Mar 20

DPA Taps Bartle Bogle Hegarty for India Ads

RAPAPORT… The Diamond Producers Association (DPA) has appointed Bartle Bogle Hegarty as its creative agency in India, as the organization plans to roll out the “Real Is Rare” campaign in the sub-continent in September, reported Jean Marc Lieberherr, the DPA’s chief executive officer.

The launch will be the DPA’s first venture outside the United States. It’s also planning to launch in China in 2018, Lieberherr said on Monday at the Mines to Market conference in Mumbai.

“Real Is Rare” has enjoyed significant success from its first two video commercials, which aired during September and October last year. Lieberherr reported 220 million views of the paid advertisements, and the videos were watched more than four million times on YouTube. The separate docu-film “Why Real Is Rare” garnered more than 444 million “earned impressions,” or views on social media and other platforms, while a 15-second clip during the ABC television coverage of the Oscars reached 22 million viewers.

“‘Real Is Rare’ is not our platform; it’s an industry platform that we manage, but in the future, everyone can build on it in the same way that the industry built on ‘A Diamond Is Forever’ for years,” Lieberherr said. “The younger generation is interested in diamonds, it’s just not interested in the way we’ve been talking about diamonds – so we need to change that.”

Meanwhile, the DPA is seeking to raise its budget for 2017, which will be funded by its seven member mining companies, predominantly De Beers and ALROSA.

Lieberherr said he expects ongoing support from ALROSA following last week’s appointment of Sergey Ivanov as the miner’s new CEO. Lieberherr said he was planning to speak to Ivanov to explain the concept of the DPA, and added that ALROSA had confirmed its contribution to the DPA in its own budget.

Mar 20

Rapaport Urges India to Scrap Diamond Import Tax

RAPAPORT… Martin Rapaport, chairman of the Rapaport Group, called on India to show reciprocity in its trade relationship with the United States.

“America is and will be India’s most important market,” Rapaport said on Monday at the ‘Mines to Market’ conference, marking 50 years of India’s Gem Jewellery Export Promotion Council. “American demand will grow significantly due to new economic policies and the U.S. government will insist on a level playing field,” he added, citing President Donald Trump’s policy of leveraging American power to rebalance what he considers to be unfair trade ties with large export nations such as China.

The U.S. imported $3.8 billion worth of diamonds more from India than it exported to the country in 2015, making India a net beneficiary in the partnership. Yet India does not reciprocate by offering competitive import tax rates, Rapaport argued. India’s import tax on loose polished diamonds and gems is 2.575 percent versus zero charged by the U.S. In addition, India’s levy on diamond-jewelry imports is 31.56 percent, compared with America’s 5.5 percent.

“We’re calling for a U.S.-India bilateral trade agreement with zero import taxes for diamonds, gems and jewelry,” he added. “Reciprocity means equal import taxes at U.S. and Indian borders, or – even better – zero percent at both.”

Rapaport also called on the Indian diamond trade to sharpen its focus on transparency and traceability of supply, saying “markets will be identified and segmented based on the sourcing legitimacy of people, products and money.”

Moves by retailers such as Signet Jewelers to ensure it sources diamonds from approved suppliers indicates a market shift toward responsible sourcing, which, he cautioned, traders must be aware of.

“You must be responsible for what you buy and sell,” Rapaport said. “If you can tell your wife, your taxi driver, everything you are doing in business, you’re okay.”

Meanwhile, Rapaport questioned the practices of the Kimberley Process and raised suspicion about why rough diamonds are leaving the United Arab Emirates at a significantly higher value than they enter the country. The 40-percent increase in price “sticks out like a sore thumb,” he said.

Mar 20

Rapaport Partners with Carat+

RAPAPORT… The Carat+ trade show has partnered with the Rapaport Group, making Rapaport the official media outlet for the event in Antwerp this May.

Rapaport will offer coverage of the show through its publications and news service, both online and in print, while also promoting the event through advertising in Rapaport Magazine and the Tradewire email newsletter.

In addition, Rapaport’s online trading platform, RapNet, will provide its Show Listings tool for the event, enabling buyers to find diamonds and suppliers at Carat+. Exhibitors will be able to upload their diamonds in advance or at the show, while buyers will have free access to search for stones and suppliers at the event.

Carat+, which will take place from May 7 to 9 at Antwerp Expo, is being billed as an exclusively diamond show. All elements of the diamond category will be on display – including many of its most prominent companies – offering branded and non-branded jewelry, loose diamonds, and diamond-related services, Carat+ said.

“Rapaport is highly supportive of the vision and efforts of CARAT+ to develop the only international trade fair focusing exclusively on diamonds, diamond jewelry and related services,” said John Costello, publisher at Rapaport. “We look forward to covering Carat+ and giving the show the support and exposure to help build its presence and visibility in the market. The success of CARAT+ will help drive growth and offer increased opportunities within the industry, and that is something the sector in general should be cheerleading.”

Mar 20

Tiffany Targets New Products as Sales Fall

RAPAPORT… Tiffany Co. expects to turn a corner in 2017 by raising the number of new product launches following last year’s poor performance.

The company reported net sales falling 3 percent to $4 billion in the fiscal year that ended January 31, noting a “soft” performance across all jewelry categories. Net earnings declined 4 percent to $446.1 million.

“Despite macroeconomic and geopolitical challenges in the past year that we believe will continue in 2017, we strongly believe that Tiffany’s strategies are sound and that we have meaningful growth opportunities,” said Michael J. Kowalski, Tiffany’s chairman and interim chief executive officer.

The company has struggled with declining sales in the past two years, culminating in the resignation of Frederic Cumenal as CEO last month. The search for his replacement is still under way; meanwhile, management remains focused on executing its strategy to restore growth, Kowalski said.

That strategy largely revolves around increasing the rate of new product initiatives, Kowalski said in a conference call last week, adding that these would be driven by Reed Krakoff, who joined the company as chief artistic officer in January.

Tiffany continues to emphasize its fashion product segment and is also seeing increased success with sales under $500, Kowalski reported during the call. He said there would be “newness” in silver, gold, platinum and diamonds as well, and that luxury accessories and non-jewelry collections were planned for the 2017 holiday season in November.

Tiffany projected that sales would increase by a low-single-digit percentage and net earnings by a mid- to high-single-digit margin in the current fiscal year. The company plans to increase its global retail space by 3 percent, with 11 new store openings, nine relocations and six closings. Half of the new stores will be in the Asia Pacific region, which outperformed other regions last year.

Sales in Asia Pacific were flat at $1 billion, with strong growth in China offsetting weakness in Hong Kong. Sales in Japan grew 12 percent to $604 million thanks to greater spending by locals, whereas Chinese tourist spending slowed. In the Americas, sales fell 5 percent to $1.8 billion following lower spending by U.S. customers and tourists, the company reported, noting that its flagship New York store was down 11 percent from the previous year. European sales, meanwhile, fell 10 percent to $458 million.

Shares in Tiffany rose 2.7 percent on Friday following the earnings announcement, with analysts saying the results were better than expected.

Mar 20

‘Mines to Market’ Forum Highlights: Day 1

RAPAPORT… India’s Gem Jewellery Export Promotion Council (GJEPC) is celebrating 50 years by hosting leaders from across the diamond industry. Rapaport News presents live updates from the two-day conference covering mining, manufacturing, marketing and politics.

5:30 a.m. EST: Trade, Miners Clash on Marketing Programs

Marketing of diamonds will only lead to more profits for rough producers and barely help the midstream other than by moving goods down the pipeline more efficiently, argued Rajiv Mehta, CEO of India-based diamond manufacturer Dimexon Diamonds.

“I don’t believe marketing is going to solve our profitability problems,” Mehta said in a panel discussion on mining.

Jim Pounds, executive vice president of Dominion Diamond Corporation, argued that better marketing would have a positive effect on the whole sector, while industry analyst Chaim Even-Zohar said diamond marketers needed to up their game significantly.

“If you see the Swarovski advertising, it’s scary. It’s so clever,” he said. “If you see some of the advertising videos the synthetic diamond producers make, if we were to play that here, everyone would walk out and go and buy synthetics.”

Paul Rowley, executive vice president of global sightholder sales at De Beers, said De Beers had invested in its Forevermark brand in the hope that it would have a positive effect on the image of the whole industry.

“But we realized the industry needed more, which is why the company is investing in the Diamond Producers Association,” Rowley said.

4:30 a.m. EST: Polyakov Downgrades ‘No-Value’ Synthetics

Andrey Polyakov, vice president of ALROSA and president of the World Diamond Council, dismissed the notion that synthetic diamonds held the same value as natural diamonds. The entire value of diamonds comes from their age and history, he argued, adding that synthetics had no geological history.

“Their producers cannot even claim that they are clones of something with worth,” Polyakov said. “Indeed, they are clones of something with no value at all.”

4 a.m. EST: De Beers Exec Urges Focus on Consumer Confidence

Paul Rowley, executive vice president of global sightholder sales at De Beers, highlighted the need to raise consumer confidence by increasing transparency across the diamond pipeline. The industry needs to understand the end consumer and engage in providing information to ensure the industry supplies according to consumers’ exact needs, he asserted.

He defended De Beers against claims that it was squeezing midstream profitability, noting that times were challenging for the entire industry.

3:30 a.m. EST: Analyst to India: Get Profitability Back

Industry analyst Chaim Even-Zohar argued that De Beers production and pricing policy had resulted in tight profit margins among manufacturers and dealers. He told the Indian trade to put “India First” and take a strong negotiation position with miners to restore margins.

“You have enormous power – use it to get profitability back,” he told the audience.

3 a.m. EST: Mining Minister Calls for New Game Plan

Piyush Goyal, India’s minister of power, coal and renewable energy and mines, assured his Zimbabwean counterpart, Walter Chidakwa, that India would work in the coming year to ensure the safety of the people of Africa. India will never think of exploiting Africa, but will work to supplement it, he said.

Goyal also expressed a desire to change the current environment in which miners have concerns about operating in India. “This is an area where India plans to change the rules of the game,” Goyal said. “We’re going to explore the breadth of this country with an honest, transparent bidding process, and the proceeds will go to the poor of this country. We don’t want to say we ran out of diamonds in the 18th century, but that in India, diamonds are forever.”

2:35 a.m. EST: GJEPC Vice-Chair: India’s Trade Must Clean Up Its Act

Russell Mehta, vice chairman of the GJEPC and CEO of Rosy Blue India, pointed to the lack of significant profit margins in the manufacturing sector and cautioned that volatility was the new normal. He also predicted that synthetic diamonds would gain a share of the natural diamond market. Mehta stressed that the industry would have to embrace transparency and align with Indian Prime Minister Narendra Modi’s push toward a cleaner economy, free of corruption.

2:20 a.m. EST: Zimbabwe Urges India to Help Africa

Walter Chidakwa, Zimbabwe’s minister of mines and mining development, stressed that the industry must do more to ensure that Africa benefits from its resources, and appealed to India to support initiatives on the continent. Just as Belgium extended expertise and financial support to India’s trade, India should do the same for Africa’s diamond industry, the minister said.

1:45 a.m. EST: GJEPC’s Pandya Stresses Need for Higher Polished Prices

Praveenshankar Pandya, chairman of the GJEPC, welcomed guests, saying the event would tackle both opportunities and challenges facing the industry, among them marketing, compliance and finance.

He called on Piyush Goyal – India’s mining minister, who also addressed the opening session – to enable the development of India’s two prospective diamond mines. “We want to be able to extract the diamonds we manufacture and export,” Pandya said.

Pandya encouraged the industry to work collectively toward higher polished prices, noting the pressure facing the midstream in recent years.

The banks are wary because prices are not rising, and sometimes there has been excessive supply, leading to high interest rates from banks, he explained. There has to be a realignment, Pandya warned, calling for greater cooperation between the miners and the trade.

Pandya also endorsed the work of the Diamond Producers Association, urging miners to provide it with financial support so it could successfully increase demand. 

Mar 20

Modi Calls on India to Tap Custom Jewelry Market

RAPAPORT… India’s gem and jewelry industry must adapt to consumers’ heightened desire for custom-made products in order to grow the sector, the nation’s Prime Minister Narendra Modi told the International Diamond Conference Sunday night.

The trade must understand its clients more deeply in order to mold their consumption habits, rather than take a merely reactive approach, the statesman said in a live video address at the event, which is marking 50 years of the country’s Gem Jewelry Export Promotion Council (GJEPC).

“We live in an era where [clothing] retailers change people’s preferences,” Modi said. “Even hairdressers change hairstyle fashions of their clients. Can’t our jewelers, with their skills, strengths and heritage, create and change global tastes and fashions?”

Modi cautioned that the sector had not made the strides seen in other business areas, even as he recognized its growth from a $28 million industry in 1966 to $40 billion today.

India is lagging, he said, arguing that making stronger connections with consumers was essential to changing that.

With ecommerce making it easier to establish direct contact with consumers, now is a “golden opportunity” for the Indian industry, he declared, recommending that it support young entrepreneurs in cultivating a market for made-to-order Indian jewelry.

Modi also called on the GJEPC and India’s state governments to make this growth happen.

“Today, India has acquired a global brand for high skills and excellence in software,” the Prime Minister added. “We have yet to do that in jewelry. If we do that, the potential is huge. This is a task which the council should take up in right earnest.”

Picture from www.pmindia.gov.in

Mar 20

Pink Star Diamond Back on the Auction Block

RAPAPORT… Sotheby’s will auction the Pink Star diamond in Hong Kong this April, more than three years after its previous sale fell through.

The oval, 59.60-carat, internally flawless, fancy vivid pink diamond is expected to exceed $60 million, which would rank it among the most valuable diamonds ever sold, according to Sotheby’s.
“At a time of unprecedented demand for the finest in colored diamonds, I am delighted to be bringing this magnificent stone back to the market,” said David Bennett, chairman of Sotheby’s jewelry division. “The extraordinary size of this 59.60-carat diamond, paired with its richness of color, surpasses any known pink diamond recorded in history.”

The Pink Star is the largest internally flawless, fancy vivid pink diamond ever graded by the Gemological Institute of America, according to Sotheby’s. It’s more than twice the size of the 24.78-carat Graff Pink, which set the current record price for a pink diamond when it sold for $46.2 million in 2010, the auction house added.

The Pink Star surpassed the Graff Pink in November 2013 when Sotheby’s sold it to diamond cutter Isaac Wolf for a record $83.2 million. However, the stone was returned to Sotheby’s after Wolf and his investors defaulted on the payment.

Sotheby’s entered into a partnership agreement in June last year with Diacore and Mellen Diamonds, both New York-based diamond manufacturers, for shared ownership of the diamond. The Pink Star has been held in Sotheby’s inventory at a value of $72 million.

The diamond will be on display at the Hong Kong Convention and Exhibition Centre from March 29 to April 3 before going under the hammer on April 4. 

Mar 20

Live Updates: ‘Mines to Market’ Day 2

RAPAPORT… After an action-packed first day of the “Mines to Market” conference in Mumbai, we’re following developments at the final sessions of the event marking the 50th anniversary of the Gem Jewellery Export Promotions Council.

See our coverage of the first day here and of Prime Minister Narendra Modi’s address to the conference here.

1 a.m. EST: Fischler to Midstream: Stop Skimping on Costs

The diamond manufacturing sector must stop relying on low-cost solutions and put real investment into high-quality employees and technology, stressed Stephane Fischler, president of the Antwerp World Diamond Centre.

Fischler urged manufacturers and traders to change their business model of trying to protect their profit margins by being frugal in their operations.

“Stop being obsessed by cheap labor, cheap software and cheap computers,” he said Monday during a session exploring survival of the midstream. “Cheap is expensive,” he warned.

The subject of slim profit margins has come under scrutiny at the conference due to prevailing high rough prices and soft polished prices, with speakers offering a range of solutions for increasing profitability.

Investing in better technology and business solutions would enable better profitability for companies, Fischler said. The industry must also hire and promote more women, raise its investment in marketing and understand how to become more attractive to banks, he added.

Mar 19

Rapaport Partners with CARAT+

RAPAPORT… The CARAT+ trade show has partnered with the Rapaport Group, making Rapaport the official media outlet for the event in Antwerp this May.

Rapaport will offer coverage of the show through its publications and news service, both online and in print, while also promoting the event through advertising in Rapaport Magazine and the Tradewire email newsletter.

In addition, Rapaport’s online trading platform, RapNet, will provide its Show Listings tool for the event, enabling buyers to find diamonds and suppliers at CARAT+. Exhibitors will be able to upload their diamonds in advance or at the show, while buyers will have free access to search for stones and suppliers at the event.

CARAT+, which will take place from May 7 to 9 at Antwerp Expo, is being billed as an exclusively diamond show. All elements of the diamond category will be on display – including many of its most prominent companies – offering branded and non-branded jewelry, loose diamonds, and diamond-related services, CARAT+ said.

“Rapaport is highly supportive of the vision and efforts of CARAT+ to develop the only international trade fair focusing exclusively on diamonds, diamond jewelry and related services,” said John Costello, publisher at Rapaport. “We look forward to covering CARAT+ and giving the show the support and exposure to help build its presence and visibility in the market. The success of CARAT+ will help drive growth and offer increased opportunities within the industry, and that is something the sector in general should be cheerleading.”

Mar 19

Tiffany Focused on New Products as Sales Stumble

RAPAPORT… Tiffany Co. expects to turn a corner in 2017 by raising the number of new product launches following last year’s poor performance.

The company reported net sales falling 3 percent to $4 billion in the fiscal year that ended January 31, noting a “soft” performance across all jewelry categories. Net earnings declined 4 percent to $446.1 million.

“Despite macroeconomic and geopolitical challenges in the past year that we believe will continue in 2017, we strongly believe that Tiffany’s strategies are sound and that we have meaningful growth opportunities,” said Michael J. Kowalski, Tiffany’s chairman and interim chief executive officer.

The company has struggled with declining sales in the past two years, culminating in the resignation of Frederic Cumenal as CEO last month. The search for his replacement is still under way; meanwhile, management remains focused on executing its strategy to restore growth, Kowalski said.

That strategy largely revolves around increasing the rate of new product initiatives, Kowalski said in a conference call last week, adding that these would be driven by Reed Krakoff, who joined the company as chief artistic officer in January.

Tiffany continues to emphasize its fashion product segment and is also seeing increased success with sales under $500, Kowalski reported during the call. He said there would be “newness” in silver, gold, platinum and diamonds as well, and that luxury accessories and non-jewelry collections were planned for the 2017 holiday season in November.

Tiffany projected that sales would increase by a low-single-digit percentage and net earnings by a mid- to high-single-digit margin in the current fiscal year. The company plans to increase its global retail space by 3 percent, with 11 new store openings, nine relocations and six closings. Half of the new stores will be in the Asia Pacific region, which outperformed other regions last year.

Sales in Asia Pacific were flat at $1 billion, with strong growth in China offsetting weakness in Hong Kong. Sales in Japan grew 12 percent to $604 million thanks to greater spending by locals, whereas Chinese tourist spending slowed. In the Americas, sales fell 5 percent to $1.8 billion following lower spending by U.S. customers and tourists, the company reported, noting that its flagship New York store was down 11 percent from the previous year. European sales, meanwhile, fell 10 percent to $458 million.

Shares in Tiffany rose 2.7 percent on Friday following the earnings announcement, with analysts saying the results were better than expected.