Top producers, manufacturers, and retailers representing the gamut of the world diamond trade sat in rapt attention for a couple of days as stalwarts and who's who of the industry expounded their stance at the {{International Diamond Conference}} - Mines to Market 2005 held in Mumbai. %% Organized by {{India's Gem & Jewellery Export Promotion Council (GJEPC)}}, the Conference provided a common platform for India and the rest of the diamond world to address important issues of universal interest. Concern over the inconsistency in rough supply, decline in profit margins, problem of synthetic and HPHT treated diamonds were included in the topics discussed in depth and detail. The Conference also touched upon branding, growing role of retailers, e-commerce, research, colored diamonds, supply chain… Amid high talk, moderators {{Martin Rapaport}}, President of {{Rapaport Group}} and {{Chaim Even-Zohar}}, Managing Director of {{Tacy Ltd.}}, provided the necessary punch lines making the Conference more interactive. The most revealing and interesting part of the Conference was the question-answer sessions that were requested by the audience after each presentation. %% Veterans who made their presentations were President of {{Botswana - Festus G. Mogae}}, Minister of Minerals and Energy in South Africa; Phumzile Mlambo-Ngcuka, {{Kantilal Chhotalal}} Partner {{Ashish Mehta}}, Managing Director of {{DTC Gareth Penny}}, Managing Director of {{Rio Tinto Douglas Ritchie}}, President and COO of {{Ekati Mines}} (BHP Billiton) {{Wayne Isaacs}}, CEO of {{Rosy Blue Group}} International Dilip Mehta; Chairman of {{Leviev Group}} Lev Leviev's papers presented by {{Dan Kempel}}, Minister of Mines in the Democratic Republic of Congo Ingele Ifoto, Deputy Director of Research & Analysis Centre of {{Alrosa Co. Ltd. Olga Vecherina}}, Deputy Head of Planning & Distribution of Precious Metals & Precious Stones in Gokhran, Russia - {{V.M. Ivanov}}, Chairman of State Bank of India - {{A.K. Purwar}}; Global Head of ABN-AMRO Bank - {{Loet Kniphorst}}; Director of Research at GIA James Shigley; Senior Research Scientist of HRD {{Dr. Jef Van Royen}}, Director of Supply at {{Signet Trading Ltd}}. in UK {{Andrew Waring}}, President & CEO of {{Zale Corporation - Mary Forte}}, President of Jewelry Industry Research Institute - {{Ken Gassman}}, Marketing Manager of {{Rio Tinto Diamonds}} in India - {{Nirupa Bhatt}}, Chairman Kashikey Ltd. in Japan - {{Hidetaka Kato}}, Regional Director of DTC {{Nicholas - Graham Smith}} and Chairman & CEO of {{Gitanjali Group - Mehul Choksi}}.%% The Indian diamond industry which is yet new to the latest marketing gimmicks was bombarded with strategies that ensure success. Consequently the entire industry was upbeat after the Conference and tagged it as a "highly successful" event for which Bakul Mehta promised to continue with the tradition and hold another conference early next year on the same lines.%% After a formal inauguration by lighting of the lamp by President of Botswana Festus G. Mogae, India's Minister of Commerce & Industry - Kamal Nath, Minister of Minerals & Energy of South Africa - Phumzile Mlambo-Ngcuka and other delegates addressed the Conference. Then Chairman GJEPC Bakul Mehta delivered the inaugural address.

Diamond Forum & Company for Rough:

In his speech {{Bakul Mehta}} announced the setting up of a Diamond Forum to assist in the detection of stimulants and to establish trail of natural diamonds to maintain consumer confidence in diamond. He invited the diamond mining companies to join the Forum. He also proposed the setting up of a new company with the approval of the government of India, the Ministry of Commerce to provide direct and easy access to the mining countries for supplying rough diamonds to Indian exporters. This, he said, will enable them to remit their sale proceeds as well as return the unsold goods, through a system that fulfils all the requirements of the Kimberly Process Certification scheme. %% {{Kamal Nath}} assured that the government would encourage FDI and joint ventures all along the diamond chain in exploration, mining and sourcing, cutting and polishing, jewellery designing and manufacturing, exports, sales and marketing. He said the SEZ Act passed by parliament would provide an opportunity for investors to set up enterprises in areas that will have world-class infrastructure and generous tax concessions. The Act also provides for specialized zones devoted to a single industry.%% The Conference began on a positive note when {{Kantilal Chhotalal}} Partner {{Ashish Mehta}} projected the Indian diamond, gems and jewellery sector on a high pedestal which, he said, is a result of years of hard work and entrepreneurship. %% {{Ken Gassman}}, President of the Jewelry Industry Research Institute, in his presentation revealed how to make profit from jewellery research. Market analysis and consumer research helps to optimize results. He explained in detail the hallmark of research which gives insight into consumer behavior and customer profile to reach optimum market.%% The papers presented at the Conference have been summerized below.

Synthetic & Imitation Diamonds:

{{James E. Shigley}} of GIA Research and {{Dr. Van Royen}} of HRD discussed the current challenges of identifying gem diamonds and the growing interest in synthetic diamonds respectively. Though there is no mass production of synthetic diamonds in the world, there is a growing awareness and threat of synthetics being confused with natural diamonds. Said James Shigley: Cubic Zirconia is the most widely available diamond stimulant in the marketplace today. CZ and other imitations can be readily distinguished from diamond on the basis of thermal conductivity which can be measured with a simple hand-held meter. Synthetic Moissanite can be confused with diamond since it cannot be detected in this way. When tested with the same thermal conductivity meter, it will register incorrectly as 'diamond'. %% Gem quality synthetic diamonds produced at High Pressure High Temperature (HPHT) by the temperature-gradient solvent/catalyst method are only available in very limited quantity.

Rough Shortage:

Taking stock of the world rough supply, three giants - {{Gareth Penny}} of DTC, {{Douglas Ritchie}} of Rio Tinto and Wayne Issacs of BHP Billiton agreed that growing demand is falling short of supply and there was increasing need to either go deeper or dig new mines.%% "We are sure that the initiative of the Government of India will take forward its joint effort with the industry of converting the Indian gems and jewellery industry into an international trading hub. We are very happy to see the support from mining nations and leading international diamond players, which will further fuel the initiatives taken by the Council through this Conference for a sparkling future of the global diamond industry," said Bakul Mehta, Chairman of the GJEPC in his opening remarks.

More Partnerships in the offing:

Speaking about the diamond industry in the next five years, Gareth Penny, Managing Director, DTC, said, "It would see more of partnerships", which De Beers readily identifies with. De Beers, he said is in partnership with Botswana, Namibia, India, Tanzania and proposed partnerships with South Africa, DRC and Angola. In his presentation he went down the diamond pipeline right from exploration, mining, the whole downstream industry and the growing role of the retail industry weaving in the Indian aspect at every stage. %% {{De Beers}} had a budget of over US$100 million for exploration and last year "we found something like 49 kimberlites and our focus is on Central and Southern Africa, India, Canada, Eastern Europe and in particular Russia. He also touched upon mining operations in India besides partnerships in South Africa and a billion dollar project in Canada.%% Taking up the issue raised on reduced supply of rough from De Beers especially, Gareth Penny clarified that there was no reduction in supply. The world caratage production from De Beers has increased to the tune of about 7% last year and looks to continue upwards. In terms of new production, Penny assured that "We certainly would do everything we can to enhance the future production". He reiterated the role of Debswana as the largest diamond mine which has been feeding the market for the last 25 years. %% {{Rio Tinto}}, on the other hand, said Douglas Ritchie, Managing Director of Rio Tinto Diamonds, has pumped in at least US$16 million since 2001 in exploration in India. It plans to spend $4 million in 2005. "Twenty-five kimberlites have been discovered to date, most of which are diamondiferrous. Drilling and evaluation will continue."

Indian Difficulties:

He however lamented that exploration is seriously constrained in several States by slow sanctioning and area restrictions. This is difficult to achieve in India "due to bureaucracy. Discovery costs are high and fiscal encouragement is needed". Rio Tinto exploration at present is going on at Majhgawan Lamproite (NMDC) / Panna alluvial diamonds, Mahanadi alluvials, Behradhih kimberlites, Krishna alluvials, Banganappalle / Jonnagiri alluvials and Wajrakarur kimberlites. Rio Tinto global exploration projects this year include Canada, Brazil, Mauritania and Botswana. In the first quarter of 2005, Rio Tinto's Argyle mine produced 8.63 million carats, up 139%, from 3.61 million carats produced in the first quarter of 2004.

He however lamented that exploration is seriously constrained in several States by slow sanctioning and area restrictions. This is difficult to achieve in India "due to bureaucracy. Discovery costs are high and fiscal encouragement is needed". Rio Tinto exploration at present is going on at Majhgawan Lamproite (NMDC) / Panna alluvial diamonds, Mahanadi alluvials, Behradhih kimberlites, Krishna alluvials, Banganappalle / Jonnagiri alluvials and Wajrakarur kimberlites. Rio Tinto global exploration projects this year include Canada, Brazil, Mauritania and Botswana. In the first quarter of 2005, Rio Tinto's Argyle mine produced 8.63 million carats, up 139%, from 3.61 million carats produced in the first quarter of 2004.

Canadian Advances:

"The arrival of Canadian mining to the diamond industry has in many respects been pioneered by BHP Billiton Diamonds. This trend is set to continue as we at Ekati strive to continuously improve business performance, which will now take us underground," said Wayne Isaacs, President and COO of Ekati Diamond mines. Other major players in Canada are Diavik mine (Rio Tinto and Aber) and Snap Lake (De Beers). There are plans to go underground at Ekati and Diavik mines while De Beers will proceed with their Snap Lake project, informed Isaacs. %% In 2004, Alrosa's mines produced a little short of $2.2 billion. "Our basic product sales reached some $2.5 billion, including $131 million from polished diamond sales," said Olga Vecherina, Deputy Director of Research & Analysis Centre at Alrosa. Russia has a special place in the world diamond industry as a major rough producer (the second largest in terms of value) with a significant cutting and polishing industry, skilled labour and favourable conditions for manufacturing a wide range of high-quality polished diamonds. "The bulk of our contributions to the federal and republican budgets comes from rough sales (83%), so we have to closely monitor the world rough market to form a realistic understanding of its problems and development prospects. We are interested in the successful experience of India." %% This year Alrosa is celebrating its 50th anniversary of diamond mining in Russia. Today Alrosa produces about 97% of rough diamonds in Russia and 22% in the world.

Marketing: Symbolic Concepts

{{Martin Rapaport}}, President, Rapaport Group: "Why do people buy diamonds? It is not like a refrigerator or some such thing. People buy diamonds because of the idea behind it. Diamonds are a gift of love. What is fundamental is to understand that idea and symbolic value of a diamond. It's De Beers which has brought about the awareness of this symbolic concept." %% Martin Rapaport, who was one of the moderators, deliberated on what Gareth Penny had to say earlier: "If we look at the advances downstream we see huge technological development, better distribution systems, many market initiatives and brand development and "indeed an industry that is starting to compete like it never did in the 90s… No where more than India has it laid the development in many areas downstream which is evident in the extraordinary mark in jewellery manufacturing in this industry." %% De Beers floated the concept of three diamond ring signifying the couple's past, present and future. This very concept saw tremendous boost in sales in the US last years. This very concept has been modified elsewhere to represent a woman's past, present and future. It is the idea behind the diamond jewellery that sells, explained Gareth. If this approach is taken forward, it would bring about extraordinary results, concluded Gareth. %% Throwing light on the latest development, Alrosa's Olga Vecherina said: "We for our domestic and international marketing policy with regard to Russian national interests, the benefit of the Republic of Sakha (Yakutia) and our own economic interests. We are ready to adjust our marketing policy to meet the requirements of both Russian and European competition legislations. We expect the European Committee to approve the trade agreement with De Beers, which will remain our main partner in the near future. The trade agreement can possibly be subject to some amendments in line with the requirements formulated by the EC as condition for the approval." %% Unlike other diamond producers who sell their rough through the system of sights only, Alrosa has a more complex marketing system.

Alrosa's Different Marketing:

"We supply our rough to the international market in the following ways:%% {[as shipments sold to De Beers ][ in cut-offs sold through Almzyuvelirexport Foreign Trade Association and also independently through the United Selling Organization of Alrosa ][ to CIS countries under agreements between the governments of the Russian Federation and these countries ][ by way of independent diamond sales in the open market ][through international auctions to sell special size diamonds.]} %% Where Alrosa has its reservation, the Indian thinking has changed and so has the market. "Today, diamond sales have taken a dramatic turnaround with branded jewellery becoming available to millions of upper middle and middle class women. Of late, the diamond jewellery business has used several top film stars and models to tempt men and women to buy diamonds not only during the festive season, but also throughout the year," said Mehul Choksi, Chairman and CEO of Gitanjali Group.

Branding & Retailing Going Up:

The Indian market is flooded with about 40 brands that are less than two years old. Speaking on branding and marketing in the new jewellery retail environment Mehul Choksi said: The sale of diamond jewellery in India has been increasing at a rapid pace of 25% every year over the last two years. The branded jewellery segment has shown an astonishing trend, increasing by 50% each year. Randed jewellery is making the consumption of diamond jewellery grow. If the Indian diamond and jewellery industry is successful in branding even 30% of this sector, exports from India will increase further and India would become a major brand leader for diamond jewellery. %% For brands the right approach is to have a continual revitalization of the brand and its position within the market. Branding commands a premium price but has to be justified. One cannot just dream up names and logos. Names like Louis Vuitton and Escada were not overnight creations. Today these brands command a price because they have succeeded in creating that kind of premium-ness about themselves. Consumer behaviour across the world is undergoing a metamorphosis and India is surely affected by this big tsunami of trends leading to globalization of the markets. A strong management will be essential for long term success.

7 Essential Es of Brand Marketing:

India has a different type of branding from the world and is considerably different from that of world players like Damiani, Cartier, etc. Among Indian brands, for example, Nakshatra is product specific, Asmi is feeling specific and Glitterati is star oriented.%% For those who want to venture into branding and retailing in India, the seven Es of brand marketing strategy are recommended for the new jewellery retail environment. %% {[First E is Experience of the brand. The consumer wants to touch and feel the brand tangibly and intangibly making it a gem of an experience. ][Second E is Expanse of distribution by having more availability across outlets in India as well as excellent visibility and merchandizing at each outlet. ][Third E should focus on Excellent product quality and design ][Fourth E should focus on world-class Environment and ambience at the office and showroom level. ][Fifth E should focus on Excitement in advertising and promotion, thereby creating consumer demand and pull. ][Sixth E should focus on Education to consumers about jewellery and help in the certification process. ][Finally the seventh E should focus on providing Endearing service at the retail level.]} %% In today's scenario focused marketing is very important creating a purpose, a definite focus for the consumer to relate to. Brands and their branding are in effect self explanatory. That is what focused branding is all about. In short, to be able to cater to this new retail environment the branding and marketing initiatives have to be very potent and with a focus. %% In India, the retail sector will grow faster than the fastest growing sectors in the country. By the year 2010, there will be 600-odd malls, constituting nearly 10 per cent of total retail sales. Cumulative retail space will grow to 100 million square feet with sales of $34.2 billion.

{{The Indian jewellery trade should bear in mind the following for keeping ahead in the retailing game:}}%% Use the available Research: It is important to know the key facts that indicate changing trends. In the market it pays in the long run to keep up with the updated reports. If you have the infrastructure then you can also set up your own tracking. These researchers help you understand how consumer attitudes have changed towards your company and product.%% Keep abreast of competitors: Make sure you are aware what your competitors are doing either through store visits, reading relevant trade magazines, etc., as this would help you frame your future decision.%% Meet Core customers frequently: Meet your core customers frequently if you really want to understand their needs and what they actually want.%% Value your employees' feedback: It's great to have intuitive sales staff, designers, manufacturers who seem to be abreast with market information. Consult them and get their views. %% Consult specialists: There are companies who specialize services. They help in providing high level conceptual inputs that can be very insightful. In times to come branding and retailing will be the only way to sell.

Tidbits

Ingele Ifoto, Minister of Mines, Democratic Republic of Congo %% {[With 27 million carats, DRC was placed third in 2003 among the diamond producing countries after Australia and Botswana which produced 33 million carats and 30 million carats respectively. Out of the 27 million carats produced, 20%, that is 5.4 million carats, are made up of gem quality diamonds, which places the DRC in fifth position after Botswana, Australia, Russia and Canada whose production of gems in 2003 was 23 million, 15 million carats, 12 million carats and 11 million carats respectively. ][Since the collapse of copper industry, diamonds have become the principal mineral resource of the DRC. Indeed, the Congolese state obtains the major part of its export earnings from export of diamonds. The statistics indicate that the DRC produced 19.6 million carats in 2001, and 21.5 million carats in 2002, valued respectively, at $495 million and $653 million, that is to say the contribution of the export earnings of diamond were 51% and 58% respectively. ][The diamonds produced in DRC are exported unpolished because our country does not have a diamond industry with sufficient value addition, namely an industry with diamond tools, diamond cutting and polishing workshops for the manufacture of jewellery. Now the government of DRC has provided conditions favourable for the development of diamond processing industry. ][ With regard to training centres, DRC reaffirms commitment to collaborate with internal as well as external partners who would like to create diamond schools and centres for training in DRC. ]} %% {{V.M. Ivanov}}, Deputy Head, Board of Planning the Distribution of Precious Metals & Precious Stones, Gokhran, Russia: Talks are going on about the widening of cooperation in the field of research, processing and application of new methods in geological exploration and processing of diamonds and about the establishment of latest enterprises in India and Russia for marketing of diamond raw materials and jewellery manufacturing industry.

{{Gokhran Russia is fruitfully collaborating with enterprises, in which Indian capital is participating in the Russian domestic and overseas market. In further talks with the Indian side following issues may be touched upon:}} %% {[The creation of joint venture in India for marketing the rough diamonds and jewellery. ][The continuation of exchange of experience in the area of government regulation and control of manufacture, business of unprocessed natural diamonds, articles make from them, particularly the creation and use of normative base, regulating the operation of indicated goods ][The widening of cooperation in the field of research, processing and application of new methods in geological exploration and processing of diamonds and other gems.]}

Diamonds - Dependent Botswana:

Festus G. Mogae, President of the Republic of Botswana: Botswana's sales of rough to the DTC are expected to reach between $2 and $3 billion, which should constitute more than half of the total DTC rough sales into the world market. I am informed that the import of rough into India from all sources is also of the order of some $3 billion. Botswana along with Russia to a considerable margin are leaders in world diamond exports which makes Botswana the world's 'most diamond dependent' economy. Last year Botswana exported over $2 million worth of rough. Botswana is as dependent today on this single commodity as virtually any country has ever been on any one export product. He also clarified that "even though we like India, in a different way, and have landed a starry role in the drama of international diamond trading, we are not as wealthy as many of those who, at the retail jewellery level, purchase the bulk of our product. If only it were otherwise.%% The success of Botswana's diamond industry had not transformed Botswana into "another Switzerland." If Botswana was fortunate this year, yields in the diamond industry would bring approximately $1.75 billion in revenues. When calculated other factored in the population of 1.75 million people, this worked out to just over $2 a day, or just more than the international benchmark for those considered to be living in poverty. Time and again the government faced domestic criticism for exporting rough diamonds to places like India for processing. "Many of our citizens would rather see us taking advantage of what they see as an opportunity to derive greater direct benefit by adding value in the form of downstream production in our own country," he said. "Indeed, our sternest critics accuse us of conspiring with the Diamond Trading Company to export from Botswana employment opportunities that are sorely needed at home." %% Among the things that Botwana will not do was to introduce any draconian fiscal incentives or other forms of compulsion. "We have no intention to make export of rough diamonds illegal or uneconomic by imposing fiscal or other penalties on those who export diamonds in their raw state. Nor, I would add, do we have any expectation of supplanting India as the world's leading centre for diamond cutting".

More Partnerships in the offing:

Gareth Penny: Speaking of the diamond industry in the next five years, Gareth Penny said "it would see more of partnerships", which De Beers readily identifies with. "De Beers", he said, "is in partnership with Botswana, Namibia, India, Tanzania and proposed partnerships with South Africa, DRC and Angola". In his presentation he covered the diamond pipeline right from exploration, mining, the whole downstream industry and the growing role of the retail industry, weaving in the Indian aspect at every stage. %% De Beers had a budget of over $100 million for exploration and last year "we found something like 49 kimberlites and our focus is on Central and Southern Africa, India, Canada, Eastern Europe and in particular Russia. He also touched upon mining operations in India besides partnerships in South Africa and a billion dollar project in Canada.%% Taking forward the issue raised on reduced supply of rough from De Beers especially, Gareth Penny clarified that there has not been any reduction in supply. The world rough caratage production from De Beers has increased to the tune of about 7% last year and looks to continue. In terms of new production, Penny assured that "we certainly would do everything we can to increase future production". He reiterated the role of Debswana as the largest diamond mine which has been feeding the market for the last 25 years.%% Going on from exploration and mining, Penny said the next stage was going downstream and one oft raised concern over the shortage of jobs in South Africa, Debswana, Namibia and other countries has been one issue that {{De Beers}} is looking into. %% One interesting point made by Penny on the marketing of diamonds was - diamonds sell not because they are shiny or hard but because of the deep emotional meaning that they have.