On Election Anxiety, Clones and Major Miners: Edahn Golan Visits JCK Las Vegas

Opinion piece
11/06/2016 18:15

Industry analyst Edahn Golan provides a rundown on last weekend's JCK show in Las Vegas, touching on traffic in the jewelry and diamond areas, the Diamond Producers Association's (DPA) marketing campaign, the hot topic of synthetic diamonds and ALROSA's strong presence in the desert. Particularly the high-end jewelers reported positive results, though much of the time the area was distinctly quiet. "Quiet surroundings are part of the desired ambiance of the high-end sections," writes Golan, "However, the expected hustle and bustle among the rest of the jewelry sections was near nonexistent this year. In fact, in some sections of the show, it was eerily quiet." Among potential influencing factors, Golan noted (and we can confirm) that the upcoming U.S. elections are making buyers cautious, as a sense of uncertainty prevails in an election year.

The loose diamond area saw much greater activity and trading, "However, sales were not back to their pre-crisis 2013 levels. There was demand for American goods, mainly 1-carat rounds in HIJ colors and SI clarities with GIA certificates, with a few reported sales of smaller goods and large diamonds." Branded goods in particular were in high demand. Concerning prices, Golan notes that, "In addition to 1-carat goods, there were some sales of 3-carat and larger diamonds. Their prices have been declining since the Hong Kong show in March, and the current show only pushed their prices even further down, leading several traders to lower prices to close deals." In light of manufacturers’ inventories filling up as the large rough supplies from January, February and March make their way through to the polished market, prices are expected to fall.

Perhaps the hottest topic of the weekend was synthetic diamonds (or 'clones' as one person termed them) and the DPA's launch of their "Real is Rare" campaign to promote natural goods. "The growing prevalence of lab-grown goods in the market is no match for their psychological presence. Everybody is talking about them, many are worried about it, yet few were doing anything about it. Well, that is changing. Not only does the DPA’s new generic diamond marketing strategy address it, so do several other initiatives. On the retail side, many are adopting the approach that scares the hell out of the diamond industry: acceptance." Golan also heard that the DPA's first campaign using the new slogan is planned to be launched in September or October, ahead of the 2016 holiday season. "The budget is limited, just $12 million, which is peanuts compared to the $50-$60 million (and more) spent annually on past generic diamond campaigns." The entry of Swarovski into the market has many concerned, but it is anyone's guess what impact this may have. Perhaps most significant is that Swarovski's may provide, "A stamp of approval that will further promote the lab-grown category."

Lastly, the major miners De Beers and particularly ALROSA had a strong presence at the show. "ALROSA was at the show en force. A large team that included CEO Andrey Zharkov, VP Andrey Polyakov, head of client relations and marketing Vladlen Nogovitsyn and more walked the halls, met clients and were generally present, something that was not seen a few years ago." Golan also notes that, "The big departure is from being a mining company that sells rough diamonds to a diamond company that is an active player in the market. As part of that transformation, ALROSA met with the larger diamond jewelry retailers, such as Signet Jewelers and Chow Tai Fook, 'to explore the possibility of joint marketing events aimed at the promotion of diamond goods consumption.'" One highly interesting initiative moving forward is discussion of a mine-to-finger diamond tracking program - a system of identifying every diamond from its recovery to the sale to end consumers. "This is a brewing topic in the diamond industry, and several such initiatives are being explored both on the technical side as well as on the practical aspects." Rio Tinto announced a similar program to promote provenance transparency.