RAPAPORT... Despite the fact that India continues its economic growth and emergence as a major diamond center, Israeli diamantaires expressed disappointment that the India International Jewellery Show (IIJS) failed to capitalize on this trend. Although the Israeli diamond industry was not largely represented at IIJS, those companies in attendance reported slow sales at the show, despite the high volume of traffic there.
“There was huge activity; the aisles were packed with people and everybody was interested in getting a quotation. But it yielded no results,” said Avi Nathanel, chief executive officer (CEO) of Fancy Collection, which specializes in matching pairs of fancy cut diamonds, calibrated lines and layout of stones.
The Indian government’s July repeal of its import tax on diamonds also failed to inspire real sales activity at IIJS, Nathanel said, adding that “the change in regulation has not yet been internalized there.”
Nathanel showcased more than 150 pairs of fancy cut diamonds of various shapes, ranging from 2 to 10 carats, but found that the Indian market was not yet interested in his higher-color and -quality stones. “It seems to us that for the time being, the H, I, J, K colors in VS1 to VVS1 clarity are in high demand and characterize this market,” he said.
Similarly, Yair Saada, CEO of Julius Klein Eliaz Diamonds Israel, said the low colors below H were in strong demand, along with pear shapes followed by emerald, heart, marquise and oval shapes.
Responding to the slower-than-expected sales, Saada reasoned that people went to IIJS mainly to develop relationships with new suppliers. He added that while “sales were okay,” the company had been working in India outside the show, which had yielded promising results.
London CallingIn contrast to the large crowds at IIJS, Israeli attendees at International Jewellery London (IJL) 2007 reported slow traffic and continuing sluggish sales at the U.K. exhibition. “We could have played a football game in the hall,” commented Moshe Gani, a salesman at Hanan Abramovici. “It was our first time at IJL, and we expected to see more buyers, but traffic was very slow, which was disappointing.”
Some Israeli diamantaires in London complained that the diamond companies were badly positioned next to booths offering cheap, plastic jewelry, subsequently drawing a different consumer profile.
It wasn’t gray for everyone in London, however. Philippe Frey, owner of Frey Diamonds, pointed out that IJL attracts a more professional clientele, and that the “people who came, came to buy.” Attending the show for the second time, Frey said his company doubled its sales from the 2006 show. He noted that Frey Diamonds’ niche market in fancy colored and matched pairs generated a lot of interest with a strong showing for fancy pinks, with yellow and champagne colors coming in a close second.
Looking AheadDespite the mixed reviews from the London and Mumbai shows, Israeli diamantaires hinted that the shows might indicate a strong holiday season in those markets.
The heavy traffic in India occurring at the start of the high season — which runs September through December — could signal that consumers are feeling out the market with respect to prices with the coming months in mind, Saada theorized.
Some Israeli diamantaires were also confident the subprime mortgage crisis that broke in the United States in August did not unduly harm the industry, though others added that it was too soon to tell and suggested that it might affect holiday demand.
Eli Avidar, managing director of the Israel Diamond Institute (IDI), said a potential downturn in the U.S. economy could have a minor influence on the Israeli diamond trade, depending on its magnitude. “So far, we haven’t seen any effect on Israeli sales to the U.S.,” he said. Avidar added that he believed conditions were good for a strong holiday season.
Conversely, Nathanel said he believed the global market would be volatile in the next few months because of a shortage of large stones — particularly between 3 and 8 carats — and that customers would be reluctant to buy at higher prices following the decreased supply. “In order to generate sales, you need to blend old cost prices with new prices to compete in this market,” he explained.
He added, however, that a potential slump in the U.S. could be offset by the high demand that remains in the Far East and India. “Diamonds are still a good news story in these centers,” he said. “There’s enough new wealth there that they have the funds to spend on commodities like diamonds.”
The Marketplace• Demand is high for clean goods and better F+ colors.
• Fancy colors in all sizes are popular.
• Demand is good for 1 carat, with decreased interest in 2 carats.
• 6 carats+ is hot.
• 2.5 carats+ pears and marquises are in demand, with good movement of 0.50- to 1.5-carat hearts.
Article from the Rapaport Magazine - October 2007. To subscribe click here.