Welsh jeweller is 'running out of gold'
Clogau Gold is a roaring success, but it has one big problem; it can't reopen its mine.
Sunday 14 June 2009
If the popularity of the celebrities endorsing your product is indicative of success, then Clogau Gold, the North Wales-based jeweller, is in rude health. Pop star of the moment Duffy and the bass-baritone Bryn Terfel, who recently wowed audiences at Covent Garden in
The Flying Dutchman, are both advocates of Clogau's wares. Terfel apparently won't perform in an opera without donning his £350 daffodil brooch.
"The perception of cool Cymru changed more last year than ever with the likes of Gavin and Stacey and Bryn Terfel," says Ben Roberts, the managing director at Clogau. "Five years ago, I didn't even know who Bryn Terfel was, and now he is in every paper or magazine you read."
The group is also producing the official jewellery for next year's Ryder Cup golf tournament, which will feature Tiger Woods, and it has links with the Welsh Grand Slam-winning rugby team of 2008. Sales at the group are also going extremely well, while the surging gold price has boosted the bottom line.
But Clogau has a problem. A big problem.
"We have developed a great infrastructure at Clogau. We're one of the few companies in this industry that's performing well," says Roberts. "But we are running out of gold. At the moment, we don't really know what the next course of action will be."
Roberts, who took over the reins of the company from his father 10 years ago, is looking to reopen the mine that has supplied the ore for the best-selling Tree of Life ring and others in the Clogau range.
After selling his frozen-foods business to Iceland, the high-street group, Roberts senior wanted to turn the mine into a gold museum, but, because of local natural beauty restrictions, was forced to shelve these plans. Clogau Gold jewellery was born.
"Opening the mine is certainly one option, but we need assistance, not money, from the Welsh Assembly, and it seems that our requests, so far, have fallen on deaf ears," says Roberts. "Every time there is a spike in the gold price above a certain level then all the big players will dig out all the possible applications for all the mines in the world and just apply. But these big miners are only putting the applications in to stop anyone else going in. They are blocking the pipeline."
The blockage could see Clogau fold in less than six years' time unless a route to the mine can be found, says Roberts. "Once we get to reopen the mine, finding gold isn't guaranteed as you'd imagine. When we originally took it over it was already declared exhausted," he says. "The reason we closed it was because it was becoming prohibitively expensive to mine at the time. But things have changed for us. If you were just doing it as a mining project then it probably wouldn't be profitable. But, given the unique selling point it gives us, then you can understand how you were doing it."
The alternative for Clogau is instigating a dramatic hike in the price of its products – a dangerous move in these frugal times. "We've tested the price elasticity of our products by increasing some of our prices by 25 per cent earlier in the year, and, in all honesty, it hasn't had a big effect," says Roberts. "The fact that our products are essentially recession-proof is immensely reassuring."
Clogau is currently running down a stockpile of gold mined from the North Walian seam in years past. It is then sending the gold to China where it's combined with ore from places such as South Africa, making the jewellery that is sold around the country. Moving production to China has been something of a mixed blessing though, as inflation in the People's Republic has soared in recent times, thereby adding to Clogau's costs.
Roberts, a former car salesman for the one-time Formula One Grand Prix driver Derek Warwick, is trying hard not to let the future cloud the present too much. He has presided over a radical restructuring of the business, which has grown from its humble roots – selling through a single craft shop in the sleepy Welsh village of Betws-y-Coed – to a company that does business as far away as Asia.
"We sell in Australia and America," says Roberts. "We also sell in Hong Kong, which could act as a springboard to wider distribution in the Far East."
Clogau also sells on British Airways flights and recently struck deals to sell through in-flight magazines for Air Canada and SriLankan Airlines, as well as through more orthodox channels such as high-street jewellers H Samuel and F Hinds.
But perhaps Clogau is best known for sales on the satellite and cable shopping channel QVC, where it is the biggest-selling gold brand.
"We've had a relationship with them for around 10 years," says Roberts. "At first they said we'll never sell a £99 product. But we've just done a limited-edition pendant, which sold out within a day, and that retailed at £400. It's amazing how things have changed with QVC. They are now saying that ... they want higher-priced product. To see that it's gone full circle is great."
Key to the relationship with QVC has been radical change within Clogau, which has seen the scrapping of what Roberts describes as "twee jewellery such as Welsh hat charms and leek brooches".
"We want to encourage people to collect from a younger age and a key part of achieving that is renewing the range," says Roberts. "In the past, our data told us that our average buyer was an ABC1 female, over 45, who went to the pub drinking real ale and read Saga magazine. By getting people to collect younger – which has also been seen with the likes of Links of London, for example – we can get people to buy six or seven pieces of jewellery through their lifetimes."
Selling to a much younger audience means a much larger proportion of sales now come online. Roberts says the firm set itself the target of increasing sales on the web over Christmas by 80 per cent. Instead, online revenue jumped by 300 per cent.
"We've spent the best part of £200,000 developing our systems, which is a lot for a company the size of ours," says Roberts. "But now everything is automated it has afforded us so much more flexibility to develop the products and grow."
But that growth is rather shrouded in uncertainty at present.
"We've grown a strong brand and it would be such a waste to see it disappear because we can't get access to the mine," says Roberts, who rules out selling silver-only products. "There's another company selling Welsh gold but we have no idea where they've got it from and we certainly don't want to go down the route of plating our products. Clogau gold has been used in the wedding bands of the royal family for generations. It's important to us and the area."
He asks: "Will Clogau cease? I just don't know at the moment. The Welsh Assembly must be busily running around the country propping up failing businesses at the moment. We've been growing by an average of 25 per cent a year. Where's the help for us?"
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