Time for Pearl Lemonade

Submitted by Perlemeister

You know the old saying: When life hands you all lemons, go make lemonade. Meaning: turn negatives into positives when and if you can.

So maybe the terrible times in the pearl world we are going through now– horrific stories for producers and dealers abound in great quantity– presents opportunities for others.

As a well-respected overseas dealer pal of mine told me recently on the dire situations abounding in his field: As for the business, it is terrible, and worse to come. Even many large, well-known, traditional international players will NOT survive this typhoon! I am including farmers. We now have a tremendous imbalance of goods in the pipeline. Sales have almost come to a standstill but by the nature of our business, there are tons and tons of pearls still growing out in the waters of Australia, Indonesia, the Philippines and Tahiti as well... and they will all be reaching the auction blocks pretty damn soon... during a time when the market is totally saturated. And most people don't have much financial fat and are eating it away at an alarming rate. We are definitely on collision course, as the industry has never ever experienced it before.

Prices are not really that important any longer. The problem is the lack of demand. December sales were really bad, but this week I spoke to various really big distributors in both the USA and Europe and all of them said that January was "catastrophic" and practically dead. ... and mind you, this is just the beginning. There is little or no chance for demand to increase in the next two to four years (even optimistically speaking)!

All of us no longer talk about sales that are down 20 or 30 or 40 percent. We talk about sales that are now 20 or 30 percent of the previous year. For the first time in my pearling career, I have stopped making "sales comparisons" with previous years. We are more busy adding up the very few sales, figuring out the little gross profit (if any) and putting that against expenses... and in most cases, the figures are far, far away from tallying up. And the larger the company, the bigger the discrepancy.

So, the question for most is how much oxygen do we have in the system... can we make it till the markets pick up again in a few years? As Warren Buffet recently said: "It is only when the tide goes out that you can see who was swimming naked".

The only thing on the increase is misery, unemployment, soup-kitchens, suicides, crime, and fraud. This is a sink or swim time for us all.

On top of this dire note came notification from a friend of mine who is a well-known dealer here in the U.S. He just returned from overseas and reported that he was the only gunslinger in town. I had my pick of the crop, and prices were extraordinarily cheap. So I bought to my heart’s content: the best situation I have ever encountered in my years of purchasing.

He will be exhibiting in Tucson at February’s show, with a better selection of goods at lower prices. Which leads us back to lemonade. Buyers can take advantage of the current situation, as it is a buyer’s market... not necessarily a seller’s market.

It’s lemon season, so make lemonade.