G. Loet Kniphorst, Global Head of ABN Amro's International Diamond and Jewelry Group, presented an assessment of the financial status of the diamond and jewelry industry at the 2007 WFDB and IDMA Presidents' Meeting.
Noting that the international diamond industry has always been subject to change, he emphasized that the speed of change appears to be more intensive and becoming more complex.
Studying developments over the years, Kniphorst noted that the value of rough production has risen consistently, from 8.8 to 13.5 billion dollars, constituting an increase of over 50%. Diamond content in diamond jewelry sales increased more than 30%.
However, retail sales rose by only 20% over a 7 year period. The figures for luxury items are not very impressive. Nevertheless, in 2006 jewelry sales increased by 10% in comparison to the previous year.
Money is still being made in mining and retail sales but according to Kniphorst, the man in the middle is feeling the crunch. Mining necessitates major investments but at the retail end, marketing campaigns and investments in stock and real estate are also costly. The end result is that the diamond industry is less profitable today than it was a number of years ago.
Kniphorst examined various forces that influence the industry such as competition, regulatory requirements, entry barriers, social responsibility, and more.
When De Beers made its decision in the year 2000 to renounce its custodial role in the industry, this meant that the latter lost its "blanket of protection." This has forced banks to reappraise their attitude to the risks that customers take.
In summary, Kniphorst strongly urged the industry to create a transparent pricing mechanism in the form of a Polished Diamond Price Index that can be used to provide the financial instruments that are so much in need.
