RAPAPORT... A couple of decades ago, Japan Jewelry Fair (JJF) ranked as one of Japan’s most important jewelry trade shows. It was organized and operated by Japan Jewelry Association (JJA), and every year, the show was scheduled at the end of summer so that jewelers could take advantage of the timing to shop for Christmas merchandise. But when the country suffered economic setbacks during the past decade, the show lost allure and the attention of the trade and its size diminished substantially. This year, as the economy starts to show spotty, but sure, recovery, JJA turned to a professional, CMP Japan, to run the show for them. CMP Japan’s affiliate, CMP Communication, is the organizer of the renowned Hong Kong jewelry show. In its first year running JJF, CMP Japan scheduled a number of special events, including an opening reception, fashion shows and seminars with prominent individuals, as well as lecturers from neighboring China, Hong Kong and Korea. With high expectations from trade members for the new organizer, this year’s JJF, which ran from August 31 through September 2 at Tokyo’s Big Sight exhibition halls, was a success. The number of exhibitors doubled to 450 companies and visitors exceeded 18,000, an increase of 50 percent from the 2005 level.
Exhibitors and buyers at the show site appeared buoyant, although any substantial results will become clear only during the coming months. One company that was definitely positive on the show was Kashikey Co., Ltd., which exhibited its line of Brown Diamonds jewelry. Four years ago, when Kashikey initiated its Brown Diamonds campaign, the company sold 100 million yen — more than $800,000 — of the product line at the retail level for the year. The following year, it sold 250 million yen — more than $200 million — at retail and 350 million yen —almost $3 million — the third year. This year, the company expects to sell 400 million yen — almost $3.5 million – of the Brown Diamonds line by year-end.
Trade AttitudeIn the brown diamond market as a whole, Kashikey, with its strong sales increases, appears to be the exception. The comments on brown diamonds from other exhibitors were mostly negative. “I think the boom of brown diamonds is over,” said Koji Kiriya, president of Kiriya Co., Ltd., a stone dealer who dealt with browns before, but not anymore. “The prices of brown have gone up so much,” said an Indian dealer who requested anonymity, “and the stones have stopped moving.”
Masahiko Akaike of Orient 4Cs, a stone and jewelry anufacturer/wholesaler, analyzed the situation: “I admire Kashikey for their insight in tackling brown diamonds. It stimulated the market, as a number of trade members have followed suit. We did, too.”
Promoting BrownKashikey is not the first company in the market who made not-so-wanted dark-colored diamonds into jewelry and marketed them. “There were times such stones were called ‘Cognac’ or ‘Champagne’ colors,” remembered Kunio Fujii, publisher of Jewel magazine. “But the market was not fooled then — the trade knew these stones were plenty and cheap and would not budge.” “Cognac and Champagne were not brands; they were just fancy names,” said Akaike. “They did not have the strategy to stay in the market.”
Kashikey purchases its Brown Diamonds from Rosy Blue. The stones are made to order to the specifics of very well makes. “For those makes, the price must be high,” observed Akaike. “People expect browns to be cheap. But they aren’t any more. Compared to several years ago, per-carat prices have doubled. It is no longer profitable for us to deal with them. For that price, I would rather deal with yellows.”
Kashikey now has 250 retailers selling its Brown Diamonds jewelry. Apart from JJF, Kashikey had showrooms in a nearby hotel, where the company met regular customers and closed deals. The show was to lure new clientele. “The problem for the rest of the trade was that browns did not go down the stream swiftly,” said Akaike — and he knows why. “It is the branding, merchandising, promotions and campaigning that move the goods to the consumers. Kashikey focused on them and did it very well.”
For most Japanese companies, branding and marketing are new turf. “Creating brands costs money and time, yet there’s no guarantee it will succeed. But the trend is clearly the branding,” said Hiroyuki Baba, manager in charge of Brown Diamonds at Kashikey.
And, in fact, Kashikey has spent enormous time and effort — so enormous that “Diamond Trading Company (DTC) once told us that our promotional effort is what they should have initiated,” recalled Hidetaka Kato, chairman of Kashikey. “I wonder if it would have worked if DTC had done it. The jobs of paying detailed attention to designing, manufacturing and bringing them to market and promoting them are perhaps more suitable for a company of our size,” said Kato.
Kashikey’s promotion kit for retailers includes DVD players that retailers may place on countertops to show promotional films to their customers. The commercial films to be played on the DVD players were shot in Belgium. World-class models, cameramen, flower designers and stylists were hired for the filming. “These couldn’t be arranged in Japan,” said Baba.
“It is the world of Brown Diamonds that we are marketing. It is not just the product that we are selling. The days of just selling diamonds are over,” said Baba. “One day, I wish that all the women in the world would crave Brown Diamonds.”
The Marketplace• Brown diamond sales stall.
• Yellow fancy shapes up to 2 carats are moving well.
• Pinks are expensive. Privates are
paying top prices, making it harder for dealers to buy.
• White stones are soft across the board, except 4/4 grainers in VVS1/D. Market is rejecting recent price run-ups.
• 2/4 and 3/4 are strong. 1/3 and 1/5 are a bit weak, due to supply and demand discrepancies.
• Larger than 3 carat, high color, high quality continue to be strong.• Changes in the Gemological Institute of America (GIA) cut grading system are suspected as the cause of the soft 4/4 grainers, pushing market prices 10 to 15 percent downward.
Article from the Rapaport Magazine - October 2006. To subscribe click here.