South African jewellery exporter makes plans should AGOA falter
Luxury jewellery brand Pichulik is one of the thriving local companies at risk of losing preferential US market space if South Africa is excluded from the African Growth & Opportunity Act (AGOA) arrangement.
Billions of rand in trade with the US flows in South Africa’s direction under AGOA; it gives certain companies tariff-free access to the US market, and constitutes about 30% of total sales.
But because of this country’s [alleged] support for Russia in its invasion of Ukraine, it is in danger of losing these benefits. The Agoa arrangement is up for consideration again in 2025.
Tracey Chiappini-Young, joint CEO and commercial director of Pichulik, is already considering alternative markets in case Agoa goes or the US sanctions South African companies.
The potential setbacks come at the time when the business has doubled in size since before Covid. It was selected by media company Condé Nast as a brand partner for the opening of a new Atlantis Royal hotel in Dubai, when 2,500 of Pichulik’s signature “Between Us” Joy bracelets were bought for guests.
“To deliver that in a four-week turnaround was testament to effective supply chain management,” Chiappini-Young says.
The business was also a retail brand partner with LVMH for its Starboard cruises, and it’s been named by the fashion organisation Institut Français de la Mode in Paris one of the top emerging African design brands.
The company was started a decade ago by Katherine-Mary Pichulik, who is creative director and joint CEO. She and Chiappini-Young own the business and have restructured operations to ease supply and demand shocks and accelerate growth.
Part of that is a disciplined approach. Payment is upfront, in cash. The company does not accept 60-day post-delivery payment, even if it means turning away business, Pichulik says. In most cases, she says, customers have agreed to this.
“We’re a small South African boutique business. We’re not pretending to have the balance sheet and resources to play in a space we can’t operate in. The customers who want to work with the company respect that,” she says.
International retail partners now include the Brooklyn Museum in the US, the Royal Academy of Arts in the UK, the Tollman Group and LVMH. In Africa the company sells through lodge operator Singita and luxury safari company &Beyond.
When actress Jennifer Lopez was seen wearing the company’s Lua earrings it led to increased online sales in the US, says Pichulik. At home the firm will open a new V&A Waterfront store in August, and it recently launched its first “signature scent”, Obsidian.
When the pandemic hit, the company lost 90% of its revenue and had to make quick decisions that would normally have taken much longer. The business, which employs 22 people, did not retrench but began to focus on its online presence. Today half its sales are to overseas buyers. It has also been ruthless with stock management, culling merchandise lines from 250 to 80 and investing in only its top 30 products.
“We’ve significantly improved gross margins, cash flow generation and profitability,” says Chiappini-Young. “We survived, and then thrived.”
She says that with a small business that has no large balance sheet to support it, “you relentlessly sweat your asset base all the time”.
“It almost took going out of business to refine that thinking; it’s been remarkable to see.”
The business doubled annual revenues last year, and is looking at growing by 50% this year. Gross profit margins have also improved significantly. The company operates an online store and has a dedicated atelier just off Bree Street. It waited 18 months for its opening at the V&A Waterfront to get the right position and terms.
The business sells to Europe, but the US became its main market because it was tariff-free under Agoa. “In Europe each country has a different duty structure. It’s difficult to navigate. Our position may change [if South Africa loses Agoa preferences] and we’re looking at it; we need to have our ducks in a row.”
The company is set to launch at New York Fashion Week in September. “We’re watching this closely. We’ve still got fantastic demand coming from [the US],” says Chiappini-Young. “Our plan at this point is to go ahead. If we find that things get messy, we’ll have to redirect to Paris, which is very strong for us but more difficult to navigate.
“There’s such an extraordinary level of innovation and a lot of success stories coming out of South Africa.”
But as any business owner will remind you, a product or brand is nothing without a market.
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