Rapaport Magazine

Pushing the Brand

Israel Market Report

By Leah Granof
RAPAPORT... Israeli diamantaires returned from April’s BaselWorld feeling that the 2007 show one-upped last year’s European trade show. Sellers of big diamonds were particularly upbeat as the prices for 10-carat-and-up diamonds were reportedly “record-breaking.” In addition to generally good feelings about the show, vendors heard about developments and trends within the Israeli industry from Eli Avidar, managing director, Israel Diamond Institute (IDI).

Avidar explained that having established and developed a solid infrastructure, the Israeli diamond industry is now maturing into the third phase of its development, in which the focus will be on marketing and branding. “This is a phase of branding, marketing and initiating new products and projects,” he told attendees.

Describing the traditional way of doing business through the trading of stones, Avidar observed that, as the marketing strategies of Israeli companies have become more sophisticated, the industry has witnessed “high-profile, strategic partnerships between our diamond companies and jewelers, as well as numerous joint ventures in manufacturing between Israeli and foreign entities.”
In line with Avidar’s analysis, more than a few Israeli Diamond Trading Company (DTC) sightholders have already begun to brand their diamonds in jewelry and create partnerships overseas. Moshe Namdar & Co, one of the first companies to brand a diamond with the Leo Cut, said it was going to be launching a jewelry line around the cut in the next few months. The jewelry collection will be targeted at Italy and Spain, where the cut is currently sold.

DTC Pressure

The recent push toward jewelry branding was in no small part due to initiatives by the DTC. “The beginning came from the fact that the DTC advised sightholders to do branding and jewelry in order to remain sightholders,” said Sharon Tammam, marketing director, Namdar.

Michal Marx, marketing and communications manager with the Dalumi Group, agreed. “It started with Supplier of Choice (SOC). Since profitability was decreasing, the DTC realized that everyone should go downstream toward the consumer,” she said.

Unlike Namdar, Dalumi has chosen not to brand its diamonds and instead focus its efforts on developing strategic partnerships overseas. In this vein, the sightholder has created exclusive marketing packages for a few of its largest clients. One such deal involves Japanese retailer Tokyo Pearl and both sides are pouring tens of thousands of dollars into marketing. Under the terms of agreement, Tokyo Pearl has agreed to mount Dalumi diamonds into its own designs, creating a specialty jewelry brand.

For smaller companies like Hadad Diamond, branding is becoming increasingly important as a means of assuring consumers that they are buying a quality diamond. With the evolution of internet marketing, Doron Itzhakov, Hadad’s managing director of marketing, fears that any small company can put up a sophisticated site without having a reputable product behind it.

“Ten years ago, you were dependent on the salesmen who were selling goods,” Itzhakov said. “Today you can click on the web and find 1,000 diamonds. I want to know who is really manufacturing the stone. That is why you need branding,” he explained.

Looking to China

Companies like Hadad are receiving an extra boost from the IDI, which has vowed to focus its marketing efforts on small and medium-sized businesses this year as part of the second stage of the “All you could ask for in one” campaign. The first stage of the campaign billed the Israel diamond center as a “one-stop shop” that could meet all the needs of diamantaires, including production, cutting, polishing and marketing. Citing the tremendous feedback the IDI received in response to the campaign, Avidar said the second phase would “cash in the check on last year’s success” and would deploy more focused messages on individual market segments.

In particular, the IDI will be providing services to smaller Israeli companies in China by opening up a Hong Kong office that places local resources at the disposal of vendors. Such services are particularly critical to companies that often cannot afford to open up individual offices overseas. And it takes on added importance in light of statistics cited by Avidar, which showed that up until 2005, 90 percent of all investment in China — across all industries — failed if the investor did not have a Chinese partner who understood the business culture and language.

Avidar also said the IDI planned to support Israeli companies at five different shows in China this year and would open up pavilions at the shows if there was enough interest from vendors.

The Marketplace

• Demand is good for big stones, particularly 6 carat+.
• Pear and heart shapes in big sizes
3 carat+ are faring particularly well.
• Overall demand is strong for fancy colors in 3 carat+ as well as fancy color pears 1 carat+.
• Demand is slow for small sizes, but strong for 10- to 50-point square shapes.
• Supply is good for low colors J-L from Hong Kong in VS1+.

Article from the Rapaport Magazine - May 2007. To subscribe click here.

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