Chow Tai Fook Jewellery Group Limited (CTF), the world’s largest jeweller by market capitalization, announced on 18 June 2014 to acquire Hearts On Fire (HOF), a renowned diamond jewellery brand from the United States, for a consideration of US$150 million. By the end of November this year, HOF’s products are expected to be introduced firstly to Hong Kong and Shanghai through CTF’s extensive retail network in the models of “shop-in-shop” and “counter-in-shop”.
HOF told Hong Kong Jewellery that they would launch bridal, fashion, and designer jewellery that suit the Chinese market. Its chief marketing officer Caryl Capeci said: “China is experiencing economic growth, rising disposable incomes, continual urbanization and increasing middle class population, which underline strong support to the growth of the bridal and diamond jewellery market. Moreover, we see an upward trend for the markets in the coming years, as supported by the increasing numbers of newly-weds, rising needs for self-rewarding and gift giving for festivities.”
After the acquisition, HOF will be run as a standalone business under the continued leadership of Glenn Rothman, CEO and chairman of HOF and its senior management team. CTF’s managing director Kent Wong expressed that the group would remain focused on its business in Greater China and have no plans to tap overseas markets yet, despite of HOF’s global presence at more than 500 locations in 31 countries.
CTH’s chairman Henry Cheng said in the press release: "The proposed acquisition is a strategic move to complement our product portfolio with an exclusive premium diamond jewellery line and to raise our profile as the world-class diamond expert in the jewellery industry.” Currently, CTF’s products are classified into four categories, namely gem-set jewellery, gold products, platinum/ karat-gold products and watches. According to its 2014 annual report, the sales of gem-set jewellery and gold products were the major sources of revenue, accounting for about 21 percent and 61 percent of revenue respectively. The diamond jewellery line is believed to have strong market potential in the future.
HOF is known around the world with the United States being its largest market. When it comes to Asia, HOF has eight retail stores in Taiwan, gaining a particular good reputation since its establishment in 2004. According to Wong, CTF targets to open 200 HOF shops-in-shops or counters-in-shops in the coming three years, mainly in Hong Kong, Macau, as well as first-tier and second-tier cities in the mainland. Capeci said: “Given CTF’s well-established network in Greater China, leadership in the jewellery industry, multi-marketing channels, as well as the extensive membership base in Hong Kong, Macau and China, we are able to ride on these strengths to grow HOF and reach millions of new customers there.” Wong elaborated that with CTF’s support, HOF could introduce other gem-set jewellery to cater the diversified needs of their customers in the future.
It is reported that the acquisition might affect the partnership between CTF and Forevermark, a famed overseas diamond brand. Wong clarified that both HOF and Forevermark appeal to different customer groups; they would never harm each other. HOF’s diamond jewellery will only supplement CTF’s existing product portfolio, providing more choices for customers and serving as a complement to other existing products. Forevermark’s CEO Stephen Lussier assured Hong Kong Jewellery: “Both CTF and Forevermark are committed to the strong continual expansion of Forevermark across their store network, a task that is far from fully realized today. We will continue to expand our presence across their retail footprints. Besides, overseas diamond brands entering into China would only help raise industry standards and give support to a healthy industry. The real challenges for us and the whole industry are economic and political stability, synthetic diamonds and other competitive luxury products.”
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