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Antwerp Diamond Symposium
Antwerp Diamond Symposium
 









 

Diamond trade faces new challenges

At the recent Antwerp Diamond Symposium the challenges confronting the diamond industry were highlighted. TOM  WILDHERN  reports that the worst is over with rough diamond prices now rebounding having collapsed.

The global diamond industry is set to stabilise after the worst of the economic crisis, but faces tough challenges including the need for generic marketing campaigns to make diamonds appeal to the young. 

“The mood is now not one of panic, but rather of quiet optimism,” Cathy Berx, Governor of the Province of Antwerp, said in an opening address to the second edition of the Antwerp Diamond Symposium.

“The worst is over and better days are ahead.”

Freddy Hanard, CEO of the Antwerp World Diamond Centre (AWDC), said, “We are experiencing a more stable environment.”

Industry leaders attending the Antwerp Diamond Symposium said rough diamond prices were now rebounding, having earlier collapsed in response to the global credit crunch, but polished prices had disconnected from the rough diamond market.

Diamantaires talked of recent speculation in rough diamonds, and said the key priority was to ensure that consumer demand for diamond jewellery would rise in the coming years.

Diamond supplies are tight after the leading producers of rough diamonds, notably De Beers and Alrosa, cut output to protect prices and confront the crisis.

Delegates agreed that the producers had delivered a successful, coordinated response to reduce production and supply, thereby preventing even steeper falls in prices.

They also said the diamond banking sector had done its part, by maintaining credit lines to the industry in the darkest hours of the crisis late last year.

Now the challenge was to increase equity levels to meet banking requirements.

“We will see worldwide corporate de-leveraging,” said moderator Chaim Even-Zohar of diamond information group Tacy.

“The banks have supported the industry admirably,” diamond economist Pranay Narvekar told the symposium.

Sergey Oulin, Vice-President of Alrosa, said talk of a possible sell-off of diamonds by Alrosa or Russia’s state-owned repository for diamond stocks, was unfounded.

“This is not the time to rush for an extra, unwise profit,” he said.

Diamond jewellery sales look set to stabilise in 2010, but are below pre-crisis 2007 levels.

Global retail consumer demand is projected to inch up 0.4 percent year-on-year in 2010 after a 9.7 percent fall in 2009, said Even-Zohar.

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“Confidence is still very low,” he said. “The consumer isn’t really back yet,” adding, “This business is going to be a smaller business. But at least now it is stable.”

Gaetano Cavalieri, President of the World Jewellery Confederation (CIBJO), said the that the top end and the lower-to-middle end of the jewellery sector had been the most resilient, but sales had fallen across the board due to the economic crisis.

The United States, accounting for roughly half of global diamond jewellery sales, will remain the bellwether market for the foreseeable future, while emerging markets such as China and India are seen as leading growth markets, although consumers there will be much more value-driven than in the U.S., where emotions are the key driver.

WARNING ABOUT YOUTH MARKET

De Beers’ Executive Director for Beneficiation, Tim Dabson, said in his address that, according to recent market research, the percentage of younger consumers buying diamond jewellery had fallen in recent years.

Other delegates shared De Beers’ concerns and said the way to appeal to young consumers was to step up creative marketing.

Delegates agreed that De Beers should no longer be expected to carry the burden of generic marketing of diamonds and that the industry must share the responsibility.

Krisztina Kalman-Schuler, managing consultant with London-based Gorham & Partners, said category marketing of diamonds would be funded by leading suppliers at the start, but other industry participants would follow when they realised that this type of marketing boosted their profits. 

“Now the competitiveness of an entire industry needs to be strengthened,” she said.

Tom Wildhern is a senior reporter with Jewellery Outlook










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Monday, 16 September, 2019 10:44am
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