Rapaport Magazine

Israel

By Avi Krawitz
Economic, Political Issues Impact Market

The International Diamond Week that took place in mid-February in Ramat Gan saw some dealer trading, but largely reflected the mood in the wider market with concerns that consumer demand remains sluggish. “This edition of International Diamond Week is taking place during one of the most sensitive periods the world diamond industry has ever known,” said Yoram Dvash, president of the Israel Diamond Exchange (IDE). “The gap between rough and polished prices still prevents us from making a profit, and economic and political changes continue to impact our business.”
   Dealers acknowledged that fewer exhibitors participated in this sixth edition of Diamond Week than in previous years. One Mumbai-based buyer added that there were also fewer goods available, and that it was difficult to find the right goods at the right price.
   Shortages continued to define the market and there were very few “new” goods available since manufacturing was at such low levels during the second half of 2015. However, there is some anticipation that new polished supply will start to become available after rough trading increased significantly in January.
   In fact, most dealers who spoke with Rapaport Magazine expressed concern that polished demand did not support the recent level of rough buying. Polished trading is being driven by dealer demand rather than an increase in consumer demand for diamond jewelry.
   “We’re keeping our expectations low for this year given the state of the global economy,” said one Israeli dealer who requested anonymity. “We don’t feel that we can make any long-term plans in such a market.”

Forging Partnerships
   Recognizing the difficult market, the IDE used the International Diamond Week as a platform to announce new opportunities for the trade. The IDE signed a memorandum of understanding (MOU) with the Istanbul Chamber of Jewelry (IKO), with the aim of increasing commercial transactions between their respective members. The parties had agreed to cooperate in the organizations’ respective trade shows, to meet regularly to discuss business opportunities and to facilitate trade between the respective industries.
   Eli Avidar, who was recently appointed managing director of IDE, noted that Turkey is a gateway to the Near East and many countries in the Russian Federation have fast-growing economies and an enormous appetite for diamonds and diamond jewelry. “Our cooperation can lead to many business opportunities for Israeli diamond dealers,” he said.
   The IDE also signed an MOU with the Hong Kong Jewelry Manufacturers’ Association (HKJMA) aiming to forge stronger ties between their respective members. Wings Cheung, general manager of the association, explained that the partnership made perfect sense since Hong Kong jewelers are looking to expand their sourcing and consider Israel a good market for responsibly sourced diamonds — particularly with regard to monitoring lab-grown diamonds, which is a growing concern in Asia Pacific. Cheung added that Israeli prowess in technology was an area that he felt Hong Kong jewelers could learn from and apply in their operations.
   IDE also aimed to create opportunities in the local market by announcing the creation of the Israel Diamond Jewelry Association. In its statement of purpose, the association acknowledged the role of jewelers in expanding consumer desire for diamonds.

Closer to Consumers
   The goal of raising consumer demand came under the spotlight during an International Diamond Week panel discussion on marketing diamonds, which featured Jean-Marc Lieberherr, the newly appointed chief executive officer (CEO) of the Diamond Producers Association (DPA), Alex Popov, chairman of the World Diamond Mark Foundation, Patricia Syvrud, executive director of the World Diamond Council (WDC), and jewelry designer Stephen Webster.
   Syvrud stressed that it is essential to understand the vulnerabilities in the supply chain in order to understand how to market diamonds. From that basis, the WDC aims to be a proactive voice sharing the good that the diamond industry does, she added.
   Lieberherr noted that one of the biggest challenges facing the industry is transmitting that positive message to Millennials, many of whom have never been exposed to diamond marketing. The DPA recently conducted research among Millennials in the U.S. that found they are looking to connect on an emotional level and that the industry needs to convey a diamond’s special qualities and emotional story.
   For the Israel diamond industry, Dvash urged diamantaires to move closer to the end consumer and understand their needs. He concluded that activity surrounding the International Diamond Week encompassed much of that goal, particularly with the MOUs that were signed and the Israel Diamond Jewelry Association initiative.
   “We need to shorten the distance between diamond dealers and diamond jewelry manufacturers,” Dvash said. “We have to find the optimum way to get us closer to the end consumer.”

Article from the Rapaport Magazine - March 2016. To subscribe click here.

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