Category Archives: News

A Case Study in the Marketing of Natural vs Synthetic Diamonds

There are continuous discussions about the impact of synthetic diamonds on the diamond trade. The issues largely centre around disclosure, due to the difficulty of identifying synthetic diamonds without the proper tools. The potential damage to the reputation of the trade should stones be passed off as natural by unsuspecting retailers, when in fact they are synthetic, would be considerable.

The point of this blog post however is to look at a different issue. A recent story has been circulating (click here to read via JCK Online) where a young man proposed at an American football game with a 2.62 synthetic diamond. It was his statement which makes us sit up and listen. I don’t for one moment think this was a random gesture, it’s clearly a marketing stunt. However the substance tells us a “shot was fired across our bow”. His statement to his bride and for all of the NFL to hear was:

“This diamond had zero impact on the environment and did not contribute to human rights violations and sporadic violence associated with mining in undeveloped countries where diamonds are found—and it cost a lot less.”

We don’t have to agree or disagree; it is an opinion, and a very solid selling point if used effectively, which in this forum it surely was. The point I want to raise is that the synthetic diamond manufacturers can develop a very powerful marketing strategy on these lines to carve out a significant piece of the pie of the natural diamond segment.

I am attending the WORLD DIAMOND CONFERENCE in India next week to discuss many of the issues which we are facing in our trade around issues of marketing, consumer awareness, and what we in the natural diamond segment intend to do to market natural diamonds as the ultimate form of luxury goods. It is our response to the above scenario which will largely determine how the future of natural diamonds positions itself against synthetic diamonds.

Rami Baron
DDCA President

DDCA at the JAA International Jewellery Fair

 

Credibility comes before profitability

The JAA International Jewellery Fair saw tremendous interest in the newly designed website of the Diamond Dealers club of Australia and its new features, with our team fielding many enquiries and signing up new potential members.

GIA Synthetic Diamond Testing Machine
GIA Synthetic Diamond Testing Machine

We announced the arrival of the synthetic diamond testing machine, generously donated to Australia by the GIA. It will be operational in October 2014 and free to use for all DDCA members. The aim of having such a machine is to safeguard the trade and consumers from synthetics being passed off as naturals. To insure maximum benefit to the whole industry we received special permission from the GIA to install the machine at the premises of GSL under the care and operation of Bil Sechos, the pre-eminent lecturer on diamond technology in Australia. Many valuers and gemmologists thanked us, as did members of the JAA for enabling the whole trade to benefit from such a machine. Currently in Australia it can take months to have a stone tested, but this new device will give results in minutes.

Many visitors expressed great interest in the new DDCA diamond trading portal, which allows wholesalers and retailers to make connections, trade, and rate each other after doing business. Our goal is to improve and stimulate trading amongst members of the diamond jewellery industry in Australia and increase the exposure of credible players in the market.

Critically, the trading portal is only available to Australian Diamond Dealers – it’s about the goods in-country and looking to level the playing field. The large merchants who send travellers with goods to sell do not have the overheads that we have in Australia, and can often work on very low margins. Admittedly they rarely provide goods on consignment – our goal is to help both the local merchant and retailer in-country in any and every way we can to succeed in these challenging times.

rami at show
DDCA president Rami Baron at the tradeshow booth
tamara gabay the new general manager of the ddca
Tamara Gabay, new General Manager of the DDCA

Alrosa world’s largest diamond producer by volume – World Federation

JOHANNESBURG (miningweekly.com) – While De Beers remains the world’s largest producer of diamonds by value, Russian diamond mining company Alrosa is now the world’s biggest producer by volume, which elevates its importance significantly.

Current economic sanctions against Russia do not extend to diamonds and although there are reports of broader and deeper sanctions being considered, the sanctioning of diamond supply from Russia is not on any current agenda.

“At this stage, nothing is happening to stop diamonds coming out of Russia and let’s hope the situation does not escalate where additional sanctions are imposed.

“It would be an absolute loss to the industry if Russia were not allowed to sell its goods freely,” Ernie Blom, who is serving his third term as president of the World Federation of Diamond Bourses, comments to Mining Weekly Online in the attached video interview.

The US government’s sanctions against Zimbabwe continue to inhibit dollar-based diamond sales from that country, but with European Union sanctions against Zimbabwe lifted, Belgium is now aggressively trying to reverse its loss of market share from the Zimbabwean sanctions, by holding quite a few rough Zimbabwean diamond tenders in Antwerp.

“They’ve seen the need and they’re starting to address it,” says Blom.

The 25 000-member world federation that Blom heads has 30 exchanges in 28 countries and 95% of all the world’s rough and polished diamonds go through these exchanges.

In South Africa, Blom would like to see the government and the cutting-and-polishing industry join hands to halt the industry’s significant decline.

During its diamond heyday, South Africa had 4 500 polishers, a number that has since fallen to fewer than 600.

“There has to be a partnership between government and industry to reverse the trend and start to build up the diamonds industry again,” says Blom, who points out that South Africa’s neighbours to the north and west and other countries have growing diamond industries.

“We can do the same, provided we work,” he reiterates, pointing out that the State Diamond Trader is working under difficult legislative circumstances in having to buy run-of-mine diamonds and sell them to beneficiators who have difficulty in viably polishing cheaper end goods.

By the same token, he is not sure that the mining companies would be happy if legislation were changed and they were forced to sell the cream of their production to the State Diamond Trader and be left with lower-end production.

He sees it as a conundrum that government, the industry and mining houses have to work out together if South Africa is to gain a bigger share of the global diamond-polishing market, which is currently very buoyant.

There has been phenomenal year-on-year growth, driven by the new emerging markets of China and India supplementing the American market plus increased strength in the European market.

“The industry has a fantastic growth potential,” he tells Mining Weekly Online.

Neighbouring Botswana, in creating facilities that are as good if not better than London’s, has customers attending sights every five weeks, which has put Botswana on the map, increased tourism and assisted the country to become a regional hub.

While the federation does not see synthetic diamonds as a threat to the natural diamond industry, its biggest concern is the passing off of synthetic diamonds as natural diamonds. To counter this, it has rolled out machinery and tools that are able to check the authenticity of each and every diamond.

Because diamonds can also lend themselves to money laundering, the federation is putting systems in place to ensure that the concealment of the origins of illegally obtained money cannot be part of the legitimate diamonds trade.

The federation’s system of warranties in 2000 was a forerunner to the Kimberley Process, which Blom says has reduced the sale of conflict diamonds to less than a tenth of a per cent, from being 4% of global turnover prior to its introduction under United Nations auspices.

Australia receives diamond detection machine from GIA

The GIA has made a synthetic diamond detection machine available to the DDCA in Australia. It will be operational in October 2014, and free to use for DDCA members.

The only one of its kind in Australia, the machine will be located at the Gem Studies Laboratory in Sydney, under the care of Bill Sechos.

Opportunities for DDCA and Jewellery Industry

The following is an interview with DDCA President Rami Baron, published in the Jan/Feb issue of Jewellery World

What were the biggest highlights for the DDCA in 2013?
The biggest achievements in 2013 were not so much in Australia but on the international stage where the DDCA was recognised as a major contributor to the future growth of the world diamond industry through its contributions to the World Diamond Mark marketing campaign. The World Diamond Mark is a generic marketing campaign which is non-brand specific but looks to bring all sectors of the trade together. It is the most exciting marketing campaign to be launched by the diamond industry since De Beers brought us ‘Diamonds are Forever’.

What challenges has the DDCA faced in the same period?
Like every organisation and trade body, the DDCA (a non-profit organisation) has found it difficult to galvanise members as everyone is so busy with their own businesses.
The good news is that although I understand this mind-set, I (and a few others) don’t subscribe to it.
We take the attitude that if we can make a difference and can help to effect change, then we will do so.

What do you think are the biggest challenges currently facing the jewellery industry?
In the diamond trade the wholesaler must come up with a greater value proposition to the retailer otherwise both sides will suffer.
We are being forced to reinvent ourselves – it’s no longer just price or even availability of goods because in 2 hours you can now bring almost any stone from overseas into the country.
I think the issue of synthetic diamonds could also be a real problem for our industry as very few are even aware of the proliferation of them and the difficulty in identifying them.
Larger synthetics are coming into the market and if the wholesaler or retailer is caught out, they will be personally responsible.
The flip-side to that is synthetics expand the industry offering by making it more affordable for consumers to own a diamond-like stone.
The critical aspect is that there must be full disclosure.
In addition the web is getting stronger and its happening faster- how are you using it?
If you think you don’t need the internet and you can just do your own thing, then my response is simple: If you are making money and your business is growing, and more importantly you have a great quality of life, then don’t look left or right, just stay on course, because this formula works for you, and that’s all that matters.
If however you are going financially backwards then move and move fast to learn (or hire those who have the knowledge) how the web and social media can be part of your business.

What do you think are the biggest opportunities in the industry?
We live in amazing times.
A small bench jeweller is no longer restricted to his suburb; he or she can create a website, watch a bunch of YouTube videos on optimisation, and reach out to the world.
He or she can create their own YouTube channel and showcase their creativity all with little more than an iPhone video and some clever editing.
Today we can look at the best designs of jewellers to get inspiration all over the world whilst sitting at our desk.
We can join specialist chat groups, read blogs and speak to others in the industry to share ideas and collaborate.
In my eyes this is bigger than the industrial revolution.
It all starts from desire and allocating time to reach out.
It’s not easy and it takes effort but the access to information and opportunity has no limits.
If you are ambitious this is your ideal time to take advantage of change.
The biggest opportunity in our industry is the realisation that one must find a niche and be the best at it -you can own that space (and not just in your city) because the web has no borders.

What are the DDCAs plans for the year ahead?
Adam Selikman, the vice president of the DDCA, and I have embarked on an ambitious project to redraft the club’s constitution to make it more relevant to the Australian market and also find ways to generate a revenue stream which will enable it to begin marketing programs for its members.
We are also very excited that Australia may be one of the first countries in the world where the World Diamond Mark will be launched.
2014 will be a fantastic year for those who are hungry and looking to take advantage of the opportunities and changes coming.

The 36th World Diamond Congress in Antwerp

I write this article whilst in Antwerp Belgium as we come to the close of the 36th World Diamond Congress. Without a doubt the highlight for me on this trip was having Gus Hashem, a fellow club member, join me and to see and experience what I have in the past few years and appreciate the high regard in which Australia is held on the world stage. This year I was tasked to run the trade and promotion committee meeting, as the president could not attend. It was not only a great honour but we had a huge turnout of observers, in particular the Minister of Mines and Mining Development of Zimbabwe, the Hon W.K. Chidakwa and a number of his ministers . It was a robust and interesting meeting where we discussed launch of the new WFDB Website and the impact of social media in our industry . The most contentious issue was the unbelievable delays experienced in GIA certification. The numbers are staggering. GIA grades approx 16000 stones per day – not bad for a non profit organisation. The issue is that it can take three months to get merchandise graded, in simple terms, is becoming an untenable situation which requires immediate action. The US Bourse already had discussions with the GIA who admited they dropped the ball and are looking to play catch up as fast as possible. At that point I formed a committee from members of the Israeli, Antwerp, and USA clubs which I took to the board for approval to look to see what could be achieved for the benefit of our members. As we are in ANTWERP, a dialogue with other respectable Labs to provide capacity was initiated. HRD was keen to respond and by the time this article goes to print there should be possible solutions in place.

2014-06-16 21.18.15
Gus Hashem together with (on the left) Gaetano Cavallieri – head of CIBJO and (in the middle) Ernie Blom – WFDB President

In the numerous discussions with the various LABS the verdict is consistent, the degree of synthetic diamonds in the market has been greatly exaggerated. Large companies like Sterling in the USA are testing even one pointers. We had Tom Moses, one of the heads of GIA on a panel where I personally posed the question when and is a tool being developed to test diamonds already set in jewellery. The answer was it’s on the horizon, but no firm commitment was made although he agreed it is critically needed as those who maybe passing off synthetics will not even send the stones to a Lab. Tom and I spoke subsequently and he gave me an undertaking that a synthetic diamond testing machine will be sent to Australia in the coming months. The World Diamond Mark has recorded a major success with the official signing of Istanbul being the launching pad for the pilot of the WDM. The President of Boursa Istanbul flew in for the signing ceremony. Following Istanbul the WDM will continue a secondary program in Dubai. Both these steps bring to fruition a vision which Alex Popov, Suresh Hathirami and myself envisioned to create a generic diamond marketing campaign to ensure the health and growth of the diamond and jewellery market. This dream is coming to reality and it is enormously gratifying.

2014-06-16 21.22.03
Gus, Martin Rapaport and myself during a catch up break.

As usual I caught up with great friends and colleagues from around the world. I can tell you all that under the WFDB IDMA and the World Diamond Council the industry is in good hands and it is highlighted by the integrity and statesmanship of our leader Ernie Blom, President of The World Federation of Diamond Bourses. Trade well.