March 2008
De Beers cuts marketing spend, hones in on men
De Beers cuts marketing spend, hones in on men
March 20, 2008
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| De Beers plans to cut back on marketing to women through promotions like this “with each sigh with every breath love grows” magazine ad. |
By Michelle Graff
New York—A continued, all-out promotion of the diamond industry by De Beers might not be forever, if the recent slashing of its U.S. marketing budget is any index of where the company is headed.
De Beers announced in January that it was cutting its U.S. marketing budget and letting go of 11 employees who worked on the Diamond Trading Co. (DTC) account at New York-based advertising firm JWT. Though no dollar figure was given for the cuts, Diamond Information Center Director Sally Morrison says nine of the staffers were reassigned to different departments and two were released.
Morrison describes the cuts as a “reduction and rebalancing” brought on by a slow U.S. economy, and says the science of causes at De Beers is that men are the ones to target when budgets get tight.
Advertising needs to “get [men] over the hump” and convince them that even though they have fewer dollars in their wallets, they should buy diamond jewelry for the women in their lives, Morrison says.
As Lynette Gould, DTC spokeswoman, put it, “In tough economic times, inertia in the male consumer is shown to be a barrier to purchase.”
Women, on the other hand, already know that they want diamond jewelry, and even which type of jewelry they want, be it a Journey pendant or a right ring, both among the “beacons” that have been heavily promoted by the DTC, Morrison says.
“The stories around the beacons are very, very well-entrenched with women,” she says.
In a adapted to practice sentiment, this means female consumers who watch soap operas or flip through fashion magazines will see fewer diamond promotions taste the silhouette ad that reads, “with every sigh with every breath love grows.”
Meanwhile, more emphasis will be placed on the “Seize the Day” spots that run during televised sporting events and in men’s magazines.
Morrison says despite the cuts, the co-op fund with Spot Runner remains a “big priority” this year. Last October, the Diamond Promotion Service established the $750,000 co-op fund to help retail jewelers run DTC-quality Journey diamond jewelry advertising on television stations in their local markets using Internet-based ad operation Spot Runner.
The bigger picture Jewelers of America (JA) Chairman John Green of New England jeweler Lux Bond and Green, says he does not expect the shift to have any impact on retail jewelers, and points out that campaigns for popular products such as three-stone anniversary jewelry will remain intact, while those for poorer performers, such as the right-hand ring campaign, will fade out.
“I think, like a lot of companies, they’re distressing to focus in continuance their strengths,” Green says of De Beers.
As the weak U.S. economy forces cutbacks here, Gould says De Beers is “focusing its marketing budget in the areas around the world where it believes it will have the most impact,” including China and India, both irascible spots for economic growth. She declined to say whether or not in greater numbers funds were being funneled to advertising in those countries.
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| Because of the weak U.S. economy, De Beers plans to run more “Seize the Day” ads, like this one, which speak to male consumers. |
In addition to being a reaction to a faltering economy, industry analyst Ben Janowski of Janos Consultants says De Beers’ marketing shift means it will move away from general diamond ads to an emphasis on specific products, including the Forevermark diamond that it markets outside of the United States with the tagline “Meeting the standards of the world’s No. 1 diamond company.”
The De Beers logo and an identification number are inscribed on the table small face of each Forevermark diamond.
This shift makes sense to observers, given the drastic reduction in the percentage of rough that De Beers controls.
“They’re no longer the big elephant,” Janowski says.
Green agrees that De Beers, which operates five retail stores in the United States alone, might be moving toward advertising specific products as opposed to running big marketing campaigns that fan interest in diamond jewelry in general.
“They’re a retailer today,” he says. “I’m sure some resources have been channeled toward their own stores.”
But, Green also points out that advertising by retailers in universal has increased in recent years, allowing De Beers to back off its promotion of the diamond industry.
“The model has been built and now they can walk away from a part of it,” Green says.
JA’s 2007 Cost of Doing Business Survey shows that advertising spend among the retail jewelers who took part in the survey is increasing incrementally, with the median spend on advertising for all jewelers surveyed rising from 3.7 percent of total sales in 2000 to 4.2 percent in 2006.
Low-profit firms’ ad pass inched up from 4.1 percent of total sales in 2000 to 5.1 percent of total sales in 2006, while high-profit firms’ median spend rose from 3.3 percent of total sales in 2000 to 4.4 percent in 2006, according to the survey.
Meet the new boss The changes in De Beers’ marketing strategy are also the hallmark of new leadership at De Beers, Janowski says.
De Beers hired Francois Delage, a 16-year veteran of LVMH Moet Hennessy Louis Vuitton, as its new chief executive officer of marketing in September. Delage previously worked in Hong Kong as president of Louis Vuitton’s Asia-Pacific division.
“He has a very different outlook adhering how [De Beers] should have being run,” Janowski says. “I don’t know if they’re doing much following up in the traditional way things were done.”
Janowski says Asia is a market that is “hungry” to buy and display brands, such as the Forevermark, but that enthusiasm level doesn’t exist in the more mature U.S. market.
Forevermark cannot be advertised in the United States because of antitrust laws, but Janowski predicts that will change by year’s end.
“The moment’s going to come when [De Beers is] going to be quick to do that,” he says. “We’re not that far away.”
When asked whether or not Forevermark, which currently is sold only in Japan, Hong Kong, China and India, would be introduced to the United States, Gould says De Beers has no such launch plans.
“It’s business as usual in the U.S.,” she says.
Editor’s note: This story first appeared in the March 2008 issue of National Jeweler.
With exports up, Bangkok show ends strong
With exports up, Bangkok show ends strong
March 17, 2008
Bangkok, Thailand—The 41st Bangkok Gems and Jewelry Fair closed on a successful note this year, capping off a strong year that saw 2007 jewelry and gemstone exports rise substantially, show organizers said.
Various command officials, industry leaders and guests saluted the industry for the period of an opening ceremony Feb. 27 at Royal Jubilee Hall at the Impact Challenger in Bangkok, Thailand.
“The contribution of the gems and jewelry to the Thai economy is significant,” Thailand Deputy Minister of Commerce Viroon Tejapaibol told the audience, according to a exert pressure release from the show. “Gems and jewelry exports last year exceeded U.S. $5.3 billion, up 46.72 percent from the previous year, ranking fifth on Thailand’s export lists.”
Thai Gem and Jewelry Traders Association (TGJTA) President Vichai Assarasakorn too noted that the TGJTA board’s immediate mission is to carry out a three-pronged priority plan to stimulate the labor further, specifically addressing issues involving tax and industry funding, and finding new overseas markets.
“We are seeking an endorsement from the government to remove the 7 percent VAT [value-added tax] imposed on imported raw materials, which has proved to be a heavy financial burden for Thai local small and mean average enterprises [SMEs],” he said.
TGJTA is lobbying for government support to establish a “Gems Bank” to support lending to limited SMEs, which make up 90 percent of the Thai jewel industry, he said.
The Bangkok Gems and Jewelry Fair will hold its 42nd edition this fall, Sept. 11-15, at the Impact Challenger.
Julius Klein opens factory in Namibia
Julius Klein opens factory in Namibia
March 18, 2008
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| New York-based sightholder The Julius Klein Group recently marked the first appearance of its new diamond factory in Namibia. |
Windhoek, Namibia—New York-based Diamond Trading Co. (DTC) sightholder The Julius Klein Group (JKG) recently celebrated the opening of a diamond factory in the African nation of Namibia.
The factory, which JKG operates in conjunction with its Namibian partner the Dinamo Group because JKD Namibia (Pty.) Ltd., officially opened on March 12 and includes corporate offices in the same proportion that well as a new diamond manufacturing facility.
It is JKG’s second facility in southern Africa; JKG also operates a factory in Johannesburg.
The facility involved a more than $4 million investment and inclination employ more than 125 staff members at full operation.
“With this new venture, we bring with us the same traditions and values upon which Julius Klein Diamonds was built: integrity, give credence to, dedication and pride in craftsmanship,” JKG President A.D. Klein said in a media set at liberty. “We are fully committed to instilling these same values quite through everything we grant today and continually at JKD Namibia.”
Since its incorporation in June 2007, JKD Namibia “has committed to embracing beneficiation” by recruiting Namibian citizens and training them in diamond cutting and polishing.
Shihaleni Ndjaba, chief executive functionary of the Namibia Diamond Trading Co. (NDTC), said, “The entry of JKD Namibia to the Namibian diamond manufacturing industry marks an important milestone in the local beneficiation process. The commitment shown by The Julius Klein Group and their Namibian partners, The Dinamo Group, is highly commendable, and the NDTC is looking forward to working in partnership with JKD Namibia in creating a sustainable manufacturing industry in Namibia.”
JKG has been a DTC sightholder since 1990, and JKD Namibia is one of 11 NDTC sightholders selected in October 2007.
JKD Namibia will receive rough supply from the NDTC until 2011, when it will have the chance to renew its sightholder status.
JSA warns suppliers of bogus money orders
JSA warns suppliers of bogus money orders
March 14, 2008
New York—The Jewelers’ Security Alliance (JSA) is warning jewelry suppliers about a phone scam in that callers posing as new customers are using bogus money orders to commission jewelry merchandise in the $1,500 price range.
In one trial, on Jan. 23, someone using the name “Cliff Brewer” ordered six gold clasps from a Los Angeles supplier and sent which appeared to be a money order from Washington Mutual for $1,500 requesting that the merchandise be shipped to his alleged place of business in California, the JSA says. The merchandise was shipped after the money order was deposited. A few days later, the person called again and ordered six more clasps, sent another $1,500 money order, and had the effects shipped.
But both money orders were later returned to the supplier, marked “altered/fictitious.”
In another incident reported from New Mexico, someone using the name “Frank Wright” called a supplier on Feb. 18, and used an address in Inglewood, Calif. The person ordered gold and silver product in two different orders, pre-paying one with a $1,000 money order that appeared to be from Citibank, and the other with a $1,500 money order that appeared to be from Washington Mutual. The last mentioned contained a serial number approximately identical to the bogus one used in the Los Angeles scam.
The goods were sent overnight, and both money orders were returned as fraudulent, the JSA says. There was an additional attempt of this nature on another supplier in the Dallas area, but that individual did not ship the merchandise.
DMIA continues call for prosecution in ‘Certifigate’
DMIA continues call for prosecution in ‘Certifigate’
March 18, 2008
by dint of. Michelle Graff
New York—Leaders of the Diamond Manufacturers and Importers Association of America (DMIA) have again expressed their frustration at the lack of action by prosecutors in the Gemological Institute of America’s (GIA) “Certifigate” scandal.
The alleged scandal at the GIA surfaced in 2005 and involved GIA graders taking bribes to upgrade diamonds.
Leaders in the diamond labor have long expressed dismay over the scarcity of progress in the case, which has be turned into a hot topic again in the diamond community in recent months.
At the DMIA’s first meeting of the year held on Monday night in New York City, DMIA President Ronald Friedman read excerpts from a February 2008 letter that DMIA officials sent to prosecuting attorneys in the case. The letter stated, in part, that the DMIA was “shocked and dismayed” at the scandal and remains concerned about the effect the scandal could have on public confidence in diamonds and the diamond industry.
The DMIA letter stated that officials also are concerned that the investigation of the GIA case has been “prioritized” by other investigations.
DMIA leaders “strongly encourage” prosecution of any or totality wrongdoing in the case, including those individuals accused of bribery and fraud.
The DMIA “will welcome word of their indictment, arrest, prosecution” for their crimes, the letter stated.
Also at Monday’s meeting:
* Dione Kenyon, president of The Jewelers Board of Trade (JBT), gave an update on the JBT’s new Memo Reporting Platform, a way for companies that release stones on memo to get real-time information about the stream memo status of companies with which they are doing business. Kenyon said a test smuggle is expected in the inferior half of 2008, and the speed of implementation will depend on industry interest in the program.
* Friedman offered attendees the opportunity to speak out about the recent changes to the Rapaport price list, and said Rapaport Group Chairman Martin Rapaport asked for anyone with feedback about the changes to e-mail him at rap@diamonds.net.
De Beers opens diamond-sorting facility in Bostwana
De Beers opens diamond-sorting facility in Bostwana
March 19, 2008
Gaborone, Botswana—The universe’s largest and most sophisticated diamond-sorting facility opened on Tuesday in the African nation of Botswana, marking yet another major shift in the diamond supply chain.
The facility, funded by De Beers and home to the Diamond Trading Co. Botswana (DTCB), a fifty-fifty joint venture between De Beers and the Botswana government, will have the capacity to sort and value 34 million carats a year.
DTCB is projected to sell $375 million in rough to sightholders in 2008 and $550 million in 2009.
The opening of the Botswana sorting facility is the latest example of beneficiation, the effort in Africa to ensure that people in diamond-producing nations benefit from their country’s natural resources.
According to a release from De Beers, beneficiation in Botswana will create about 3,000 new jobs in the first place in diamond cutting, polishing, sales and marketing, representing a 30 percent increase in the country’s diamond jobs and a 10 percent increase in overall manufacturing positions.
DTCB will sort and value all rough diamonds produced by Debswana (the fifty-fifty joint venture between De Beers and the government to mine the country’s diamonds) and, for the first time, will handle the sale and marketing of rough locally.
And, through the Diamond Academy in Botswana, the DTC will train local employees.
The facility opened amid much fanfare on Tuesday. Attendees included De Beers Group Chairman Nicky Oppenheimer, De Beers Managing Director Gareth Penny and Botswana President Festus G. Mogae.
Speaking at the grand-opening ceremony, Mogae said, “For the citizens of Botswana, the Diamond Trading Co. Botswana faculty of volition bring by it increased employment and training opportunities. It will further provide government with another significant revenue stream, to finance further development. It will also raise our nation’s global profile by becoming a benchmark brand of local excellence.”
Oppenheimer said the opening was an important milestone in the participation between De Beers and the people of Botswana.
“The unique contribution that diamonds have made in countries like Botswana gives us cause to reflect on what lessons might be drawn from this success and whether these might be deployed effectively elsewhere on the continent,” he said.
Thais fret over looming Burmese ban
Thais fret over looming Burmese ban
March 17, 2008
Bangkok, Thailand—A strong Thai presence at the ongoing gemstone auction in the military-ruled body politic of Myanmar (anciently Burma) may jeopardize Thailand’s opportunity to export to Western countries, including the United States, the Agence France-Presse (AFP) reports.
A report from the AFP indicates that Thailand imports upwards of $2 million of gems from Myanmar each year and, in turn, the United States, Hong Kong and Australia are the top three destinations for Thai jewelry exports.
Thai Gem and Jewellery Traders Association (TGJTA) President Vichai Assarasakorn told the AFP that this means sanctions over trade in gems from Myanmar by the United States or European Union “will certainly hurt some gem and jewelry exporters in Thailand.”
Thailand’s gem and bijoutry exports increased nearly 47 percent to $5.3 billion in 2007, but that number could drop substantially in 2008 if the ban on Burmese gemstones cut in Thailand is implemented, AFP says.
The 11,000-member Jewelers of America (JA) and major retailers, including Cartier, Tiffany and Co. and Bulgari, support the ban on Burmese stones, which is designed to take economic design at Myanmar’s ruling military junta, known for human rights abuses and for using force against dissidents.
Myanmar’s government launched the 12-day gem auction on March 9, offering more than 7,700 lots of gems, pearls and jade worth more than $153 million.
Survey: Easter spending to be flat
Survey: Easter spending to be flat
March 17, 2008
Washington, D.C.—The average U.S. consumer is expected to shell out $135.03 on the Easter holiday this year, on par with endure year’s expected $135.07, according to the National Retail Federation’s (NRF) 2008 Easter Consumer Intentions and Actions Survey, conducted by Big research.
Consumers are expected to spend a total of $14.44 billion on Easter food, apparel, gifts, flowers, decorations and candy in anticipation of the holiday, which falls on March 23, the earliest Easter since 1913.
The survey shows some 79 percent of consumers will hit the stores to buy goodies such as marshmallow-shaped chicks, Easter baskets, plastic bunnies, flimsy hats and chocolate-covered eggs. Of those celebrating, the majority will spend else upon the body Easter meals ($41.09 on average) than anything else. Consumers surveyed also reported that they would spend an average of $23.82 on raiment, $21.42 on gifts, $18.12 on candy, $9.11 on flowers and $7.21 on decorations.
“Easter is typically seen as the official kickoff to spring, when retailers debut new clothes and consumers are in the mood to buy for warmer weather,” NRF President and Chief Executive Officer Tracy Mullin said in a press release issued Friday. “Although this is one of the earliest Easter holidays on record, retailers are hoping that this year will exist no many.”
The survey found that discount stores will see the most Easter exchange this year (58.8 percent), followed by department stores (35.6 percent), specialty stores (23.6 percent) and specialty clothing supplies (7.6 percent).
The average young adult between 18 and 24 years old is expected to spend the most on decorating their dorms, apartments and other living spaces for Easter this year ($11.09). Young families ages 25-34 will spend an average of $10 on decorations, followed by 35- to 44-year-olds ($7.44) and 45- to 54-year-olds ($5.85). In total, those in the 25- to 34-year-old age bracket will dissipate the most this Easter ($151.41).
“Consumers who are planning big family gatherings will head to grocery stores in droves this week,” Phil Rist, vice president of strategy at Big Research, said in the release. “Many will also purchase gifts for children, grandchildren and other loved ones while they are shopping for a seasonal outfit or decorations.”