The two main synthetic diamond manufacturers made their first public appearance before the diamond industry at the recent Rapaport Corp. International Diamond Conference in New York. Both expressed a desire to join the industry and work with it to ensure that their stones are disclosed as man-made.
“We are very concerned about representation of our product,” said General Carter Clarke of Gemesis. “We do not want our product to be passed off as a natural diamond.”
Bryant Linaies of Apollo Diamond agreed and said his product will make diamonds available to consumers who previously could not afford them. “We want it to be not only ‘A Diamond Is Forever,’ but ‘A Diamond Is for Everyone,’ ” he said.
In the same session, Gemological Institute of America president William E. Boyajian said that GIA has “to work harder than ever to stay ahead of technology.” He warned that manufacturers of treatments and synthetics who didn’t disclose could seriously harm the diamond market.
“Consumer confidence is key to the entire diamond industry,” he said. “[Rogue traders] who seek to make a quick buck by introducing treated diamonds into the marketplace with no disclosure … put at risk the very foundation, the very core of the trade itself.” He noted that the emerald trade almost collapsed when it was beset by undisclosed treatments.
Rapaport expressed similar concerns. “God help us when we can’t stand behind what we sell,” he said. However, he added, “Maybe synthetic diamonds are not such a bad thing. Don’t forget cultured pearls came about because there weren’t enough natural pearls.”
Also at the conference:
Peter Gross of ABN-AMRO Bank said that the current state of the industry is “not a pretty picture,” with a red-hot market for rough but without commensurate price increases in polished. As a result, he said, polished stocks are being built up unhealthily. He cited two recent bankruptcies of Indian firms to illustrate the dangers of this environment.
Moshe Leviev of LLD, the world’s second largest rough producer, said that his company is “the supplier of real choice. … We are not telling our customers how to run their business. A businessman should be able to chart his own destiny.”
S. Lynn Diamond of the Diamond Promotion Service argued the case for branding: “For those who say that diamonds are too much of a commodity to be branded and don’t have the margins to support a brand, I have two words for you: Coffee. Water.” The industry must revitalize its stores, she said, because shoppers today want shopping to be “fun.”
“We need more creative energy and serious investment in the shopping experience,” she said.
Dilip Mehta of Rosy Blue said the industry was facing tremendous changes. He predicted more consolidation, with niche players thriving as trend-setters. He also said that he expects more frequent diamond price adjustments to match demand and supply.
The Rapaport Corp.’s Martin Rapaport said that while he had some reservations about De Beers’ “Supplier of Choice” policy, the industry might be ignoring other threats. “Wal-Mart may be a bigger threat than De Beers,” he said. “We’re all so worried about the bear that we’re not noticing the snake in our sleeping bag.”
He added that the industry still had work to do on humanitarian issues. “Do you realize that there are 10-year-old kids in Sierra Leone mining diamonds for a cup of rice an hour?” he said. “And those diamonds are legal under the Kimberley Process. We have to get our house in order.”
Ken Gassman said that, long-term, the “party is just heating up” for the industry. He noted that 30% of the U.S. population is composed of “baby boomers,” who are loaded with money and love to shop.
Elliot Tannenbaum of Schachter and Namdar had a somewhat more cautionary view of the future, predicting the industry will sustain “multiple shocks,” with many companies dropping out or being absorbed into big ones.
“Supplier of Choice [is] a wake-up call to an industry that is falling asleep,” he warned. “Had [De Beers] not gone down this road, it would have led the industry down the path of self-destruction.”