BROOME, Western Australia--Exploring one of the planet's most isolated coastlines from the bunk bed of a working pearl boat, with its smell of marine diesel and dead fish, is not your average luxury cruise.
But as China has cornered much of the global market with mass-produced pearls, traditional pearl farmers from Australia to Indonesia are using ever more inventive sales tactics to stay afloat. They are targeting ultrawealthy buyers for whom a highly customized shopping experience matters almost as much as the price tag.
Prior to boarding a pearling vessel last year, just before seasonal cyclones howled through the turquoise waters off remote northern Australia, Yang Yang, a 41-year-old China-born investor, wasn't even a fan of pearls:
"They seemed a bit old-fashioned," she said.
But she recalls how impressed she was with the raw, insider's view of the work that goes into cultivating them, watching as chapped-handed workers wrestled crates of pearl oysters with shells the size of dinner plates from shark-infested waters. Back on dry land, Ms. Yang bought an $8,000 pearl necklace.
These invitation-only pearl-boat trips, organized by Australia's Paspaley Pearling Co., are designed to educate the world's super-rich--from Chinese billionaires to Saudi sheikhs--about the exclusivity of these cherry-sized South Sea gems that can sell for millions when set in jewelry. They are among the rarest pearls on the planet, according to the Gemological Institute of America--consistently larger, rounder and more valuable than any other.
Australia is the last place in the world where pearls are cultured in wild oysters, using mollusks not from hatcheries but handpicked by divers from the deep ocean floor. Hollywood celebrities including Angelina Jolie, Uma Thurman and Scarlett Johansson have been known to wear them, and in 1992 a strand of 23 Australian South Sea pearls sold for a record $2.3 million at Sotheby's in New York. By comparison, a necklace of 55 Chinese freshwater pearls was recently listed on eBay for $2.79.
At wholesale prices, these Australian South Sea pearls can fetch up to $30,000 each, according to Global Industry Analysts Inc., a U.S.-based research firm. They can reach more than 18 millimeters in diameter, roughly the size of a dime, and regularly sell for about three to four times the price of those from Indonesia, the world's biggest South Sea pearl producer.
The Australian industry has been beset by crisis in recent years--from oyster disease to spiraling production costs--as multinational oil companies began drilling off the coast during a long resources boom, forcing pearl producers to pay more for deckhands and skippers. Where once more than a dozen pearl producers dotted this coastline, today only a handful remain.
They aren't the only ones struggling. On the Indonesian island of Lombok, a once-flourishing market of small, mostly family-run businesses operating out of thatched-roof huts has contracted about sixfold since 2009, according to The Autore Group, which owns six South Sea pearl farms in Indonesia and one in Australia.
High-end pearls have become an increasingly tough sell. The U.S. was once one of the biggest markets, but the financial crisis ravaged demand for luxury jewelry--and it has yet to fully recover. Meanwhile, China has diluted the exclusivity of pearls by swamping retail outlets from Wal-Mart Inc. to airport boutiques with masses of cheap pearls.
Chinese freshwater pearls are often cultivated in flooded rice paddies and fertilized with animal waste. They are smaller, irregularly shaped and commonly require chemical bleaching to give them a pure white gloss. They're also cheaper to produce because a single freshwater mussel can yield as many as 50 pearls, whereas a South Sea oyster grows just one.
In recent years, though, Chinese producers have worked to improve farming techniques. They can now produce shiny, round, freshwater pearls that measure between 15 and 17 millimeters across, rivaling the quality of midrange South Sea ones.
"China is producing freshwater pearls by the millions and they keep getting better and better at it," said Russell Shor, a senior industry analyst at the Gemological Institute of America.
Another challenge for the pearl industry is an image problem: Many younger people consider them old-fashioned.
"Pearls are on the bucket list for people over 60 years old," said Jeffrey Badler, who owns Maurice Badler on New York's Park Avenue. He said he has sold more pearls this year than last, but none to younger clients.
Paspaley, the world's dominant South Sea pearl producer by export value, last year made 28-year-old British model and actress Clara Paget the sun-kissed face of a major ad campaign targeting younger consumers. Paspaley woos V.I.P. guests with pearl-grading sessions hosted by a master jeweler and "discovery tours" complete with champagne and pearl-meat canapés.
"There's rarity attached to the value of a pearl," said Rosario Autore, chief executive at The Autore Group in Sydney. "Rarity is what people are willing to pay for."
James Brown, a third-generation pearl farmer who runs Cygnet Bay Pearls, a small Australian producer, recently began to bypass wholesalers and target wealthy jewelry buyers directly.
Inspired by tasting rooms at wineries, Mr. Brown has transformed the family pearl farm into a hands-on experience. Vacationers are offered educational boat rides through the fierce ocean currents that swirl above the pearl oyster banks.
"In the past, it was all about volume. That model has failed," said Mr. Brown.
But, the market for luxury pearls may be improving. Wholesalers in New York and Kobe, Japan, say American buyers are returning as the U.S. economy continues to improve, while Asia's rising middle class is emerging as a new clientele.
Recent pearl auctions in Hong Kong yielded the best sales results for Paspaley in years. Atlas Pearls and Perfumes Ltd., which farms South Sea pearls in Indonesia, also reported record sales at a Kobe auction in April.
"The bigger the Chinese supply, the more people want rare [pearls]," said Mr. Badler, the New York retailer. "People who can afford the better ones will always want those."
Write to Vera Sprothen at email@example.com
(END) Dow Jones Newswires
November 12, 2016 01:25 ET (06:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.