggins’s Maloo has increased prices twice in the past year. “Costs are up, but we’re still getting orders,” he says.
The strength of the dollar in the last few months has helped cushion some of the rising costs, but U.S. inflation is poised to chisel away at any small gains.
Still, higher prices and hard-to-get inventory don’t discourage Mastoloni. His company will be exhibiting at JCK Las Vegas, June 10–13. Like prices, his appointment book is seeing a boost. “We have 20% more appointments booked than we’ve ever had. So many stores have run through their pearl inventory. Everybody needs to restock.”
“We sold out of just about everything last year.” Gary Tarna, Hanadama
“Farmers are telling us demand outstrips supply, and that they aren’t bringing in the numbers they used to.” Jonathan Louttit, Imperial Pearl
“White South Seas are almost untouchable. There’s so much pressure from the Chinese, who are buying them sight unseen.” Fran Mastoloni, Mastoloni Pearls
“When you pay more, you are guaranteed to get the pearls.” Fred Sagues, Black Market Pearls
“Prices for freshwaters under 5 mm have more than doubled. There’s a low supply and the work is labor intensive.” Joe Pan of JP Pearl & Jewelry
New Pearls for Las Vegas
Despite sourcing issues, dealers exhibiting at the Las Vegas trade shows will have new pearls to sell. Here’s a peek at some of the newness you can expect to see. See show dates and select booth numbers on page TK.
Reimagined classics, including single drop pearl pendants
Additions to the Bubbles and Colors collections and Tahitians at $25,000 retail and up
Multicolor ombré strands, additions to the baby akoya collection, and new jewelry with mixes of saltwater pearls
Nice quality 6–10 mm akoyas, multicolor Tahitians, and good-quality South Sea strands
Mixed strands of South Sea pearls and pearl and diamond jewelry
Color-graduated strands and akoya pearls
Ropes of pearls and fine loose 11–16 mm South Seas
New akoya pearl jewelry
JP Pearl & Jewelry
Colorful Edison freshwater pearls and akoya pearl strands
Purple freshwater pearls and strands of natural-color blue akoya pearls
Top-quality akoya pearls and a new jewelry collection with fancy-shape diamonds starting at $10,000 retail
Strands of 3 mm bead-nucleated Edison freshwater pearls