Professional Jeweler Archive: ICA Congress Focuses on Selling Color to Consumers

May 2005

Merchandise | Gemstones

ICA Congress Focuses on Selling Color to Consumers

An ambitious new plan to raise money for colored gemstone promotion debuts and Madasgascar unveils its reforms of the gem sector

By Robert Weldon, G.G.

As 200 International Colored Gemstone Association Congress attendees returned home, they carried several important messages about colored gems with them. The biennial congress, held Feb. 18-21 in Bangkok, Thailand, discussed and debated many issues affecting the gemstone industry. These included better consumer marketing and promotion, colored gemstone forecasting, emerging markets and assorted gemological topics.

ICA president Joseph Menzie’s opening remarks defined the tone and substance of the congress. “Though we love what we do, we recognize we need help in getting consumers to demand our product,” he said. “Our business has changed dramatically over the past few years and continues to evolve. As individuals we may want to keep things the way things were, but that’s impossible.”

Among the goals Menzie and ICA board members identified is developing an ongoing strategy to raise money to promote colored gemstones. ICA unveiled the Gem Millennium Campaign, an initiative spearheaded by Jim Littman of DMB Partnership to raise $3 million in its initial push. The campaign is aimed at developing ways to spark greater sales of gemstones worldwide. Littman’s campaign seeks sponsorships by other organizations, including governments of gem-producing nations, gem companies and individuals. (Littman nurtured a successful fund-raising program for the Gemological Institute of America during the 1990s.)

Campaign Proposal

Littman said this is a “seminal time” to develop a program for colored gemstones. “The gemstone industry is fragmented, has no central organization or backing [as De Beers does with diamonds] and it bases its promotions on isolated programs,” he said. Littman proposed creating four components of a plan for ICA:

  • ICA Fashion Gem Council would promote colored gemstones in close consultation with the fashion industry. Jewelry coordination kiosks, present at major shows, would help link colored gems and jewelry to a given year’s fashion designs and colors. In addition, the ICA-FGC would seek colored gemstone jewelry placement at international events and on television.
  • Retail Gem Initiative would involve, educate and engage retail jewelers about colored gemstone jewelry. Ad programs, slicks, brochures, press kits and incentive programs would be devised, as would other high-profile projects (such as major traveling jewelry collections) to help jewelers sell more color. Recognition and awards for top retailer participation would be established also.
  • Gem Marketing Enterprise would work to understand what Littman describes as the “emotional life cycle” and identify occasions and events which might be potential motivators for buying colored gem jewelry, such as births, graduations or second marriages.
  • Recognition Program would involve membership in the Magnificent Gems Roundtable, comprising financial contributors to the campaign’s projects. Recognition would be gained for different levels of contribution, such as $1 million and up, $500,000-1 million, and $100,000-500,000.

Boosting Confidence

Eric Braunwart, American Gem Trade Association president, delivered the keynote address. He noted an MVI Marketing study showed “a large percentage of people know about five or more gemstones, but most had no plans to purchase.” Consumers view the colored gem industry as rife with uncontrolled pricing, discounting and counterfeiting, said Braunwart, and that they want assurances throughout the supply chain before they buy gems. Integrity in the product, labor conditions in mining locales and attention to environmental factors must be better addressed for color to sell, he said. It’s up to ICA members to make this happen, he said (for more information on Braunwart’s stance on gemstones, see: “Branding with a Conscience,” Professional Jeweler, October 2004. p. 37).

Susan Sagherian, president of Concept Design, Strategic Product Development, Herrliberg, Switzerland, discussed interpreting color trends. Color trends are set as much as two years in advance through agencies that study lifestyle trends, geopolitical scenarios and social developments, she said. ICA’s understanding of the color trend process will help anticipate potential demands for gemstones with advance notice, she said.

William Boyajian, president of the Gemological Institute of America, Carlsbad, CA, said GIA is dedicating serious funds and resources to focus on colored gemstone issues. “I am confident the first 10 years of this decade will come to be known as the decade of the colored gemstone,” he said. While GIA won’t promote colored gems to the public, it foresees an increasing role for colored gems in the near future.

New Markets for Buying & Selling

M. Pamphile, director of mines and geology in Madagascar, unveiled his country’s new regulatory reform and mining policy, which dismantles old barriers to trade in gemstones. Madagascar’s President Marc Ravalomanana signed the new mining policy in February. Past regulation was widely held to be a disincentive for foreign investment, responsible for high levels of corruption in Madagascar’s gem markets and a skirting of much of the country’s tax revenue. Until February 2005, it became illegal for foreigners without locally registered companies to buy gems in Madagascar.

“That’s why this is a big deal,” says Tom Cushman of Allerton Cushman, Sun Valley, ID, who specializes in gemstones from Madagascar. Cushman has advised Madagascar’s government on developing the gems and minerals sector for the past few years. “Madagascar is a minicontinent, bigger than California or France,” he says. “It’s got everything except for tanzanite, and who knows, it might have that too. Large-scale mining companies – including RTZ, De Beers and Majescor – are actively looking for diamonds and other minerals in the country. With these new reforms, Madagascar is shedding its Wild West image and developing itself as the new frontier for gemstones.”

Madagascar’s road to liberalization started two years ago with Minerals Resource Governance Project, said Nadine Ranorosa, Madagascar’s national coordinator. It was initiated with a $35 million loan approved by the World Bank last year.

“The development of this important sector has been constrained for too many years by restrictive regulations that have resulted in smuggling of our high-quality stones out of the country,” said Ranorosa. “PGRM’s goals are to open the gemstone sector to foreign trade. First, we will facilitate gem trading for Malagasy and foreign traders.” Ranorosa described the opening of one-stop-shops in key cities around Madagascar where safety, customs, package sealing and shipping could be arranged.

“Second, we will increase value-added projects,” she said. Madagascar aims to train 15 instructors and 70 students in lapidary arts, mostly based near Antananarivo, the nation’s capital. A gemological school, in partnership with the Gemmological Association of Great Britain and GIA, is open, and a state-of-the-art gemological testing laboratory will open this fall.

“Finally, we want to reduce corruption and smuggling in the sector,” said Ranorosa. This will be implemented through streamlining and simplifying regulations and providing incentives for buyers through low taxes. Officials say an easily paid buyer’s license and subsequent 2% tax will be levied on rough materials, while there will be no tax on goods fashioned in Madagascar.

“Madagascar is truly open for business,” said Cushman.

China Factor

While new buying markets are also opening elsewhere, not just in Madagascar, ICA’s international membership is looking for new markets in which to sell gems.

ICA’s Joseph Menzie said he believes China may be such a market. “Our delegation visits to China have shown us what massive possibilities exist in China. The future for ICA there is bright, but the way is difficult,” he said.

Chinese retailing has no colored gemstone infrastructure, and retailers there need ICA to set the standards and create the infrastructure, he said. Selling ICA gems with proper certification would essentially “brand” gems sold by members, Menzie continued, a factor that could lead to the establishing an ICA Promotion Center.

ICA officials said they are looking into speaking with China to help establish a free-trade zone for gemstones. “We have seen there is a latent desire for colored gemstones in China,” said Menzie, displaying a chart of the growth of China’s jewelry market. The market totals about $13 billion now and is estimated to reach nearly $22 billion by 2010.

ICA wants a part of that market, while building its image in the world’s largest growing consumer market.

ICA President Joseph Menzie says the industry needs help in attracting consumer interest, but that ICA has plans. Photo by Robert Weldon.
Madagascar’s gem bounty includes dozens of species and varieties. New legislation and policies unveiled at the ICA Congress make the country’s gems newly and legally available to foreign buyers. Photo by Robert Weldon.
The winning poster in the ICA contest nabbed its designer, GIA’s graphics manager Faizah Bhatti, an all-expense-paid trip to Idar-Oberstein, Germany.
In his keynote speech, American Gem Trade Association President Eric Braunwart said Integrity in gems, labor conditions and attention to environmental factors must be better addressed for color to sell. Photo by Robert Weldon.

Copyright © 2005 by Bond Communications