Down But Not Out :
Quick numbers as we begin: Israel's diamond exports added 49% in November 2009, reaching US$524.1 and rough diamond exports shot up by 144% to US$256.8 million, reaching a joint growth rate of 71% and US$780.9 million. The Israeli Industry that shrank 60% in the fourth quarter of 2008 is reviving with smaller goods moving at a good pace again. Nonetheless, the bigger goods will take some more time to get moving, opines David Namdar of Moshe Namdar & Co., “Small sizes have picked up but people are still not encouraged to buy bigger sizes. Prevalent fluctuations have also added to the confusion. However, I am hopeful that once the rough prices stabilize, confidence will be restored and things will become usual.” Bumi Traub of ABT Diamonds Ltd adds, “The Israel diamond industry is on the safer side now. There are less but stronger players in the industry. Turnover that had gone down by 50% is picking up again. In polished diamonds 3ct and lesser sizes have picked up both in terms of demand and prices significantly. I think by first quarter of next year the bigger sizes should also move faster.” Festive season will also promote diamond sales further, “At the Hong Kong show we observed that Indian buyers were negotiating actively which indicates that there is a genuine need of merchandise. We are optimistic for the future, the shopping season in US would be stable and the American market will improve. We are determined not to let the past dictate our industry’s future” says Eli Avidar of Israel Diamond Institute.
Eye-Opening Lessons :
The Israel diamond industry could have been in a much weaker state if diamond producers did not hold their output and banks did not contract their credit policies in time. These timely measures certainly avoided wide spread bankruptcies. Huge stocks of inventory, credit and memo shipments, dependence on one single market and panic are some of the major reasons attributed to the drastic downfall. The industry has certainly learnt its lessons and has rectified evidently, “We started investing more in jewellery manufacturing at the start of this year. In addition, we shifted our focus to markets other than America. The non traditional markets like India, China and Far East are recovering faster than the US. We also feel that long term credit and memo system should be eliminated in the diamond business for its well being. Hopefully, people learnt their lessons from the slowdown” tells Avi Paz of Avi Paz group. Almost everyone has shifted their focus to other markets which they feel are greener; India, china and Far East are the most sought after locations at the moment. Besides, there are other learnings which are not quantifiable but still important to avoid such an adverse situation in future. “I have reduced credits significantly but not stopped them completely. I still continue to work with experienced people. India and Far East make a major portion of my portfolio. Crisis taught me to rely on my own experience. Listen to the bankers, government, media and others but do what you feel is right for your business,” commented Rony Eitany of Regent Diamonds.
However, unity and cooperation in the industry remain the biggest lessons of all, says Eli Avidar, “The year 2009 showed us that ego and competition amongst the diamond centres is futile and better co-operation is required for survival. We are looking forward to work together with other diamond sectors for mutual benefits.” IDI exercised its leadership impressively during the downturn. It optimally utilized resources to the benefit of the industry. “TOGTHER WORKS campaign initiated by IDI helped the industry during depression. When the crises started in 2008, we opened a VIP buyers program and offered facilities like free hotel accommodation to facilitate trade. We created a positive environment through this campaign” added Eli Avidar.
Promotions, Marketing Encourage Consumer Confidence :
A commendable step that companies in Israel took was not to cut marketing and advertising costs during the downturn. In fact many of them increased these efforts to retain consumer confidence, “We invested in advertising and marketing heavily. We cut down other costs but did not compromise on these. In addition we looked at newer selling channels like the virtual space,” reveals Yair Sahar of Sahar Atid Diamonds to which Nadav Attar of Lili Diamonds adds, “It was panic situation in the beginning of the crisis and we re-evaluated our marketing strategies. Then, we launched a new strategy again in full strength which will picture Lili Diamonds and Lili Jewellery into the online world besides other channels. Approximately 200 people are involved in Lili diamonds, and like any other company, it was inevitable that we had to cut our manpower. Luckily, all of them are back at work.” Online selling has also caught attention as it’s a more cost effective medium and has a wider reach. “I believe that crisises also create opportunities. Especially in periods of crisis it is needed to strengthen marketing and service. That’s why few of the things that we did were to increase the amount of sales people in our company and launch a new website that is friendly, easy to operate, and service oriented. The Israel diamond industry increased its consolidated marketing efforts which included workshops for people in the industry to enhance their knowledge of online sales and promotional options available on the web like social networking.” says Assaf Granot of A.G DiamonDirect Ltd.
A Cautionary Word:
Stocking rough at a premium price was a major factor that led to shutters coming down for many companies. A correction emerged with mining companies holding the output from the market for a while but the trend has caught up again, various mining giants in Russia, South Africa and Australia have started supplying more rough and prices have also risen considerably. These companies believe that eventually demand will outpace supply in the next decade. However, some traders fear that market has again begun to act irresponsibly, “Looks like many in the rough diamond trade have still not learnt essential lessons. They are still paying high premiums on rough stock, following which the rough prices will shoot up and we would get stuck in the vicious circle all over again” apprehends Shmuel Schnitzer of M.Schnitzer & Co.
Speculation Invited Misery :
A set of diamond manufacturers in Israel believe that the downturn was partially a result of speculation, “I believe speculation was bigger than the actual problem. There was shortage and fluctuations for a while but they could have been tackled calmly as well. Speculation made the situation worse by making banks apprehensive, who then started exerting pressure. Once they relaxed the credit period things started falling in place” opines Benjamin & Joses Meirov, MID DIAMONDS Ltd. Support from banking institution was another pain that the entire industry felt unanimously, “Banks play a very important role in this business; they are like life saving oxygen. When banks curtailed support diamond business started dwindling. One of the major reasons of faster recovery in the Indian markets is because they have higher support from financial institutions” suggests Amihai Zivan, EZ DIAMONDS. “The banks reduced support very significantly. Consequently, people had no money to hold their stock. They were forced to dispose of their inventory even at loss and it definitely was one of the reasons why prices came crashing down dramatically” pointed out Yair Sahar of Sahar Atid Diamonds.
Optimism Prevails :
Diamonds may be losing share to other luxury goods but there unique timelessness distinguishes them from every other commodity on this planet. “If the economy picks up even slightly, people will continue to buy diamonds. Diamonds are cheaper than many other valuable things and permanent in nature as well. A holiday would cost anywhere between US$ 5,000-10,000 and diamonds would also range similarly but will last forever and connoisseurs understand that. Diamonds are a unique investment,” comments Bumi Traub, ABT DIAMONDS Ltd. Diamond industry is hopeful and certain that diamond will never lose its luster and so go on for ever!
A commendable step that companies in Israel took was not to cut marketing and advertising costs during the downturn. In fact many of them increased these efforts to retain consumer confidence, “We invested in advertising and marketing heavily. We cut down other costs but did not compromise on these. In addition we looked at newer selling channels like the virtual space,” reveals Yair Sahar of Sahar Atid Diamonds to which Nadav Attar of Lili Diamonds adds, “It was panic situation in the beginning of the crisis and we re-evaluated our marketing strategies. Then, we launched a new strategy again in full strength which will picture Lili Diamonds and Lili Jewellery into the online world besides other channels. Approximately 200 people are involved in Lili diamonds, and like any other company, it was inevitable that we had to cut our manpower. Luckily, all of them are back at work.” Online selling has also caught attention as it’s a more cost effective medium and has a wider reach. “I believe that crisises also create opportunities. Especially in periods of crisis it is needed to strengthen marketing and service. That’s why few of the things that we did were to increase the amount of sales people in our company and launch a new website that is friendly, easy to operate, and service oriented. The Israel diamond industry increased its consolidated marketing efforts which included workshops for people in the industry to enhance their knowledge of online sales and promotional options available on the web like social networking.” says Assaf Granot of A.G DiamonDirect Ltd.
A Cautionary Word:
Stocking rough at a premium price was a major factor that led to shutters coming down for many companies. A correction emerged with mining companies holding the output from the market for a while but the trend has caught up again, various mining giants in Russia, South Africa and Australia have started supplying more rough and prices have also risen considerably. These companies believe that eventually demand will outpace supply in the next decade. However, some traders fear that market has again begun to act irresponsibly, “Looks like many in the rough diamond trade have still not learnt essential lessons. They are still paying high premiums on rough stock, following which the rough prices will shoot up and we would get stuck in the vicious circle all over again” apprehends Shmuel Schnitzer of M.Schnitzer & Co.
Speculation Invited Misery :
A set of diamond manufacturers in Israel believe that the downturn was partially a result of speculation, “I believe speculation was bigger than the actual problem. There was shortage and fluctuations for a while but they could have been tackled calmly as well. Speculation made the situation worse by making banks apprehensive, who then started exerting pressure. Once they relaxed the credit period things started falling in place” opines Benjamin & Joses Meirov, MID DIAMONDS Ltd. Support from banking institution was another pain that the entire industry felt unanimously, “Banks play a very important role in this business; they are like life saving oxygen. When banks curtailed support diamond business started dwindling. One of the major reasons of faster recovery in the Indian markets is because they have higher support from financial institutions” suggests Amihai Zivan, EZ DIAMONDS. “The banks reduced support very significantly. Consequently, people had no money to hold their stock. They were forced to dispose of their inventory even at loss and it definitely was one of the reasons why prices came crashing down dramatically” pointed out Yair Sahar of Sahar Atid Diamonds.
Optimism Prevails :
Diamonds may be losing share to other luxury goods but there unique timelessness distinguishes them from every other commodity on this planet. “If the economy picks up even slightly, people will continue to buy diamonds. Diamonds are cheaper than many other valuable things and permanent in nature as well. A holiday would cost anywhere between US$ 5,000-10,000 and diamonds would also range similarly but will last forever and connoisseurs understand that. Diamonds are a unique investment,” comments Bumi Traub, ABT DIAMONDS Ltd. Diamond industry is hopeful and certain that diamond will never lose its luster and so go on for ever!
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