Graff sparkles with optimism as it eyes Asian markets

Francois Graff, heir to the Graff empire, bubbles with optimism on a February morning in the company's headquarters in London's Mayfair. Fresh from the opening of Graff Diamond's store in Hong Kong, one of six to be opened this year, he presents the company's showpiece for Baselworld - the Fascination - a $40m, 152.96-carat diamond wrist watch. It is the epitome of extravagance.

"We're cutting-edge in our creativity. We're very brave," asserts Mr Graff, who is also chief executive of the company. Contemporary works of art line the walls behind him, collected by his father, and company founder, Laurence - also known as the King of Diamonds.

He dismisses suggestions that producing such pieces might be a commercial risk. "By tempting people, one creates demand," he says. "Last year, Graff Diamonds sold 120 items [costing] between $1m and $10m and sold 7,100 items in total."

This, he says, demonstrates there is plenty of demand for very high value pieces. He will not be drawn, however, on whether there was a buyer for the Hallucination, the $55m diamond watch unveiled at Baselworld last year.

Whatever happens to the Fascination, Graff Diamonds is well within its comfort zone when pushing the boundaries of luxury. Laurence Graff established the business in the 1960s, rising from humble beginnings as an apprentice at Schindler's jewellery workshop in east London. He established his first two stores in 1962 and has expanded the business over several decades, becoming known for creating unusual pieces, such as the $100m Peacock brooch, and also acquiring stones at extortionate prices, such as the Graff Constellation, the world's largest D-colour internally flawless diamond.

Francois Graff, 51, appears to share his father's passion for fine, high-end jewellery and is bullish about the company's prospects. "Last year was extraordinary for us. We saw top-line growth of more than 30 per cent . . . Our trend growth for the past 10 years has been about 20 per cent." Today, the company has more than 46 points of sale across the world.

He puts this growth down to the strength of the brand, the diminishing supply of diamonds and the unprecedented increase in the number of rich people worldwide.

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Moreover, as Mr Graff points out, consumers are gravitating more towards tangible assets. "Does it make sense to invest in financial products where there is no yield . . . with all the risks associated with them? I think people are looking more and more towards real assets. You look at the car market or the fine wine market - they're all exploding with no sign of abatement," he says.

This year will see five further store openings: in Paris, Monte Carlo, Nagoya and Macau and a bigger concession in Harrods, London. It will also see the establishment of four franchises in Oman, Riyadh, Azerbaijan and Cyprus.

Intriguingly, the company saw triple-digit growth in Japan this year, primarily in the bridal jewellery market. "It's a wonderful business, so we're growing that, and we have some plans for the US as well," says Mr Graff.

He is nonchalant about the uncapping of the Swiss franc from the euro which battered the share price of companies such as Richemont. Graff has a smaller operation in Switzerland so it has less material impact. "The cost to produce watches - which are only 7 per cent of our overall sales - is not a big factor in our overall business." What has been more important is the strengthening of the dollar - Graff holds diamond stocks in excess of $1bn at any one time.

In the longer term, Mr Graff has his sights set on Asia. "By 2021, UBS suggests there will be more Asian ultra-high net-worth individuals than Europeans and Americans."

With this in mind, two of the men's watches it will be unveiling at Baselworld are targeting the Asian consumer:

The Grand Date dual time Tourbillon, set in rose gold, and the diamond encrusted Grand Date flying Tourbillon. The latter sparkles majestically and is composed of 236 diamonds, which, despite the edict from the Chinese government to cut back on gift-giving and lavish displays of wealth, has enormous appeal for the male market in Asia.

"It's part of the culture in Asia," says Mr Graff.

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The Fascination: A toned-down dial

Striking a very different tone from the opulent Hallucination watch of last year, the Fascination watch is for diamond purists.

It comprises 150 carats of diamonds in total, with the centre diamond alone being more than 40 carats. As with most of Graff Diamonds' creations, the diamonds themselves are Colour D flawless.

It is a relatively thick set, chunky piece, which makes a bold statement. "We wanted to do something quite different from last year - last year was colourful - it was a fruity design and more vivacious," says Francois Graff.

"This is quite sombre, clean and sharp." Keeping some details for the show itself, there is no visible clock face or dial. It would seem, despite the display of extravagance, that some things have to be left to the imagination.

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