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IN THE FACE OF THE CORONAVIRUS CRISIS,  DE BEERS CUTS SUPPLY OF ROUGH TO DIAMOND MARKET

 

The COVID-19 coronavirus continues to make it presence felt on the diamond and jewelry markets, with De Beers citing the worldwide epidemic as a primary reason for its cutting the size of rough diamond allocation in February, which was 36 percent down on the amount reported just one month earlier. 

Over the first two cycles of the year, De Beers has reported allocations worth $906 million, which makes it the slowest start to a year since the company first began releasing sales data in 2016.

According to De Beers, $355 million worth of of rough diamonds were sold during its second second sales cycle of 2020 compared with $551 million for the first cycle of the year. The second sales total was 28 percent lower than sales in the same period of 2019. 

“Following an improvement in demand for rough diamonds during the first sales cycle of 2020, we recognized the impact of COVID-19 coronavirus on customers focused on supplying the Chinese market, and put in place additional targeted flexibility to enable customers to defer allocations of the relevant rough diamonds,” said De Beers CEO Bruce Cleaver, in the company statement.

MOST OF IMPACT EXPECTED DURING FIRST SIX MONTHS OF CRISIS

Earlier, a study released by Italian luxury brand committee Altagamma, in collaboration with consulting firm BCG and asset management firm Bernstein, forecast that luxury will lose up to $11.4 billion in profits and a result the coronavirus outbreak, adding that the market is unlikely to return to normal trading conditions before the beginning of 2021. 

According to the survey, the head of luxury companies polled expect decreases in revenues of between $34 billion and $46 billion, which would bring the value of the personal luxury market to between $353 billion and $364 billion, its lowest point since 2015. They expect most of the impact to be registered during the first six months of the crisis.

The Altagamma survey also looked at how luxury companies are reacting to the crisis. The bulk of brands are cutting back on opening of directly operated stores, its results suggested, as well as prioritizing online sales. 

De Beers has reported allocations worth $906 million during the first two sales cycles, the slowest start to a year since the company first began releasing sales data in 2016.

A significant percentage of those polled said that they would also relocate stock being held in China and Asia to other regions, as well as allocating marketing budgets to other countries. Other said they are cutting back on store hours in an attempt to hold down expenses.

Many of the technology-based solutions for managing a business remotely come with a cost that will be less easily carried by small and medium-sized enterprises, warns CIBJO President, Gaetano Cavalieri. 

TECHNOLOGICAL TOOLS ARE KEY FOR FUTURE

In a message to the jewelry trade, Gaetano Cavalieri, President of CIBJO, urged the leadership of the industry to begin considering what needs to be done “so that we are able to traverse the current crisis intact as possible.”

Within the framework of the restrictions being imposed to prevent the spread of the virus, we must begin using the tools at our disposal to allow the motor of our business to continue turning. “Fortunately, more than during any other period in human history, we have a wealth of instruments in our toolkit,” he noted

“Travel and face-to-face interactions are preferable, but in their absence teleconferencing, video-chatting, Facebook, Whatsapp and Skype are all viable alternatives. Many employees can work from home and remain productive. Managers can monitor business long distance, and products can be displayed and transactions completed online. The technology is available, and many are already using it,” Dr. Cavalieri stated.

But, he added, there is caveat. “Many of the technology-based solutions for managing a business remotely come with a cost that will be less easily carried by small and medium-sized enterprises. Especially at a time like this, there should be an industry-wide sense of awareness that colleagues who are more vulnerable to the suspension of regular trading norms should be a provided a fair opportunity to catch up and compete,” he stated. 

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