Diamond industry on edge over Hollywood film [p. 16]

Today's US big-screen release of the anticipated blockbuster movie "Blood Diamond," starring Leonardo DiCaprio, has left the diamond industry on edge over fears the film could spark public concern about illicit "conflict diamonds" and hurt demand and sales during the key Christmas holiday shopping season. "There are concerns over the negative impact the Hollywood movie could have on sales, given that more than the majority of exports of the Israeli diamond industry are to the US," said Udi Lederer, vice-president of marketing at Sarin Technologies Ltd., a Ramat Gan-based pioneer and leader in the development and manufacturing of advanced evaluation systems for diamond and gemstone grading. "The movie will be released at the all-important holiday shopping season, which accounts for the lion's share of the industry's annual sales, a time when diamantaires had hoped to recover from the worldwide slowdown of the industry in the year." Last month's data on Israel's polished diamond exports, which totaled $735 million, showed that 61 percent of exports were destined for the US. The Warner Brothers movie chronicles the corrupt days of so-called "blood diamonds" or conflict diamonds during Sierra Leone's 1999 civil war, when the precious gems were used to finance civil wars and rebel activity that killed thousands of Africans. "We are concerned that the movie will provide people with the wrong picture of the state of blood diamonds and, as such, have an influence on consumer behavior and demand," Eli Izhakoff, chairman & CEO of the World Diamond Council had told The Jerusalem Post in a June interview. "The problem we have is not the airing but the fact that the content portrays the facts which were true for the 1990s." Members of the diamond industry are concerned that human rights groups could unleash calls to boycott the precious stones, leading to a drop in sales and popularity. In preparation for the release of the movie, the World Diamond Council embarked on a $15m educational campaign that included full-page advertisements in major newspapers, the creation of an informational Web site, diamondfacts.org, and the mailing of training pamphlets to jewelry store owners. The campaign's goal is to let consumers know that the movie's story line focuses on the period before the creation of the Kimberley Process, set up in 2000, which aims to crack down on the multi-billion dollar trade in gemstones that have been mined in war zones. "The trade in conflict diamonds has been reduced from 4% to 0.5% by the Kimberley Process," said Avi Paz, president of the Israel Diamond Exchange. As to the possible effect of the film on the diamond industry, Moti Ganz, chairman of the Israel Diamond Institute remained optimistic. "Israeli diamonds are conflict-free and there is no real problem today in the world with conflict diamonds," said Ganz. "The movie doesn't represent the reality of today." But even with the Kimberley Process in place and with 71 countries as members, reports continue to emerge about false certificates being issued for diamonds in Brazil and of rebels in the Ivory Coast smuggling rough diamonds into Ghana where they get certified despite their origins. "Commitment to the Kimberley Process is on a voluntary basis and verification of a diamond from mine to finger still remains difficult as for example bribery cases along the way can not always be averted or caught," said Lederer. "Over the past years, as a result of the development of synthetic and treated diamonds, the evolution of conflict diamonds and the emergence of the Internet, consumers have become much more knowledgeable and sophisticated about buying diamonds questioning their quality, authenticity and legitimacy." Lederer added that the increasing need to assure quality and authenticity has been the driving force for the emergence of technologies, such as those developed at Sarin to grade and certify diamonds. "Watching the movie, the expectation is that consumers will become more aware and curious about the variety of diamonds, and question the origin and quality criteria of the diamond," he said. "To raise consumer confidence, we expect that not only will manufacturers and gemological laboratories increasingly use technology devices for scanning and grading diamonds but so will jewelry retailers." A few weeks ago, Sarin entered a cooperation agreement with the Miller fine jewelry chain for color grading devices of diamonds. "Although the retail market makes up less than 20% of our sales, we see much growth potential in this market and most of our focus in 2007 will be on developing and marketing cost-effective products for retailers," Lederer said.