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08 december 2017

Global demand for polished diamonds will remain steady – Ali Pastorini

13 june 2017

ali_pastorini_xx2.jpgAli Pastorini, senior vice-president of the World Jewelry Hub, answered questions from Rough & Polished concerning the world diamond market, preferences of consumers and role of bank crediting.

What is your outlook regarding the demand for rough and polished diamonds?

In my opinion, global demand for polished diamonds will remain steady. In the countries where the recession was deeper it will take a little longer to stabilize. Having said that, we must take into consideration that the younger and new consumer generation have different preferences and are attracted to different luxury products. It is the duty of our industry to remedy this making sure that this vast group of consumers will be once again attracted to the beautiful product that has been a symbol of love and commitment for centuries. As for rough diamonds, the demand for polished diamonds is a driver for the demand for the rough ones.
What can influence the diamond and diamond jewellery sales in the short-term, medium-term and long-term perspectives?

Regarding the diamond jewelry, it is the image created by media and advertising that influences. I have been saying for a while that with promoting the positive features of these products, such as the emotional component when a person purchases diamond jewelry, we can expect a surge in demand. We are forgetting the essence of the beauty in our industry and consequently we are forgetting to transmit it for our customers.

Regarding the polished diamonds, I believe that a high position of polished diamonds in the hierarchy of values which allows to prefer purchasing diamonds and diamond jewelry rather than other luxury products. Diamonds have an intrinsic value and are good investment, something we must constantly impart to our customers.

Is the role of mid-size manufacturers in global production growing?

The global diamond producing leaders has become increasing fractured which gave the opportunity of a good number of small and medium-size diamond producers invest and develop new mines . In our industry where around 20 years ago a company like De Beers accounted 80 % of global supply, this new phenomenon of mid-size manufacturers is very interesting.

Smaller miners are playing a growing role. Take as example Petra Diamonds, which has developed after acquiring several of De Beers former mines since 2007, and these days Petra’s production is forecast to be around 4.5 million carats in 2017. Or take a look at the Canadian diamond miner Dominion Diamond Corp., has become the world’s third largest producer of rough diamonds by value and these days produces around seven million carats annually.

Even a company such as Lucara Diamond Corp. which is a relatively new diamond producer, the forecast revenue from regular and exceptional tenders, of $200 million to 220 million for the 2016 calendar year and it is important remind that doesn’t include the sale of the 813- carat Constellation diamond, which sold for $63.1 million in the beginning of 2017.

Today, De Beers itself says it is responsible for only around 35% of global supply, while Alrosa accounts for more than 25%. With all these numbers mentioned, I have no doubt the role of mid-size manufacturers became very important in the global scenario.

If jewelry demand is really growing, what are people buying instead of diamonds? The Millennials have already started to, or are about to, enter the marrying age, but, as marketers have discovered, this group's buying patterns are different from those of their parents and are extremely varied, thus making marketing to them a complex affair. What could you say on this?

I agree with an article by Forbes last September 2016 where it says that Millennials buy Diamonds and it doesn’t make sense to think that they don’t. If you notice their idols such as Beyonce, Kardashians and a variety of digital influencers constantly do public appearances showing off their beautiful diamond earrings and diamond rings and we know very well the effect that such appearance cause in the young consumers.

What happened is that they started to look and add as a purchase other type of jewelries and not only diamond jewelry. I have said in past that the problem is not in the behavior of the client, the problem is in the behavior of the seller that simply forgot to sell ‘emotions’ and ‘sensations’.
The new generation more than ever is tired of what we call “more of the same,” people need that a brand brings new experiences to connect with them, they need to understand what the purpose of your brand is and not only how beautiful and fancy your product is. In my speeches in South America I usually say that even a customer who is not a luxury buyer still wants a luxury experience.

The key is in the way how we communicate with this new generation, I notice that many companies still do not know how to communicate through social medias, they still ignore the power of these platforms and do not have any interest to study and improve ways to reach the potential customers. If you do not change your approach do not expect that the customer show interest in your product.

Do you share the opinion that silver is the ‘new gold’?

No, I believe that there is ample space for both, gold and silver. People tend to believe that because the Millennials are buying more silver jewelry it means that the time of gold jewelry is over and clearly that is not the case. The Millennials, as I mentioned before, need to connect with your brand and feel they are buying a unique experience and not only a product.
Don’t you think banks have become wary and tight-fisted in financing the industry?

Due to many unfortunate incidents of defaults and regulations, banks have become wary and tightfisted in financing the industry. The margins reducing and end product prices becoming more volatile, it is not surprising the banks retrained themselves from lending to the gem and jewelry sector which affects the financing availability to the industry.

Friends of mine from the larger diamond companies in India question more about the cost of finance rather than their availability, while other companies question more the struggling to access finance from banks.

The problem arises when rating agencies and banks approach to risk management and assess potential clients. What the “Diamond Financing 2017: New Opportunities, New Realities” seminar organized by the Gems & Jewellery Export Promotion Council did last February in Mumbai, India shows the first step has been done which is bringing bankers and industry members to explore together options on how banks can work with MSMEs as well as examine credit insurance and risk management mechanisms that can be improved by the lending banks. I believe that Seminars and Meetings like that should be organized more often and both sides keep in constantly communication to find ways to solve one of the biggest issues in the current scenario. In summary, there are solutions but is important for our members to understand that the way of doing business and the method can’t be like used to be and much more transparency is required.
What are latest news from Mujeres Brillantes?

I am very happy to announce that VicenzaOro Show in September will host the International meeting of Mujeres Brillantes 2017, we accepted the invitation made by the Italian Exhibition Group and Vicenzaoro due to their mutual vision of gender equality (another big issue in our industry) and the respect paid to women at the head of jewelry companies. We already have 550 members from different parts of the world, mainly coming from Latin America, in 10 months since the group was created.
Our Youtube Channel – Mujeres Brillantes already has more than 13,000 visitors and more than 1,400 subscribers since it was launched last December 2016 with a variety of videos and interviews, events and tutorials in English, Spanish and Portuguese. Besides, our International Newsletter is about to be launched in July 2017, as well as the Social Responsibility Program focused on helping women artisans and miners in Latin America and providing tools for them to advance professionally and have a better quality of life. 

Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels


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