Supply management was sufficient to maintain a deficit and thus raise prices

The modern world diamond industry, estimated at over $ 70 billion, is essentially the result of two well-thought-out strategies - supply management to maintain price levels, and the promotion of the idea in the world that Diamonds stand for being so desired. For more than a century, diamonds were a supply-driven industry. This model no longer works, and the global diamond and diamond industry is seriously suffering now.

The key to remedy the situation is the transformation of the entire industry into a demand-driven industry. But the difficulty lies in the fact that industry executives do not seem to understand this. They come from an old, supply-driven world, and although they understand that it is necessary to stimulate consumer demand, they seem to spend most of their energy on attempts to patch a diamond-led pipeline.

Back in 1888, when John Cecil Rhodes founded De Beers, one supply management was sufficient to maintain a deficit and thus raise prices. When Ernest Oppenheimer took over the company in 1926, he realized that just one management of the offer was not enough. It was necessary to create a demand among consumers for polished diamonds. This vision of Oppenheimer led to the development of the global advertising campaign De Beers and its famous slogan "Brilliant is forever".

A century and a quarter after the creation of De Beers, despite the decline in production at the world's major mines, there was no increase in prices for diamonds and diamonds. De Beers, whose share has now shrunk to less than 40% in the rough diamond supply market, has carried out impressive global promotional activities. The diamond industry could not replace the global advertising campaigns that De Beers once spent, and now many other luxury items are aggressively fighting for the attention and wallet of consumers.

Diamond-mining companies set the tone, dictating how many lapidary companies have to pay for rough diamonds. And they take a lot. Their justification - the arguments as in 1888. The deficit causes a price increase. All the major world mines have reached their peak, so prices only go up.

In fact, prices have recently fallen.

Currently, it is difficult for those who are in the middle part of the diamond pipeline. Today, the main problems for the industry are the questions that diamond mining companies take too much for diamonds, consumers are not ready to pay more for their diamonds, bank loans have declined for lapidary and polishing companies and there is no consistent global initiative that would tell the world that diamonds are being stolen Of being so desired.

All these questions were raised by all speakers at the Presidential Meeting-2015, organized by the World Federation of Diamond Bourses (WFDB) and the International Manufacturers Association (IDMA), which opened in Tel Aviv on Monday. Ernie Blom from South Africa, the current president of the WFDB, clearly and clearly said: "The conditions in the diamond industry are far from easy, and they have been so for many months. This is a difficult time for the diamond and diamond industry around the world. "

Shmuel Schnitzer, president of the Israeli Diamond Exchange, who hosted the event, repeated all these concerns. Speaking about the lack of profit in the processing part of the diamond pipeline, he said: "We must sound the alarm. We must find a solution to the problem of the profitability of the industry. This can not continue for a long time. "

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