Evidently, the diamond industry’s mood depends now on the next trade event. With the Chinese New Year and Valentine’s Day behind us, the focus now shifts to the upcoming Hong Kong and Basel trade shows.
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Follow the latest insights shared by All Diamond in memory of Ehud Arye Laniado and access all articles written by Ehud Arye Laniado
Other Supply Chain Players - The Banks
Financial institutions are another key stakeholder in the diamond supply chain, which Ehud believed expected greater transparency from the diamond sector. "Bank financing is the lifeblood of the industry. Without it, there would be no money for exploration or new store openings," Ehud stated in 2015. He also stressed the need to boost confidence in the diamond industry. This lack of confidence is evident in, for example, the decline in available bank financing over the past several years.
Recycled Diamonds
Recycled diamonds are another aspect of the diamond supply, which Ehud believed could benefit from greater transparency of the true value of diamonds. Recycled diamonds refers to diamonds that had been bought by consumers previously and are now back on the market for sale. Ehud agreed that the term "recycled" does not do them justice. "When discussing recycled diamonds in the past, some people in the diamond industry have shied away from the term 'recycled' because it cheapens diamonds. They make a good point… Unlike cars or electronics, the wear and tear on diamonds is minimal and can be repaired to perfection. This is one of a number of important aspects of these diamonds and therefore the term recycled simply does not do them justice. They are in fact reclaimed. Reclaimed for their beauty, reclaimed as a gift, reclaimed because their value is not lost, but maintained."
Reacting To Lab-Grown Diamonds
Beyond diamond players, Ehud explored other supply-side topics that have sparked debates over the years where he believed that similar to demand-side issues, greater transparency is central to address them. Lab-grown diamonds provide a good example.While their emergence was accompanied by rising concerns across the industry, Ehud believed lab-grown diamonds can play a complementary role to that of natural diamonds, provided consumers gain a better understanding of the inherent value of natural diamonds.
Possible Solution for Fragmentation – Alliances
As another possible way to solve the problem of fragmentation in the diamond sector beyond consolidation, Ehud encouraged the industry to explore strategic alliances. "Looking at other industries, there appears to be various ways to address the challenges of excess fragmentation in parts of the diamond sector. One option our sector can consider, especially given the slow trend in consolidation between players, is to make more use of strategic alliances."
Possible Solution for Fragmentation – Consolidation
Ehud explored possible methods of addressing the issue of fragmentation, drawing in part on lessons from other industries. First among them was simply consolidation, whether natural or through mergers and acquisitions.
Improve the Diamond Midstream
Delving further into the issue of fragmentation in the midstream (manufacturing) of the diamond sector covered in last week's post, Ehud said in August 2015, "The more we examine the facts, the clearer it becomes that the main problem faced by the diamond industry is that the midstream – the manufacturing sector of the diamond pipeline that mainly polishes diamonds – does not get its fair share of the pie."
Regaining consumer trust on the industry’s weakest links
In addition to improving pricing transparency, Ehud believed that the diamond industry should also tackle the other issues that have led to a decrease in trust in the sector as a whole.
Crystal Clear – From Rough to Polish
Improving the pricing transparency of polished diamonds is the first part of the two main components of the Crystal Clear philosophy. The other part, driven by the first, is the ability to then determine the prices of rough diamonds. The rationale that Ehud used here was that, ultimately, it is consumers who determine the price of a rough diamond based on how much they are willing to pay for its polished output.
Turning Crystal Clear Theory into Practice: Mercury Diamond Price List
The introduction of a transaction-based polished diamond price list is possible. The Mercury Diamond™ Price List which Ehud founded, provides wholesale polished diamond prices based on transaction prices in the wholesale market.
Crystal Clear – The 5th C
A key component of Mercury Crystal Clear™, the diamond pricing system which Ehud founded, is expanding consumer knowledge of diamond characteristics beyond the 4Cs (Carat, Color, Clarity and Cut) known to the ordinary buyer. "The importance of a transparent and easily understood pricing system for diamonds cannot be stressed enough. For many years, the general press and many consumers have been stating that the misunderstood differences in diamond prices are a turn-off."
The previous article highlighted the importance of irregularities and how they impact the value of a diamond. Irregularities, together with carat, clarity and color, are the basic components that determine a diamond’s value.
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In last week’s Market Update, it was suggested, “It’s never a good sign when ‘slow’ becomes a buzzword.” Is it any better when the buzzword is “confusion”?
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I have what I like to call a philosophy about diamonds and I’ve named it the Crystal Clear philosophy. At the heart of Crystal Clear lies a deep conviction that what today’s diamond buying public most needs is clarity about what they are buying and what they are paying for, when purchasing diamonds.
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It’s never a good sign when ‘slow’ becomes a buzzword. But the past few weeks in the global diamond trade have been undeniably slow – ranging from the business to business trade of polished diamonds, to orders from retailers, overall consumer demand and even the pace at which manufacturers are transforming rough diamonds into polished stones.
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