RAPAPORT... The Israel Diamond Institute Group of Companies (IDI) has embarked on a campaign to encourage diamantaires to move downstream into jewelry manufacturing as a means to enhance their position in an increasingly competitive market.
“Our traditional approach has been on loose diamonds only,” said IDI Managing Director Eli Avidar. “But for the Israeli industry to effectively compete in today’s economy, we feel it is necessary for our small and medium-size enterprises to penetrate the jewelry market.” He explained that the campaign was specifically targeting small to medium businesses because many of the larger Israeli players already have a presence in jewelry.
The move is part of IDI Chairman Moti Ganz’ vision to increase Israel’s competitive edge, particularly in light of the relative stability seen in diamond prices during the past 20 years, compared to commodities such as gold, platinum and oil.
Michael Aghbashoff, president of Denir Diamonds Israel and Denir International, manufacturers of loose diamonds and diamond jewelry, respectively, noted that diamond jewelry enjoys much better profit margins than loose diamonds, which are being squeezed in the current economic climate. He warned, though, that the domestic Israeli consumer market is too small to have a sufficient positive effect on businesses and that diamantaires need to focus on exports to bring about success in their jewelry lines.
In the same way that Israeli diamantaires in general have found their niche in the larger, better-quality goods, Aghbashoff said his own company has moved away from commercial goods in the past few years toward more expensive jewelry pieces in the range of $20,000 to $50,000 in an effort to counter growth in Chinese jewelry manufacturing. Denir’s story, however, is somewhat different from the manufacturing-to-jewelry model IDI is seeking to encourage, since the company started as a jeweler and later ventured into loose diamond manufacturing.
Creativity FlowsFor Ovadia Diamonds, traditionally a manufacturer of fancy cut diamonds, the move into jewelry was a logical and necessary one. The company decided to start manufacturing jewelry about two years ago and in 2007 launched its jewelry business entity, Illimitee, with a “Freedom of Choice” ring that can be dismantled into three parts to be worn as a plain ring, a solitaire or with side stones.
“Globalization and the entrance of new players like India and China took its toll on the diamond manufacturing industry,” explained Moshe Sinai, vice president of Ovadia and Illimitee. “Jewelry manufacturing is a way to keep in the game. It diversified and broadened the scope of our business, as we are now able to sell to both wholesalers and retailers.”
Sinai explained that as a diamond manufacturer, one generally needs to respond to requests for special sizes to fit the customers’ jewelry requirements. Having its own jewelry manufacturing operation, however, has allowed Ovadia Diamonds to play to its own needs and use those diamonds that were otherwise difficult to sell in its jewelry, he said.
“The move has also allowed us to be a bit more creative and enter different industries like fashion,” Sinai added. “So we definitely see the potential in jewelry and are looking to grow our Illimitee business.”
Focus on the WebIDI is planning a two-year campaign to spread the jewelry word. The focus in 2008 is on providing information and sponsoring special events such as the Jovella International Jewelry Exhibition and a diamond jewelry design competition to be showcased at the Harry Oppenheimer Israel Diamond Museum, as well as hosting a special exhibition on rare and ancient jewelry at the museum. “The idea is to showcase Israel as a leader in jewelry design from ancient times until today,” Avidar said. The institute also has appointed the museum’s curator Yehuda Kassif as its director of jewelry for the campaign.
IDI already is increasing its attendance at trade shows, where about 10 percent of its pavilions are diamond jewelry manufacturers. Avidar expects that percentage share to increase in 2009. He stresses, however, that in IDI’s jewelry strategy, trade shows are secondary to the drive to move more businesses to the web. In fact, the 2009 emphasis will be on assisting businesses in their efforts to make that move.
“We really plan to push the educational aspect of this campaign in showing companies how to use the web to create a presence in the market and reach customers,” Avidar said.
He noted that the move involved not just a “reengineering of business models” but a psychological adjustment as well.
“The Israeli diamond market is a very traditional one and can be conservative in its philosophy, so we were concerned in the initial stages. But when you take current economic and market trends, this is a logical step and one that complements our traditional businesses beautifully, ” Avidar said, adding, “The response has been enthusiastic.”
The Marketplace• Activity has been slow in Ramat Gan as a longer-than-usual vacation period comes to a close.
• Business owners responded to the quiet market by extending their own vacations.
• Large stones are not moving, probably in response to the wealthy cutting back on their spending on expensive diamonds.
• 3 carat+ is trading at 10 percent less than two to three months ago.
• Sales have improved in 0.30 to 0.70 carats and prices are higher than in 2007.
Article from the Rapaport Magazine - October 2008. To subscribe click here.