In the diamond business, romance still selling

KATHY GREY/ FLORIDA WEEKLY Al Morgan of Al Morgan designed this necklace for his shop in Punta Gorda. A swirl of diamonds showcases the mabe pearl centerpiece. Since the phrase “A Diamond is Forever” first appeared in advertisements in the late 1940s, the retail diamond industry has maintained a long, happy partnership with fairy-tale romance. The bridal business continues to be the lifeline for many Southwest Florida jewelers, even if other sales decline. For example, buying jewelry as fashionable gifts declined during the recent recession.

“I think right now for the jewelry industry, bridal is just so important,” said third-generation jeweler Todd Schusterman, co-owner of The Diamond District at Coconut Point mall in Estero. “People are still getting married. We’re still in the romance business and that’s what our focus has been on.”

At Mark Loren Designs in Fort Myers, sales of diamond jewelry for weddings, engagements and anniversaries has held steady the last few years. “That area has not slowed for us,” said Mr. Loren, who designs and sells many types of jewelry. He’s well known for incorporating stones like emeralds and rubies, as well as cultural artifacts (sometimes centuries old), into his pieces.

MORGAN It may seem that diamonds have always been one of America’s most popular symbols of love. But it was not always so. De Beers and its subsidiary, the world’s largest diamond mining and selling operation, leveraged the timeless human emotion after sales fell off during The Great Depression. The company hired an ad agency to combine romantic images with the nowubiquitous catchphrase, and the twinkly gem captivated a starry-eyed public.

For many hopeful husbands, spending two or three months’ income on a diamond engagement ring became par for the course. Buying a diamond measures the level of commitment and devotion for many couples, either for the years they plan to spend together or the ones they already have.

COURTESY PHOTO Jason Sherman and Todd Schusterman, owners of The Diamond District, at their new 10,000-square-foot location at Coconut Point mall in Estero. Diamond supply and demand

In Southwest Florida, the recession created a glut of diamonds that drove down prices on the street, even though diamonds have held their long-term value well. The market was flooded with people trying to get rid of their old diamonds.

“People are selling diamonds to try to pay their mortgage or medical bills,” Mr. Loren said. “The supply is much greater than demand at the moment. It’s kind of like the housing market. You’re starting to see the best deals disappear quickly.

“What we are (also) seeing is people who took money out of real estate or other markets and put it into a big diamond, because it’s going to hold its value. We’ve had some clients that purchased big stones from us when things were really busy in the construction industry. And we’ve now helped them resell those big stones. There’s definitely a demand for them, if you know

who to sell to.”

Other trends include people who are being more frugal and buying smaller diamonds this year.

“I think what you’re seeing due to the economics, .50 and .75 (carat diamonds) go like hotcakes,” said John Butherus, owner of Jewelry by F.M. in Port Charlotte. “Because people don’t have the money to buy to the one- and two-carats. What’s popular over all will be the smaller diamond.”

Mr. Loren said jewelry stores like his have done well competing against online retailers or big retail outlets that sell diamonds en masse, usually lower-quality ones.

“That takes the whole romance, beauty aspect out of it,” Mr. Loren said. “We’re really trying to hone in on the experience rather than the commodity of buying a diamond.”

What makes someone gaga about a stone is personal. “It’s an emotional connection,” The Diamond District’s Mr. Schusterman said. “You’re not driving a diamond. A diamond is not keeping you warm at night.”

Controlling diamond prices

Until the mid-1980s and early 1990s, De Beers monopolized the diamond industry. It reportedly stockpiled billions of dollars worth of diamonds to keep the prices high based on the perception of scarcity. Since then, the company ended those monopolistic practices, according to a recent New York Times article. But it still produces about 40 percent of the world’s diamonds, and maintains an overwhelming effect on the price retailers and consumers pay.

“The price is usually fixed by De Beers,” said Al Morgan, who has owned Al Morgan Fine Custom Jewelers in Punta Gorda since 1980. “They control the world diamond market.”

In fact, De Beers shut down its largest mining operation in the beginning of 2009 so supply wouldn’t overwhelm demand worldwide, according to the

The F inancial Times of London. They reported the mine is now up and running again at 80 percent capacity, a sign of optimism. De Beers group mined 48.1 million carats of diamond in 2008, accounting for $6.89 billion in sales.

Charles Wyndham, an executive at WWW International Diamond Consultants Inc. and former director of De Beers Selling Organization, disputes the notion that there is a surplus of highvalue diamonds sold in retail stores, as opposed to cheaper ones used in other trades and industries.

“When you refer to diamonds you are treating it as one commodity whereas in fact it is a multiple commodity,” he said. “To make a crude analogy with cars, even though cars are not scarce in most parts of the world, a Rolls Royce or an Aston Martin is a very rare car. So to some extent with diamonds, as you go up in size and in quality, they become extremely rare.

“Looking ahead, most of the world’s diamond mines are past their peak production phases,” he added. “Therefore, our long term prognosis is that there is going to be an inevitable shortage of natural diamonds.”

More diamonds are sold in the United States every year than in any other country, but they aren’t mined here. Mines are found in many parts of the world, including Russia, Australia, South Africa, China and Canada. Botswana is the leading producer of high-value diamonds,

according to The Financial Times.

The perfect diamond

Mr. Loren recently designed his own custom cut for diamonds, called Firelight. His cut will include 81 facets, flat surfaces that reflect light. One of the most popular cuts on the market has 57 facets. Another one Mr. Loren has available at his store has 100 facets. It’s the design rather than the number of facets that dictates a diamond’s brilliance.

Al Morgan and his wife have owned Al Morgan Gallery in Punta Gorda since 1980. Mr. Morgan keeps diamonds on hand and weaves them into his art as he sees fit, or as customers demand.

“We design pieces that accommodate different shapes or sizes of diamonds,” he said. “I work from a design standpoint. If a person comes in with diamonds, I can design a piece around that.”

Diamonds can be cut into a multitude of shapes and come in shades like clear, pink, blue, red and black, some rarer and more desirable than others. A deep, clear yellow color might make a diamond more expensive, but a yellowish tint is a sign of poor quality. Provenance may also affect the price, especially at an auction.

“The four Cs justify price and the flexibility of what is important to a person,” said Craig Lewis, manager and appraiser at Thomas Jewelers in Cape Coral. “To some people, color isn’t that important. Other people want a very white stone and they’ll sacrifice a little bit of quality.”

Reputable jewelers have diamonds certified. The Gemological Institute of America judges the diamond based on the four C’s and grades the quality. The best ones may be considered “flawless.” But if you look closely — sometimes far closer than a human eye is capable of — finding a perfect diamond may be impossible.

F.M. Jewelry owner Mr. Butherus remembers learning to judge diamonds at the GIA many years ago, when he earned his gemology certification. “I had to do a solid week of grading diamonds,” he said. “I took it up to 50 or 60 power on the microscope and I wanted to grade it. The proctor walked by and said, ‘If you go deep enough, you’ll find something. There is no perfect diamond.” ¦