With the global diamond market facing the kind of challenges that have not been seen for many years, it has never been more important to focus on niche markets. One of those markets is undoubtedly the fancy shape diamond sector, and it is one in which Israeli firms have a strong presence. Although round diamonds, particularly those up to one carat in weight and of mid to high clarity remain the most popular diamonds among consumers worldwide, there is a growing demand for fancy shape stones.
The American market has long been known for its demand for these stones, and in recent years Israeli firms have been directing their goods to the Far East market, particularly to Mainland China.
That is not to say that it has been an easy task, but Israeli manufacturers continue to develop their sales and marketing efforts in Asia. “It can often be tricky because certain shapes are not well regarded by some population groups,” said one manufacturer. "For example, princess shape diamonds can be difficult to sell because the Chinese usually do not like pointed cuts. It can signify bad luck.
“We attend all the major trade shows in the Far East, particularly in Hong Kong and Shanghai. We do that not just to sell diamonds and make contacts, but also to gather information about the market and ‘intelligence’ about what is happening in the market, changing tastes, what new opportunities exist and if there is a problem with certain cuts."
The United States and China are the two main global markets for fancy shape stones, as they are for all categories of diamonds. The Chinese market has become increasingly important for Israeli diamond firms over the past 10-15 years.
"The American market is much easier of course,” said an Israeli maker of fancy shapes. "We arrange meetings, fly to New York and present the goods for sale. We understand the American mentality. In addition, there are many offices in Israel of American firms or companies who represent them, and there are also many family and other connections. This makes our business operations relatively easy. The Chinese market, on the other hand, is very different.”
Meanwhile, Yoav Paz of Paz Diamonds, which produces straight-edge fancy shape stones, said: “It is a very steep learning curve. It is far from easy, but the potential opportunities are large so it is worth the outlay on getting to understand the complexities of the market.”
Among the many Israeli manufacturers of fancy shape goods are MID Diamonds Ltd. Limor Diamonds, Danny Avlas Diamonds, S. Schnitzer Diamonds, and Eli Yona Diamonds.
“We see China as a strong market with a lot more potential to come,” said Shmuel Schnitzer. “Fancy shapes are growing in popularity although progress is relatively slow. Chinese tastes and fashions often imitate those of the United States and because the fancy shape market is relatively strong we could well see China developing further in that direction.”
Schnitzer said that Chinese consumers tend to still prefer round stones, but that up to a quarter of the diamonds that S. Schnitzer supplies to the country are fancy shape goods. “These are mainly princess, pear, marquise and emerald shapes,” he explained. “The quality of diamonds in demand are D-H color and VVS-VS clarity and of high make. We have found that Chinese consumers may compromise on color but not on clarity."
Why did Israeli manufacturers move into fancy shape stones when round goods are still overwhelmingly popular? “It all comes down to finding a way to bring added value,” said Avi Paz, a former Israel Diamond Exchange president, and the owner of Paz Diamonds.
“Israeli firms are very good at finding and creating demand for new and different items. The Israeli mentality lends itself to looking for new markets and bringing extra value. There are many thousands of round diamond manufacturers and suppliers around the world, and that includes a great many in Israel. These are successful firms doing great work. But when there is an opportunity, based on great technical knowledge and experience and excellent production, then the opportunity is there,” Paz added.
Meanwhile, Limor Diamonds specializes in small fancy shape diamonds and claims there are few companies in the Israeli bourse which it does not supply. “We are a very young company, now in the fourth generation, involved in the business,” explained Roi Limor. “I believe our average age is probably the lowest among Israeli firms, and it is doubtless because of that that we are able to be so open-minded and have a modern and progressive business model.
“We are not stuck in old and perhaps outdated ways of thinking. I believe that it is because of this that we are able to provide a niche market with speedy service and to think in completely different ways.”
One of the largest Israeli firms in the fancy shape market is Dalumi Diamonds, which manufactures fancy shapes and makes jewelry set with the stones in both the Chinese and American markets. The firm has been involved in China, and the wider Asian market, for the last 19 years. Indeed, it was among the first Israeli companies to have a presence in Hong Kong, and to join the Shanghai Diamond Exchange.
The secret to expanding its fancy shape diamond production and selling to the Chinese market? Managing Director Vered Dalumi Yitzhaki says its jewelry lines are popular precisely because it uses fancy shapes which allows the firm to produce more jewelry items. “There is strong demand for princess and heart-shape diamonds.”
Yoav Paz said there was good demand last year for emerald cut diamonds up to one carat in weight. "Demand for baguette and princess shapes is also good, but the price of the rough has gone up so much and the price of polished has not risen so we have reached a point where manufacturing of these shapes has dropped. There is less of this type of rough on the market. "Companies do not want to stock any goods. They are happy to earn less and not be left holding inventory that they cannot move."
As for the future of fancy shape stone firms in the Israel Diamond Exchange, conversations with a range of manufacturers of such goods shows that the companies are there for the long haul. Demand for such items is not as strong overall as round goods – by far the most popular items. On the other hand, as one manufacturer pointed out, the number of companies involved in round stone manufacturing and marketing is vast and competition intense.
"That's not to say that selling fancy shape diamonds is easy – quite the opposite – but we are able to bring a wide range of shapes to the market that will, in time, become increasingly popular," he commented.
By our Israel correspondent Abraham Dayan
