At this time, as these are the last few weeks before the end of year holidays, most of us will be quite busy, Maxim Shkadov, President of the International Diamond Manufacturers Association (IDMA), says in his address published on the IDMA portal at http://idma.co. However, I think this is as good a time as any to invite our industry peers and do some strategic thinking about the future of the diamond supply pipeline.
In no small terms, the last couple of days this congress have done just that, no matter how controversial the issues that came up are, we as an industry will always address these challenges.
In past October, at the 35th World Diamond Congress, discussions on rough supply were largely skirted at the joint meetings.
The only time it was discussed, albeit indirectly, was during the presentation of the World Diamond Mark programme, which I hope will be successful, for the sake and benefit of the entire diamond supply pipeline.
However, I'd like to pause for a moment and discuss the current rough diamond market, analyze it and understand about what is actually happening out there.
Let's take a look at who exactly are the customers buying rough diamonds, what their position and role is and how the industry that supplies polished to the end user actually does it, and most important, what they are saying.
I am sure that different people will give different answers to the above questions For instance, they may say that
- that the only product manufactured from rough diamonds is polished diamonds;
- or that the diamond polishing business is a money-losing business;
- or that attempts in the last decades to cause sight holders to invest their resources into growing market share for diamonds– as in the Supplier of Choice vision – have collapsed (thank you for that, Gareth Penny);
- or that in recent years the only buyers of rough who are making money on rough are those who speculate with it;
- or that prices for certain polished categories haven’t changed for 30 years while rough prices have soared;
- or that the members of new generations in family businesses don’t see much sense in carrying on;
Etc.
Other questions that can be asked about the future is why the rough suppliers are:
- depleting their clients’ resources by demanding rough prices that are higher than those the polished,
- devaluing their stocks;
- reducing prices month after month instead of limiting the flow of rough to the oversupplied market?
If the suppliers would care to answer these questions honestly, it would also help them understand where they might find themselves sooner than they expect - in the doldrums, together with the manufacturers. Sadly, there is no real competition in the rough diamond market. In a truly competitive market, when you fight for the client, you’ll see progress.
But when the client is turned into some kind of money extraction machine, we find ourselves where we are now. And no machine can function without the necessary lubricant to keep the cogs moving.
Surely, the producers, too, must know that sales of diamond jewellery are declining, and are losing market share within the luxury goods consumer market?
They, too, must know that a joint, dynamic effort is needed to increase demand for diamonds? They, too, cannot but grasp that such an effort should be funded by those who have the biggest stake in our pipeline, by those who sell their goods with the biggest profit margins? The question is therefore, why are they not stepping up to shoulder that effort?
Wake up, your business - our business - is under threat.
We, the manufacturers will all help you in this endeavor.
