Despite its relatively young record Windiam bvba, the Belgian company which started its operations in the diamond market in 1991, even then leaned upon rich experience and knowledge of a whole generation of diamantaires to whom belonged its CEO Gon Raz now successfully expanding its business geography. Rough&Polished asked him to answer several questions about the situation in the market.
Will global polished demand be able to develop progressively and sustainably within the next 5-8 years in the absence of large-scale marketing programs formerly pursued by De Beers?
I believe that the rally we have seen in the last six months in diamond prices was based more on speculation in the major markets than anything else. I think that we will see a correction on both rough and polished prices in the second half of the year as liquidity again becomes a problem together with banks being much less liberal as a result of the last economic crisis.
I believe that in the long term demand will develop as the two giant economies of India and China are expected to continue to grow in the next 5-10 years and so their middle classes will purchase diamond jewellery, while the U.S.A. and Europe will continue to slowly shrink.
In the short term (1-3 years) I think that we will see a reduction in sales of diamond jewellery as the U.S. and Europe are still seeing very slow growth in their economies combined with the rapid increase in diamond and gold prices leaving diamond jewellery out of reach for many consumers.
I believe that a new world wide massive marketing campaign by the major producers can improve the numbers in the short term and long term.
Consumer markets in the past decade underwent qualitative changes giving rise to quickly renewed industries (mobile phones, computers, new types of home electronics) offering goods in price ranges close to an average ticket for diamond goods and enjoying brisk demand among the young consumer audience. May it produce a serious impact on demand for diamond jewelry in the nearest 5-8 years?
I think that your assumption is wrong. All these new accessories which became very popular are much cheaper than the average ticket price for retail jewellery, but all these products are backed by very powerful professional corporate marketing campaigns such as Apple, Microsoft and others.
Twenty year old women will definitely buy themselves an IPAD before they get a diamond ring and in western society marriage is happening later in life so I believe that most diamond jewellery sales will come from the engagement rings and less from the present business.
The success achieved in the CVD technology used to synthesize diamonds is obvious. What are the prospects for the diamond market in case such products will be distributed without any control?
I believe that the market for synthesized diamond jewellery will develop and create challenges to the natural diamond markets:
In the first place, it is a cheaper alternative to a real diamond sold at the price of semi precious stones or even cheaper.
In the second place, there is a risk of fraud in case synthesized diamonds are mixed into natural diamond parcels and later found out by the consumer resulting in lost confidence to natural diamonds.
Again I think that massive marketing and education campaigns are necessary both for consumers and the trade.
Is there any chance of organizing a civilized secondary market of diamonds? In other words, is it essentially possible to generate a mechanism giving polished diamonds some properties of an investment instrument?
As long as there will be no spot price for diamonds as a commodity I don't see major investments in diamonds.
The Zimbabwe case proved a not-too-high efficiency of the Kimberley Process. Should the Kimberley Process be subject to re-organization, and if it should in which way?
I think that the Kimberly Process did what it was made to do very efficiently and I remind you it was made to fight the use of diamonds to finance civil wars in Africa and as you may know in diamond mining areas there are no civil wars right now and I think we can give a big credit to the diamond community and the Federation of Diamond Bourses for creating the Kimberly Process and fighting blood diamonds vigorously.
The Zimbabwe story is a very different story and it is politically and commercially motivated. I never understood why Zimbabwe was thrown out of the Kimberley process, there is no embargo on any other Zimbabwean product and I hope and believe this embargo the diamond community imposed on Zimbabwe will end soon so this poor country can generate the money it is so much in need of from the sale of their diamonds.
Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels
