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Diamond headaches today, a different world tomorrow

The diamond business still cannot seem to get weaned off mama De Beers.  That is not in the way of a complaint to De Beers, but rather an admission that clinging to the old, sheltered ways is gone.  And most of the trade refuses to admit it.  Even the Oppenheimers knew it was time to move on. Sure, a $30 million auction sale is made.  And other big stones are fought over.  But something is wrong at the core of the business.  There are big bankruptcies in Antwerp and Mumbai.  Banks are backing off financing the trade, except for financing solid receivables.  Government authorities are investigating diamond companies in Belgium and India.  De Beers sights are being rejected for lack of money.  Boxes are being sold at discounts - sightholders prefer to take a loss rather than try and convert the goods and lose even more money.  Cutting factories have sharply reduced output, especially on small goods.  And everywhere we hear that due to overpriced rough, profits are gone. Is this any

The De Beers Forevermark Promise - real or illusory?

De Beers has a superb history of managing the diamond business and the public perception of diamonds.  No one will ever do it better.  The two parts of its business - mining and marketing - have over long years evolved into the distinct positions they now hold, neither of which give the company very much breathing room. While that might sound drastic - and we are not looking at any imminent change - the outlook for the status quo is not promising. On the mining side, we have all been aware for a while that no mining company is excited about the future.  BHP sold out; Rio Tinto tried, but could not find a buyer who would take on their huge investment in going underground at the Argyle mine.  Never mind that mining companies want no part of the bad publicity involved in operating in some countries. And where is De Beers?  They continue to be a dominant supplier, and that will not change soon.  But, just before the Oppenheimers sold out, they signed a new 10-year agreement with the

De Beers, Forevermark, and everybody else.....

The recent trade shows and recent press reports offer a spectrum of opinions and a range of actions in and around the diamond business that leaves a distinct sense of a train hurtling uncontrolled down a track.  No derailment (as yet) in sight, but enough clatter to cause concern. Some facts are clear: De Beers, now not totally free to act as it wishes, and now with a new CEO who comes from the mining sector, is all-in with Forevermark.  This is their future. and either it flies or they may be done, at least on the marketing side of diamonds.  Or is there another future possible? Two major mining companies, BHP and Rio Tinto,  are working to extract themselves from diamond mining, with some success.  Nominally, it is because there is not enough scale in diamond mining, or the outlook for it, to make the investments worthwhile.  BHP has made a sale, Rio Tinto has now backed off, as it could not find a proper buyer.  The banking industry is broadly retreating from financing diamo

Las Vegas Shows - 2013

I must apologize for being 'off the radar' for these past weeks, as a series of events have preoccupied me and precluded me from stopping long enough to give this blog some thought.  Nothing bad at all, though, just concentrated activity. Among that, of course, was attending the shows in Las Vegas.  This year I had the need to work intensively with a large number of vendors at the Luxury, JCK and Couture shows.  It was an exhausting (as usual) few days, but filled with timely conversation.  In sum, after years of tight economic conditions, high gold and diamond prices, and growing shortages in fine colored stones, the industry is showing its ability to adapt, or not. Some vendors have really come through with well thought out lines that are innovative and address market realities.  At the high end, in fine non-bridal lines, we saw excellent use of 18 karat gold with diamonds and color.  In silver, designs have greatly improved, as has quality, and price points have distinc

Top 10 trends for 2013 - Part Two

Last month I covered five market trends that I view as important for this year, and no doubt for years to come.  I have five more here that I see as part of the rather remarkable transition that this industry has sustained over the years.  The ten trends are not ranked in importance.  It will be different for each of us. 6.  Social media.   The power of social media, in its now countless manifestations, cannot be underrated.  We are awed by its power in spawning the Arab Spring, raising money in response to disasters, or electing a president.  No doubt it has hit a nerve - 500 million users of Facebook is not an accident.  There are definite efficiencies in communication, presuming one wants to send brief notes to dozens or hundreds of people at the same time.  I, for one, use Facebook, Twitter and LinkedIn to tell people that I have written a blog.  That notice is better transmitted that way than by e-mail, say. Nevertheless, I must say that I am a terrible user of social media,

Top 10 Trends for 2013 - Part One

We enter a new year and for many people that means getting on with business in pretty much the same way that they approached prior years.  It is business as usual.  And, to some degree, that is true.  Retailers will review their sales results and plan on deletions, additions and solving persistent problems, like gaps in price points.  Suppliers will want to find new ways to tweak old standby's and turn new materials into innovative products.  But everyone will be scratching their heads trying to figure out where our industry is headed.  There are many market conditions inundating us, but here are five of my top ten for the coming year. 1.  The Millennials are coming .  More and more of our business is shifting from boomers to millennials.  And with that has come a shift from brand to concept.  For years we have heard of the importance of creating a brand or image.  All industries have pushed to create or enhance their brands, but in most cases that has been little more than lab