Diamond Trading Company (DTC), a distribution arm of world’s largest diamond producer De Beers, feels that some types of diamonds may be in short supply by the end of the year because of drastic production cuts. DTC’s Managing Director Varda Shine told Rajesh Bhayani that diamond continues to be a prime gift object and DTC, to further popularise diamonds, plans to launch big idea campaign in the US in the last quarter of the present calendar year. Excerpts:
Recently, BHP fetched high prices in auction of rough diamonds. Does this signal a return of the good days for the diamond polishing industry?
We are not privy to BHP auction information. But, we have heard that, and from DTC’s perspective, we have seen a steady growth for the first three months of 2009. We have cut production by 40-50 per cent during the year while consumer demand has fallen 5-10 per cent. We see certain that some types of diamonds like those used in engagement rings will see a shortfall by year-end as that part of demand has not gone down. Now retailers have also started buying goods from cutting centres. Although these are positive signs, it may be too early to say we are out of the woods.
Does the production cut by nearly half mean that the Indian polishing industry too will see that much of a fall in business?
Not exactly. When we say we have cut production, it is in price terms and hence it is not a 40-50 per cent cut in quantitative terms. Second, we are not the only rough diamond supplier. Our share is 40 per cent. So 40-50 per cent cut in production by DTC doesn’t mean that much fall in the business of cutting and polishing industry. Certainly there could be some amount of consolidation among them which is good sign. They are also adjusting with market realities.
But can we say we will see good times that we have seen in 2008 again in 2010?
The year 2008 was an aberration as there was buy-ing of rough diamonds as if prices would go up every week. Companies have not done proper calculation at what price they will sell those diamonds after polishing. We better don’t see that speculative year again.
But we are launching big idea campaign in the US in Q4 to increase demand for polished diamond and for that we will license some products with IP (intellectual properties) to even Indian sight holders. We expect to sign agreements with them in June.
Diamond will be positio-ned there as long term values and something which is forever and symbolises relationship. These efforts are to bring back the shine to the diamond industry.
Diamond is facing competition from other things as gift items. How can the lost shine be brought back?
Our surveys of consumers suggest that diamond is still number one or two in their preference as a gift and the latest survey was carried out just last year-end. They consider diamond as having long term value, as a status symbol and a gift to celebrate. Improving economic scenario will bring back the lost shine.