Rapaport Magazine - May 2018

Vol. 41 No.5 May 2018

ARE WE HEADED IN THE RIGHT DIRECTION?

News analysis King of Bling

How startups are shaking Meet celebrity upjewelry a still-conservative designer Stephen Webster industry

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Auctions Auctions

Sotheby's hypedsales lots failed Strong Geneva toforsellSotheby’s in Hong Kong; and full resultsChristie’s in an all-new format

RetailTrends insight Retail An in-depthand look at Challenges India's buoyantofonline opportunities customization jewelry scene

Style Style

Social media Trade Report

Trends Baselworld, on Instagram yet?

Animalatjewelry is all from The Not impact of new mine therage established brands to After reading the this season.

Gahcho Kué onourthetop tips, Go wild your store roughwant market theinnewcomers you'll to sign up

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IMAGES: Swoonery; Sotheby’s; Patek Philippe

CONTENTS

IN-DEPTH

RETAIL

MARKET & PRICING

16 News

46 Retail profile

65 Trade report

Industry: A Rosier future for Leo Schachter?

Retail: Hong Kong’s comeback continues.

Mining: Tech-enabled transparency.

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

Originally a luxury watch seller, Wempe embraces the modern, comfortable and feminine in its design today.

Sector sees continued stability.

24 News analysis

48 Retail insight

68 US retail

As e-commerce and consumer technology gain traction, entrepreneurs are shaking up the stillconservative sector.

With major jewelry empires investing in the online retail scene, India is poised for growth in that sector — and diamonds are ruling the roost.

26 Interview: Swoonery

51 RetailRap

Jean Z. Poh’s online fine-jewelry platform is all about catering to the consumer’s aesthetic tastes.

What bridal styles are selling well?

COVER

53 Jewelry Connoisseur

STYLE & DESIGN

67 US wholesale

71 Hong Kong 72 Israel 75 India 76 Russia 78 Antwerp

Meet the new generation of signet rings.

80 Diamond data

Human Rights Watch has raised questions about responsible jewelry sourcing, leading the industry to ask — and answer — some tough questions of its own.

54 Style

85 Price List

Vintage, innovation and plenty of carats: Baselworld 2018 had it all, despite the dip in attendance.

97 RapNet Price List

36 Auction report & results

56 Designer

102 Advertiser directory

A poor showing by leading lots makes for disappointing results at Sotheby’s Hong Kong.

Former teacher Kat Florence has built her business on rare gems, flawless diamonds and celebrity collaborations.

106 Calendar

31 Ethical dilemma

43 Gems of wisdom: Rules of engagement Looking to up your sales strategy? Maryland retailer Nelson Coleman Jewelers shares some real-life marketing tips, focusing on three key areas.

58 Legacy

108 The final cut

A new book traces the history of Italian jeweler Bulgari and the extraordinary pieces it’s created for its elite clients.

60 Social media Instagram is the app of choice for jewelers working to boost their sales.

diamonds.net

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NOTE FROM THE PUBLISHER

De Beers can be our Apple for sustainable sourcing

IMAGE: Ben Kelmer

The price of cobalt, an essential component in lithium-ion batteries, has skyrocketed over the past year thanks to the growing demand for smartphones and the race among car manufacturers to switch to electric.

Similarly to the diamond industry, a significant amount of cobalt is extracted by artisanal miners. These diggers predominantly operate in the Democratic Republic of Congo (DRC), which produces over half of the global supply of cobalt. Child labor, human-rights violations, deaths, and ties to deadly wars in central Africa have seen cobalt added to the list of “conflict minerals.”

There are 200,000 people digging for cobalt in DRC, according to estimates from the country’s Chamber of Mines. A growing number of these are benefiting from initiatives funded by the likes of Apple — which powers its smartphone batteries with cobalt — to actively improve the standards and conditions in the mines. They also insist on an audit trail of production to ensure such “conflict minerals” are not allowed to enter the supply chain.

Just like in the diamond industry, no brand wants to be associated with images of impoverished men, women and children working in subhuman conditions. The response has been a drive to try to empower cobalt diggers, while Apple actively works with mines to help them develop responsible practices.

In the same way Apple helped transform the lives of many artisanal diggers mining this once little-known metal, De Beers could be on the cusp of doing likewise for the diamond sector. It has announced plans to work with artisanal diggers in Sierra Leone to ensure their diamonds are ethically sourced and sold at fair market value on the company’s auction platform. Their aim is to create a secure and transparent route to market for their diamonds.

Integrating artisanal miners into the formal supply chain makes not only economic, but also moral, sense.

And while De Beers’ initiative should be applauded, our industry always needs to do more to ensure artisanal diggers don’t continue to receive a rough deal.

John Costello Publisher john.costello@diamonds.net diamonds.net

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NEWS/INDUSTRY

A Rosier future for Leo Schachter?

Fraud pushes Gitanjali out of sight

Partnerships expand manufacturers’ reach, helping them combat shrinking profit margins. By Avi Krawitz It’s not often that mergers occur in the diamond manufacturing and trading sector. Too frequently, egos get in the way, as businesses typically belong to families that want to maintain their legacy. However, at the same time, the market has been characterized by rising costs and declining polished-diamond prices in recent years. This has squeezed manufacturing profit margins.

Therefore, news that Rosy Blue had agreed to acquire a minority stake in Leo Schachter was unusual for the trade, but made sense given recent market trends. It also validated recent rumors about Leo Schachter, as the company has scaled down its operation in Israel, its main distribution center. Leo Schachter’s polished exports from Israel slid from $328 million in 2013 to $63 million last year.

Bringing Mumbai- and Antwerp-based Rosy Blue on board will help improve efficiencies, while Leo Schachter’s current management team will still operate it independently. The deal will enable the firms to use each other’s infrastructure around the world, providing better value for their clients, Leo Schachter explained.

The partnership may also have broken the ice for further collaborations within the trade, as market conditions remain difficult for diamond manufacturers.

Gitanjali Gems lost its sightholder status following allegations that managing director Mehul Choksi was complicit in a $2 billion fraud against Punjab National Bank. The Mumbai-based jeweler can no longer make rough purchases from De Beers, the mining company confirmed to Rapaport Magazine. De Beers has recently introduced more rigorous financial-compliance criteria for sightholders.

High-end slump hits De Grisogono

De Grisogono plans to slash up to 41 jobs after sales fell below expectations due to challenging high-end market conditions. The Swiss-based jeweler is shifting focus to its more affordable fine jewelry and watch brands and is considering scrapping 31 of 104 positions in Switzerland, as well as up to 10 more globally. The company recently cut the high-profile 163-carat, D-flawless Art of de Grisogono, Creation 1, and is currently working on the 813-carat Constellation rough diamond.

Leo Schachter’s polished exports from Israel have declined since 2013 $ Millions $350 $300

IMAGES: De Beers; De Grisogono; Stuller

$250 $200 $150

2017

2016

2015

$0

2014

2012

$50

2013

$100

Based on data from Israel's Ministry of Economy and Industry.

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Capital injection New diamond fund sees opportunity in banks’ reluctance to lend Alternative sources of funding are becoming available to diamantaires at a time when banks are growing increasingly wary about lending to the trade.

There is an unprecedented shortage of capital among diamond dealers, wholesalers and cutters, opening up an opportunity for niche lenders, according to Chris Del Gatto, creator of the Delgatto Diamond Fund.

The fund, which is set to launch in the coming months, will provide more sustainable and affordable capital than bank loans offer, Del Gatto said. That includes putting more of an emphasis on references than on a company’s profitand-loss statement.

Borrowers will also use diamond inventory as collateral, but will continue to have full access to those resources at any time, he explained.

The fund will total $100 million in its first six to nine months, with between $250,000 and $10 million available for individual clients to borrow. It has the capacity to increase the facility to $500 million, and potentially even to $1 billion, depending on demand, Del Gatto said.

NOTEWORTHY

Polished exports from Hong Kong to China rose 12% to $3.2 billion in 2017 diamonds.net

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GIA takes synthetics testing to Stuller

The Gemological Institute of America (GIA) opened a meleescreening center on the premises of jewelry wholesaler Stuller — the first time the lab has ventured into a private company.

The arrangement allows Stuller to sell its natural diamonds to retail clients with an accompanying GIA document stating that the goods are not synthetic or simulants.

The GIA independently operates the center, providing the laboratory’s melee-analysis service for round polished diamonds ranging from about 0.033 carats to 0.25 carats. The service also sifts out diamonds treated using High Pressure-High Temperature (HPHT), and sorts natural stones by color.

Stuller president Danny Clark (second from right) opens the facility along with Tom Moses, executive vice president and chief laboratory and research officer at the GIA.

Real news, fake report

China’s National Gemstone Testing Center (NGTC) discovered a 3.10-carat synthetic diamond that had been submitted to its lab as an F- or G-color, VS-clarity natural stone.

The laser-inscription code on the stone’s girdle corresponded to a grading report of a natural diamond with similar characteristics, gemologists at the Shenzhen-based lab confirmed. But the diamond was in fact a chemical vapor deposition (CVD) synthetic with a forged inscription and fake grading report.

Certain characteristics gave away the stone’s origin, including a “silicon-vacancy center” — a type of impurity that is extremely rare in natural diamonds but common in CVDs. A similar case of a forged inscription on a synthetic stone was reported by the GIA last year, but the NGTC said it was rarer for a Chinese lab to make such a discovery.

This latest stone is also one of the larger synthetic diamonds to have cropped up with false credentials to date, according to the lab.

“The growth technology of CVD synthetic [diamonds] has been making great progress for decades in [terms] of size, color and clarity,” the NGTC said. “Recently, the distinct characteristics of the synthetic diamond are becoming less, and it is more difficult to differentiate.”

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THE FINAL CUT

On the go

Rapaport Magazine asks industry figures: What apps can’t you live without, professionally and personally?

Ali Pastorini Co-owner, Del Lima Jewelry President, Mujeres Brillantes

Professionally: I would say Instagram, because I can build faster and closer relationships with my colleagues and clients. I believe that one of the reasons I have so many followers (100,000) is my ability to keep them updated in real time about my activities and future projects.

Personally: Definitely WhatsApp, because as I travel a lot, I can communicate with my family and closer friends instantly about where I am or what I am doing.

Tzafrir Engelhard Vice president of business development, Sarine Technologies

Professionally: Booking.com.

I’ve been traveling all over the 10 years for business meetings last the in world and activities. I just can’t imagine how I would handle hotel bookings without this app. With it, and especially based on reviews, I am able to find great places to stay in, which makes my travel so much better.

Personally: Clash Royale. This is the first and only app I got addicted to. It is a great strategic game in which you need to battle against other online players. Every player chooses eight cards (playable units) where each card has different strengths and weaknesses.

You do not know what your competitor’s cards will be until the game begins, and you need to adjust and be creative to win. Very addictive, so be careful before you give it a chance.

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Richard Weisenfeld President, Jewelers Board of Trade (JBT)

Professionally: The JBT Red Book mobile app, of course. This app has all the in the palm information you need to have ispe nsable ind an it g kin of your hand, ma the road. on and ws sho de tra tool at jewelry ly see ant inst With just a quick search, I can rs, aile ret of n atio the credit rating and loc h wit ed list rs ure act nuf wholesalers and ma any on es JBT. It also allows me to insert not company, then email those notes to myself for future follow-up.

Personally: My favorite is Words with Friends. I usually have three or four Scrabble games going at all times.

Tracey Ellison Founder, TheDiamondsGirl

Professionally: In today’s world, we depend on so many apps, but the one I cannot live without is Instagram. How else would I share the world’s best diamonds and get to see the latest discoveries and designs?

To make the most of my Instagram page, @TheDiamondsGirl, I rely on editing apps.

I use Splice to edit videos — it allows you to merge several videos seamlessly and to adjust the speed of the videos. For photos, I use Adobe Lightroom, which is great for improving visuals. All the apps are free; I find there is no need to pay for expensive apps.

Personally: I can’t live without Uber. I land in any city in the world, and there is an Uber driver waiting for me. diamonds.net

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