loose diamonds round

Despite film, local merchants say diamond sales solid

Thursday, January 4, 2007 BY CARRIE OLSON found at michigan business review mbiz

A diamond may be a girl's best friend, but Hollywood has proven it is anything but a friend to the diamond industry.

"Blood Diamond," a Warner Bros. film released in December, is set in 1999 Sierra Leone and brutally portrays the international diamond trade. Starring Leonardo DiCaprio as a South African mercenary, the film shows how money from illegal diamond sales funds violent rebel forces and helps sustain crippling civil wars.

International human rights organizations Amnesty International and Global Witness have jumped on the opportunity to gain a widespread audience for these issues.

In cooperation with the film's director and several cast members, the organizations launched a Web site, www.blooddiamondaction.org, and sponsored public service announcements this fall urging consumers to ask questions about the origin of the gems they buy.

But has all this hype really affected the diamond industry?

Local merchants agree that very little has changed in response to the film's message.

Jonathan Farnsworth, manager of Lewis Jewelers on West Stadium Boulevard, admits that customers have asked more specific questions about conflict diamonds this shopping season, but says sales are unaffected.

"We've heard the questions and we have documentation if there is a concerned customer who wants to see it," Farnsworth said, "but we've done really well these past two months."

Sales in November and December account for 40 to 50 percent of annual sales for Farnsworth's store and the jeweler has experienced a 25 percent increase over last season. That is pretty close to its 30 percent target.

Nationally, diamond sales during the Christmas shopping season account for almost 50 percent of annual sales. Last year, total jewelry sales grew 3.8 percent to $59.4 billion, according to government sources, and retailers were hoping sales would increase four to five percent this year.

The World Diamond Council, a trade organization based in New York City, launched a counter-offensive in September, taking out full-page newspaper ads in ten major markets across the nation and launching a Web site, www.diamondfacts.org.

Craig Warburton, owner of Austin and Warburton on S. Main, is not worried that sales will be affected by the film's release.

Unlike a lot of jewelers, Austin and Warburton's Christmas season accounts for only 25 percent of annual sales.

"Sales are solid year-round for us," Warburton explained. "Spring and summer are busy times too."

"We've never been asked to show a copy of our company policy on conflict diamonds," Warburton admitted.

Farnsworth believes the public is not fully aware of human rights issues in Africa and Warburton agrees.

"People in Africa are dying at the rate of 747's flying into the side of mountains from things like E. Coli and tainted water supplies," he said. "People in Darfur are being massacred and it doesn't even register on the American news."

Although, only three percent of Austin and Warburton diamonds originate outside of Africa, the jeweler is confident he does not sell conflict diamonds.

"We buy next to no finished diamonds. All the production work is done right here," he said. "It's a lot easier to distinguish origins on the loose diamond level."

But there is rising concern that this controversy will have an adverse affect on Africa's legitimate trade industry, by shifting business to other diamond-producing regions in Canada or Russia.

"You have to question the movie maker's motives," Warburton said. "Take away the only business they have and they'll be a lot worse off. In many of the diamond-producing countries the majority of people are employed in one end of the industry or the other."

Many believe the film is a little late to make any real difference in the diamond world.

"The conflicts in the movie are ten years old," Farnsworth explained. "There are now processes in place to assure the legitimacy of diamonds."

The Kimberley Process, a method of certifying legal diamonds through tamper-resistant papers was passed into law in 71 participant countries in 2003. The papers are needed for the stones to cross international borders, and this process has reduced the number of conflict diamonds from four percent globally to only one percent.

"That is a great achievement. What else can 71 countries agree on?" Warburton said.

Although happy that the Kimberley process has been so successful, local jewelers still see room for improvement.

"One percent of the diamond trade is still an exceptionally large number," Warburton said, "but the diamond world is changing. I'm cynical, but we still hope for improvement."

"If we could squeeze that last percent out we'd be happy," Farnsworth said.

"I believe the hype was as much to help the movie as to hurt the diamond business or bring attention to human rights issues," Warburton said of the recent Hollywood release. "Diamonds are so special and unique that people really desire them and are not deterred by some of these issues."

Carrie Olson is a freelance writer.