Rapaport Magazine - June 2019

VOL. 42 NO.6 JUNE 2019

MAKING THE WORLD

A BETTER PLACE THROUGH AN ETHICAL DIAMOND INDUSTRY

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ANALYSIS

OPINION

JCK PREVIEW

REFLECTIONS

LIGHTBOX TOOK THE TRADE

BY STORM IN 2018. WHAT ABOUT CONSUMERS?

HOW TO STOP THE DECLINE OF JEWELRY-FAIR ATTENDANCE

WHAT DESIGN AND RETAIL TRENDS TO EXPECT AT THE SHOW’S NEW HOME

IT MIGHT BE TIME TO ADAPT THE 4CS TO THE CURRENT MARKET

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CO N T E N TS STYLE & DESIGN 65 Jewelry Connoisseur Ethical gemstones have the added luster of being good for the world.

66 Style

34

The diamond anniversary may be a couple’s 60th, but there are plenty of other jewelry gift options for the years in between.

Page

IN-DEPTH

16 News

Industry: Spreading the good word.

Retail: Trade war enters jewelry battleground.

Mining: De Beers to rock new boat.

Movers & shakers: Who’s coming, who’s going.

24 News analysis A year after De Beers’ Lightbox announcement, retailers’ reactions are still split, but the lab-grown line is gaining traction with consumers.

26 Opinion Trade-fair organizers need to rethink their approach if they want to raise their declining numbers.

31 JCK preview A look at what to expect from North America’s top jewelry show, from the renovated venue to standout statement pieces.

68 Designer

COVER

34 Cover story

Synthetic ethics: Martin Rapaport on lab-grown diamonds.

Lifting the artisanal stigma: The wider industry is engaging with small-scale miners and taking steps to encourage better standards.

Preserve and protect: Australian ethicaljewelry champion Benn Harvey-Walker calls for a deeper conversation on human rights and the environment.

All about trust: Amid efforts to boost transparency, integrity is a priceless resource for dealers.

46 Reflections Renée Newman, author of a guide for the diamond trade, has a few additions to the 4Cs.

48 Auction report Sotheby’s and Christie’s Magnificent Jewels sales in Hong Kong and New York: A look at the trends, highlights and results.

RETAIL

58 Retail profile

IMAGE: LIGHTBOX

Pageo has built its allure by catering to fashion-conscious women in Massachusetts and Florida.

24 Page

63 RetailRap Two jewelers explain why they will or won’t be attending the upcoming Las Vegas shows.

Diamonds run in the family for Nadine Aysoy, who brings a background in banking, a passion for gems, and an eye for future trends to her dazzling designs.

70 Legacy A new glossary of jewelry terms and techniques offers makers, collectors and connoisseurs an overview of the craft’s history.

72 Colored gemstone Whether for beauty or investment value, ruby holds its ground as the king of gems.

MARKETS & PRICING 77 Trade report 79 USA 84 India 87 Israel 89 Antwerp 90 Hong Kong 92 Diamond data 97 Price list 109 RapNet price list 114 Directory 118 Calendar 120 The final cut

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Note from the publisher KNOW YOUR VALUES — AND MAKE THEM KNOWN

IMAGE: BEN KELMER

W

hat are your values as a business?

Let’s assume you know. Because if you don’t, you’re in big trouble.

Now ask your managers and fellow employees. Do they know? Can they articulate these values clearly? The real acid test, however, is to ask your customers. Do they know your company’s values? Can they clearly articulate them? If the answer is no, you have a lot of work to do.

What companies stand for matters now more than ever. Millennials make up more than a quarter of the US population. Their spending power amounts to $2.5 trillion. And they care deeply about the ethics and values of the companies they choose to buy from. Indeed, 70% say they are willing to spend more on brands that support causes they believe in. These causes span the spectrum of environmental, social-responsibility, diversity and ethical concerns. In the diamond and jewelry sector, your position on these topics not only matters, but needs to be clearly and constantly communicated.

What is your company doing to help protect the environment? What is your sourcing policy with regard

to the raw materials you use? Is it ethical? What causes does your business support? What organizations is your company a member of ? What local community activities are you involved in? Are your company’s employees and customers aware of these?

In an industry that has been tainted by blood diamonds, human-rights violations and criminal activity, the onus is on all of us to wear our kosher credentials on our sleeves. It is up to each one of us to prove we care about where the diamonds we sell come from. To ensure the gold in the rings we sell is ethically sourced.

To promote and help causes that make our industry and world a better place.

Regardless of the rise of millennials and the spending power they wield, our industry is nothing without strong values. This is also true for your business. And remember that values not communicated clearly to staff and customers are like trees falling in a forest with nobody around to hear.

John Costello PUBLISHER john.costello@diamonds.net DIAMONDS.NET

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COVER COVE R

ALL ABOUT TRUST Amid efforts to boost transparency in the industry, a dealer’s integrity is a priceless resource. By Joyce Kauf

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T

ransparency is a growing goal for wholesalers, but there’s another “T” word that may be even more important: trust. In an industry defined by long-abiding relationships, assurances of ethical sourcing depend heavily on a seller’s reputation for integrity.

GETTING CERTIFIED

Transparency is now a “definite trend,” according to Eric Mor, president of New York-based wholesaler Abe Mor Diamond Cutters. There is public concern, especially among millennials, about an industry associated with “blood diamonds,” he notes, though he attributes the rise of transparency to the influence of outsiders entering the industry.

“Thirty years ago, it used to be just family members, and now we are bringing in brain-power and Wall Street money,” he says. “We’re opening up, but we’re still so insular.”

David Rakower, president of New York-based manufacturer Joseph Asher Collection, also hails the move toward greater openness. “Transparency is de rigueur; everyone is trying to be transparent,” he says. He cites the Kimberley Process (KP), as well as the written and oral guarantees in place to ensure that everyone from producers to retailers is complying with ethical standards.

Is it sustainable?

IMAGE: SHUTTERSTOCK

For all those efforts, however, it’s difficult to verify a stone’s source indisputably, says Mor. “Our suppliers sign pledges that their diamonds are sourced ethically, but frankly, without advances in technology, such as blockchain or photographing the diamond from the rough to the final product, there is really no way to absolutely ensure that every step of the way is ethical.”

The same is true for recycled diamonds — or as Mor prefers to call them, “reclaimed” diamonds.

“It’s definitely hip right now to buy things that are environmentally friendly,” he observes. While he occasionally receives requests for reclaimed diamonds, he believes retailers need to make consumers aware that such diamonds exist, as

“We get from two to five calls a week from all kinds of dubious suppliers. We ignore those calls”

O

D AV ID R A K OWER

Opening up

KARD A N D R EW R IC

customers “are not going to ask for them unless they are advertised.”

That said, it’s not always possible to confirm that such diamonds are indeed recycled. “Short of showing the old Gemological Institute of America (GIA) cert or other paperwork, there is really no way to prove that the diamond has been reclaimed and entered the market,” he says.

Maintaining a good name As such, many wholesalers consider trust to be the driving factor in an industry traditionally known as a “handshake business.”

“As a supplier, the most important thing we can do is establish a trusting relationship and [strengthen] those relationships we have both upand downstream,” asserts Rakower. “We are going to regulate ourselves to ensure that when we produce and/or sell things, we do that with the knowledge that we have our reputations at stake.”

Indeed, he declares, “we don’t hide behind anything. We put our name on our products.”

Of course, that doesn’t stop less savory players from trying to gain traction. “We get from two to five calls as well as several emails a week from all kinds of dubious suppliers. We ignore those calls,” says Mor. “It isn’t all that hard for someone to find illegal sources. We only do business with people we trust.”

‘A very strong chain’ It takes a joint effort from parties throughout the pipeline to ensure ethical sourcing, says Rakower.

“We have a personal responsibility to do the right thing. If everyone in the chain stands up and does the right thing, we’ll have a very strong chain.”

Of course, there are other benefits to sourcing stones responsibly. “Besides being the right thing to do, being ethical is a smart business move — more so for our industry,” states Mor. “The most exciting part is the potential to market our transparency to consumers and shine a light on all the good the industry does. But at the end of the day, market forces will drive the change. Being transparent will pay off.” ◼

ne of the ways companies can get their ethicalsourcing credentials is by joining the Responsible Jewellery Council (RJC) — and the organization has high standards for entry.

“It was quite intense,” says Andrew Rickard, vice president of operations at RDI Diamonds, recalling the extensive audits required for membership. The certification recognizes a company’s commitment to responsible business practices, and RDI — a wholesaler in Rochester, New York — took this proactive step to reinforce its values of transparency and integrity.

“You’re essentially going through the rigorous process to prove that your product is done in an ethically sourced way with people who are trusted resources,” Rickard elaborates — in other words, that “you are doing things above board.”

Occasionally, clients question him about the company’s sourcing policies, and he views it as an opportunity to explain the RJC’s goals. “Clients gain a different perspective once they understand what certification entails and how comprehensive — and difficult — it was. There is a newfound respect for what we’re doing...to mitigate those risks.”

Still, nothing is “1,000%” foolproof, he acknowledges.

“There is always the fear that one bad player can damage your reputation. There are so many parts of the chain — and only so much that is in your control.”

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RE F LECTIO NS

DO THE 4CS STILL

MAKE THE CUT? Renée Newman, author of a guide for the diamond trade, proposes a fifth ‘C’ and two ‘T’s.

By Joshua Freedman

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Renée Newman.

T

he “5Cs and 2Ts” isn’t as catchy as the usual formula, but it might be a better pricing method, according to the author of a diamond-trade guide that claims the 4Cs are no longer adequate.

“One of the biggest misconceptions is that there are only four diamond price factors — color, clarity, cut and carat weight,” says Renée Newman, a graduate gemologist who last year published the third edition of her Diamond Handbook.

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“In fact, there are other factors, such as the transparency and treatment status.

They can have a large impact on price.

We [in the trade] may know that, but the consumers don’t, because they just hear about the 4Cs.”

Looking right through them

the 1950s, the trade didn’t differentiate between the shape and the quality of the cut when deciding prices, so it didn’t matter that the same term referred to both things. Now, the cutting style and shape are a distinct price factor from cut quality, with many labs providing a grade for the latter, she observes.

Meanwhile, rising interest in labgrown diamonds has prompted Newman to consider an eighth criterion, one she plans to include in a revised edition of another of her books.

“I left out a ‘C’ that I’m going to add when I redo my Diamond Ring Buying Guide, and that is the creator. Is the creator man or nature?”

“THERE ARE OTHER FACTORS, SUCH AS THE TRANSPARENCY AND TREATMENT STATUS”

The Gemological Institute of America (GIA) developed the 4Cs in the 1950s, when the industry considered cloudy diamonds to be industrial quality and didn’t put them into jewelry, the Handbook explains. Today, jewelers do use cloudy and hazy diamonds, but their clarity grades often don’t reflect their lower transparency, even though that characteristic can affect the value.

Newman distinguishes between clarity — a stone’s lack of inclusions and other blemishes — and the first “T,” transparency, which is how well it lets light pass. While a diamond with high clarity will have few or no inclusions, a stone is transparent if a viewer can see objects through it distinctly. Many laboratories don’t take into account subtle differences in transparency, Newman writes.

“I’ve seen hazy and slightly cloudy diamonds with VS clarity grades,” she notes in the book.

How to treat treatments Very few treated diamonds were on the market when the 4Cs came along, Newman explains. Most diamonds are still untreated now, but it’s becoming a larger minority as sellers seek to improve stones’ color, clarity and transparency.

This second “T” is important, as it hugely impacts the price. An untreated 1-carat, fancy-green, VS-clarity diamond will often fetch more than $200,000, compared with around $5,000 for an irradiated diamond with otherwise identical characteristics, Newman estimates. Treated diamonds are also much harder to resell.

Expanding the ‘C’s The “cut” part of the 4Cs needs to be two separate categories, she argues. In

Hard to change Newman is not trying to get traders to discard their 4Cs charts, as the system is so ingrained, she notes. But they should be aware of the additional elements affecting the value of a diamond. That’s why she emphasizes the 5Cs and 2Ts in the Handbook.

“They can’t just completely change over all their advertising and all the materials they have, so I don’t expect people to change the 4Cs,” she explains.

“But I do expect them to understand all the price factors.” ◼

T

TRANSPARENCY ISN’T OPAQUE TO THE GIA

T

he Gemological Institute of America (GIA) is one of the laboratories that do take transparency into account.

It has been grappling with the question for decades.

In 1970, gemologist Robert Crowningshield, then the director of the New York laboratory, wrote that some “misty” diamonds had been difficult to grade, because their color and clarity were otherwise top-scoring.

The lower transparency “did affect the value, but we have been at a loss how to arrive at a meaningful grade,” Crowningshield noted at the time.

The GIA began referring to transparency in grading reports during the early 1970s.

Initially, that took the form of a comment. In June 1970, it placed an asterisk next to the internally-flawless (IF) grade of a 13-pluscarat, D-color diamond, with a note saying the stone was “near-transparent due to [an] unusual internal texture.”

By the late 1970s, the lab had begun treating this characteristic as a feature that affected the clarity grade itself.

“Transparency has been included in the GIA’s clarity grading system for nearly 40 years,” Tom Moses, the GIA’s executive vice president and chief laboratory and research officer, tells Rapaport Magazine.

A PLETHORA OF PARAMETERS

he criteria the trade has traditionally used to grade diamonds are no longer sufficient, concurs David Block, CEO of Sarine Technologies.

“The diamond industry has evolved, and now there are other characteristics that significantly influence the diamond’s value,” Block notes. Physical criteria include milkiness, tinges of color, and specific details about inclusions, such as their nature and where they are located, he explains.

Another element is light performance, which refers to the visual effect when light enters and exits a stone. That feature is “a very important consumer-facing parameter, and is already a factor influencing the value of diamonds, especially in Asian markets,” he adds.

Other characteristics that don’t affect the physical beauty include the stone’s origin and story, treatment status, and whether a diamond is natural or lab-grown, he continues. “The ability to trace the diamond’s provenance and show consumers the diamond’s unique journey will be very critical in the coming years.”

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TH E FINAL CU T

AS TIME GOES BY

How has the industry changed in the last 40 years? Four diamond and jewelry leaders share their thoughts

In 1979, I bought a mother’s ring at my local mall. It was a big deal at 14 to spend all my money on a ring. I was hooked. In the ’80s and ’90s, I worked on Jewelers’ Row in Philadelphia. There was plenty of business to go around, and the competition was fair.

Everyone sold diamonds by discounting from the Rap Sheet [the Rapaport Price List], and customers would go around to stores looking for a better deal on the ODI marquise bypass bridal set.

Who knew then that diamonds would go from being a luxury to being grown in labs, sold at Costco and on the internet? In some ways, our industry has changed for the better. With the internet came consumer education and accessibility.

[But] some things haven’t changed. I work at ODI now, and we still sell hundreds of that marquise bypass. And my 12-year-old niece recently asked me to help her get a mother’s ring.

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JENNIFER DAWES DESIGNER AND OWNER, DAWES DESIGN

LARRY WEST FOUNDER AND OWNER, L.J. WEST DIAMONDS

I’ve been in the jewelry industry for over 20 years and have seen the highs and lows of market fluctuations. We’re in an industry that is still working off a 17th-century retail model and is extremely resistant to change. Jewelry will always be about the human connection, and that is this industry’s saving grace. We see this pattern [of resistance to change] in the diamond industry, playing out [in] the “A Diamond Is Forever” campaign. Now we have “Real Is Rare.” It’s a great slogan, but it falls flat because the messaging is not sincere.

The diamond industry needs to put its money where its mouth is and be real with what consumers want. Consumers want to know where their diamonds come from, and they want traceable origin documentation. We are not moving fast enough for what our market wants. We’re seeing the ramifications economically because of this fear of change. Real is real, real should not be rare!

The availability of information is a key factor that changed the business climate in the diamond and jewelry industry. As Rapaport — [with] its price list, news organization and online trading platforms — and others like it since have grown, the need for middlemen, brokers and dealers has diminished. Clients are savvier when it comes to searching for the best deal. Bid and asking prices are closer, so profit margins are shrinking. There are fewer people and viable companies in the industry today. Those left are the best at what they do. Business has become much more efficient.

Rough importers are cutting diamonds where production costs are low, turning it into jewelry, and working directly with retailers. Wholesalers and retailers must adapt to new marketing strategies, evolving technology, and the ways clients are trying to shop.

Those who are successful have been innovative in how they differentiate and translate value.

DAVID BOUFFARD VICE PRESIDENT OF CORPORATE AFFAIRS, SIGNET JEWELERS One of the most successful areas of change is how the industry works to ensure consumer confidence in the products we sell. About 20 years ago, because our industry was in the spotlight with headlines about conflict diamonds, we acted, taking a stance toward greater transparency and accountability to ensure consumer confidence.

Signet has supported key legislation and processes that have strengthened transparency in the trade of conflict-free minerals, including being a founding member of both the World Diamond Council (WDC) and the Responsible Jewellery Council (RJC), adopting its Code of Practices as the basis of the organization’s work.

Signet requires all suppliers to join the RJC over time. The complexity and challenges of the global jewelry supply chain require solutions that are larger than any one company can drive. It requires a rigorous and collaborative approach.

COMPILED BY DEBORAH YONICK. IMAGE: PAIGE GREEN (JENNIFER DAWES)

VALERIE FLETCHER VICE PRESIDENT OF DESIGN AND PRODUCT DEVELOPMENT, ORIGINAL DESIGNS INC. (ODI)

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