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Coke and diamonds

By Charles Wyndham.

There are many things about which I know nothing, so to learn that the average of a Coca Cola drinker is 56 filled an important gap in my knowledge.

In fact, the whole article in The New York Times, ‘For Coke, Challenge is to stay relevant’, I found intriguing.

Coca Cola is having a rough time.

The share price has fallen 7% this year, which is apparently unprecedented for this venerable company, which is now 127 years old, a year older than De Beers.

Its product is under threat from the anti obesity brigade and perhaps more to the point by changes in consumer tastes that Coca Cola has notably failed to latch onto.

The younger consumer, especially in Europe and Japan, has moved away from highly carbonated sugary drinks to coffee, chocolate and sports drinks, all of which have stolen a huge march on Coke.

About a year ago, I wrote a piece entitled ‘Nespresso’, about how Nestle have managed to create huge added value to the humble coffee bean, something which the diamond industry fails to do to its supposedly much more illustrious product.

Game changers can be generated, but in diamonds we still seem to be plodding along the well worn dreary path of protecting vested interests, which has simply meant that the cake has and continues to shrink whilst other luxury products have gone through a golden period.

Looking through the odd glossy magazine, I see more and more coloured stones being brandished.

As I already mentioned diamonds have failed miserably to keep up with the growth for other luxury goods for at least the last 25 years, a trend which appears to be accelerating.

The reaction by Coca Cola to both Michelle Obama’s campaign against obesity and also Mayor Bloomberg’s attempt to ban sales of giant sized bottles of high sugar soft drinks, reminds me of the diamond industry’s reaction to cultured diamonds.

Both are guilty of simply trying to defend the status quo and not, as Seth Godin, founder of the website Squidoo and author of ‘Purple Cow’ who said of Coke, ‘They’re not in the sugary water business.  They’re in the storytelling business… They think their assets are bottlers, self space and futures contracts on sugar. But the real asset is trust, share of mind and a story…”

Cultured diamonds have been driven underground and potentially creating many more problems for natural diamonds than they ever would have been able to do if the competition (or opportunity) had been openly accepted.

The passing off of cultured diamonds as natural is potentially disastrous for the industry.

But then the industry has never gone out of its way to gain trust.

Certification of diamonds grew from a need to bring trust into the purchasing process for the consumer.

Even then it is not that long ago that we had the debacle about manipulation for gain of the certification process.

About diamonds there nearly always appears to be a hint of a less than wholesome whiff.

I read recently Peter Meeus, ex managing director of the HRD in Antwerp and for some time the chairman of DDE (Dubai Diamond Exchange), writing some pathetic defence of the Kimberley Process, that is a defence against the very parties that forced the establishment of the Kimberley Process, namely the NGO’s.

I quote him, “Diamonds are the most strictly checked raw materials…”

Well, if they are, not that much of it goes on in Dubai according to what I hear.

Last month, I read a report about how a whistle blower revealed that Dubai’s biggest gold refiner had committed serious breaches of the rules designed to stop gold mined in conflict zones from entering the global supply chain.

A reason for the undoubted success of Dubai in manufacturing itself as a major diamond centre has of course been based on the ‘flexibility’ it allows the diamond trade.

One definition provided by the Oxford English Dictionary of ‘flexible’ is to be able to bend without breaking: in Dubai’s case, it is more, no need to bend as there is nothing to break.

The constant flow of rumours that I have heard for many years that Dubai is the clearing house for the majority of diamonds which have an embarrassing provenance, because of its less than lip service to the, in itself, very flawed Kimberley Process, has been pretty monotonous. 

It is not as if I pay much attention to the Kimberley Process, but I have always been faintly amused that the issue of Dubai has not been raised much more vigorously.

It cannot be because of the totally unfounded rumour that Dubai has gone out of its way to curry (undue?) favour within various trade bodies.

No, that would be an unthinkable thought, so there must be a much simpler reason…, the only problem is that I have not got the faintest idea what it could be.

Whatever criticism that may have been made about De Beers, of which I am probably guilty of a few, they did spend time and money (even if only some of it was their own) selling the dream of diamonds, which they did well and at times very well.

The emotional appeal of diamonds is extraordinarily strong and it has allowed the industry to ride out one embarrassing episode after another, but it would be very dangerous to think that the industry can go on forever giving the two fingered salute to the rest of the world.

As Giuseppe de Lampedusa wrote in ‘The Leopard’, ‘ if we want everything to stay as it is, everything will have to change.’









 

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