Rubel & Ménasché has been supplying the jewelry houses of Place Vendôme with high-end small diamond goods for over 50 years. The company’s specialty is extremely well-finished stones, which it offers to top jewelry brands the world over.Taking into account that it is also part of the Dali Diamond Group, a De Beers Group sightholder, our correspondent in Brussels asked its CEO Stephan Wolzok to share his views on the current events in the diamond market.
What are the lest news from your company?
Our company is constantly in motion and seeking improvement. This is what has enabled us to remain competitive and experience positive growth.
Two years ago, we set up an internal audit in order to review our procedures and define ways of moving forward. Based on the findings of this audit, we then organized a complete reorganization of our company. Our goals remain the same: to gain greater precision, efficiency and quality. To offer our clients an increasingly high-end service. To continue to develop large-scale and long-term projects with these clients. To strive to always anticipate our future and that of the diamond industry by remaining innovative.
We are also continuing to make progress in terms of Corporate Social Responsibility. Ethics and transparency are two crucial dimensions these days. The diamonds selected by Rubel & Ménasché are natural, their provenance is guaranteed and we comply with both Kimberley Process and World Diamond Council principles and rules. Our RJC certification, initially obtained in January 2011, was thus renewed in 2014. We are seeking to improve diamond traceability at our level.
What is your forecast for the diamond market in 2015-2016?
Let’s be honest, the diamond market is in an unprecedented and difficult situation. However, we must evolve and look towards the future. Obviously, the situation for certain industry players is worrying. We can hardly rejoice in the knowledge that there are diamantaires being choked by profit margins that are too low or indeed negative. Regardless of the sector, industries function on the principle of supply and demand, which was not the case in the diamond industry. Yet, the refusal by sightholders of almost 60% to 70% of the goods offered during the July sight was totally unheard of before, as was the fact that De Beers authorized the deferral of 75% of allocations in August. As for banks’ financial requirements, they are finding their place in a globalized environment, and this was to be expected. Our industry couldn’t be an exception to the rule forever!
To go into more detail, volumes are low at the moment and will doubtless remain so. I can’t get ahead of myself in terms of the prospects to come for the current market. The diamond industry is in a latent state. It’s difficult to say with any certainty what’s going to happen over the next few months.
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As for the more specific niche sector in which Rubel & Ménasché is evolving, it’s in good shape. The diamonds that we sell — small high-end goods — are still in demand! Rubel & Ménasché is positioning itself in a market that, even though it may vary, remains stable in the storm. As for why, well I’d say a combination of factors are at play. That said, everything that we are setting up, commercially speaking, aims to guarantee and ensure this stability for us.
Do you expect an increase in demand for diamonds by jewelry retailers?
All I can say, again, is that beautiful goods for pieces of jewelry and fine jewelry are still in demand. I’m not expecting this demand to weaken. Our clients are always more demanding and always in search of exception; and our structure is adapted and focused on that. Consumers are still sensitive to the rarity and beauty of a diamond. We must now give all our attention and our priority to diamond traceability: we must be able to justify this to the same consumers. Everyone — at every level of the chain — must be irreproachable.
Does the diamond industry need a plan of salvation?
What do you mean by that? In my opinion, our industry has the qualities and the means to adapt to a new market environment. It just needs to build more modern and solid foundations to work. But this calling into question is ongoing…
Can the increase of market share of synthetic diamonds lead to lower prices for diamond jewelry?
Here we’re talking about two different products. There is a market for good-quality synthetic (i.e. man-made) diamonds, and this market will undoubtedly be greater in the future. However, it is not the same market as that for mined diamonds which are, by their nature, exceptional and rare, and of very high quality, like those that we propose at Rubel & Ménasché. Their prices are therefore not comparable.
We’ll propose different product ranges, that’s all.
And if, in the short term, the quality of synthetic diamonds influences and brings down diamond prices, that will only be temporary.
What do you think about the existing lending arrangements for the diamond industry?
It’s normal for banks to ask for guarantees before granting a loan and for them not to loan the entire sum necessary for an investment but ask the company seeking the loan to provide part of it. What’s surprising about banks asking for stability? The industry used to rely heavily on specialized banks, which have, at best, reduced their loans to diamantaires by 40% or have even closed. Nonetheless, I understand that it’s difficult to adapt when the duration of credit granted by rough traders in Antwerp, for example, drops from 180 to 60 days. Even more so at the moment, polished is not necessarily selling as quickly as it needs to for the diamantaires that manufacture it. I understand the point of view of the banks and it can’t be denied that the industry needs them, but the lack of cash flow is a major problem for our industry. Lending arrangements are in the process of changing our market and are going to influence the relationship with rough suppliers. Polished manufacturers will have to better predict their real needs if they want to avoid being choked on both sides.
What do you think about online diamond trading and online diamond exchanges?
This way of selling makes the market more reactive. You can buy certain goods without great risk, as long as you have the financial manna necessary to pay outright. The image software programs are efficient and let you see the diamonds from almost all angles. This is one of the commercial relationships that is possible today!
What is the impact of China and India on the market? How does this affect prices?
Although the American market is still the main one, the Indian and Chinese markets remain significant. The good health of our industry is measured on a global scale.
Consumer demand has dropped across Asia. Taking anti-corruption measures and the decrease in economic growth into account, China is somewhat disappointing current expectations; but it’s a maturing market and will remain a very fine market. I can’t deny the success of Chow Tai Fook, which has, by the way, just opened three independent Hearts on Fire boutiques in China and two commercial spaces, one in China and one in Hong Kong, distributing this brand that they acquired in June 2014. As for the People’s Bank of China depreciating the yuan in early August, it is a little too early to say to what extent this will influence prices on the Chinese market and the consumption of diamonds by Chinese consumers in general, at home as abroad…
With regard to India, the defaults on payment, cash flow problems or pressure upon Indian diamantaires are certainly worrying. What can I say? I don’t know if an aid package is desirable or even necessary. The human aspect of this situation is the most troubling; it’s dramatic to have to sell at a loss to pay the banks. From an economic point of view, India, like the whole diamond industry, has the means to get itself out of this tight corner, even if the short-term prospects are not encouraging…
What do you think about the practice of overgrading?
I can only deplore this practice! It runs the risk of tarnishing the image and credibility of our industry with consumers. The industry probably needs an internal regulatory body as well as clearly established and globally recognized certification standards. There cannot be confusion about the quality and clarity of the diamonds sold.
Frankly, why not just simply sell things for what they are?
