Impact of DiCaprio film on gems 'likely to be modest'

By: MARTINNE GELLER

LONDON - 'Blood Diamond', a thriller that hits movie theatres today, could spark public concern about illicit "conflict diamonds" and hurt demand during the holiday shopping season, analysts said this week.

But any financial impact to retailers should be modest and brief,

they added.

The film, starring Leonardo DiCaprio, highlights the precious

gem's role in Sierra Leone's civil war during the 1990s.

 

So-called conflict diamonds, or blood diamonds, refer to stones

mined in war zones and sold illicitly to fund war, insurgencies and

human rights abuses.

 

James Hurley, an analyst with research firm Telsey Group, feels

the movie will likely affect sentiment with its star power and

advertising push.

 

But he doubts people will stop buying diamonds, which would hurt

retailers such as Zale Corp, Tiffany & Co Inc, Blue Nile Inc,

and Signet Group Plc, as well as diamond processor De Beers

Group.

 

"What a diamond means and what it stands for has been ingrained

in people's psyches for decades, if not centuries.

 

That's a pretty powerful attachment to ...

 

destroy with just one film," Hurley said.

 

CL King analyst William Armstrong said the movie would likely

alter buying patterns for a small group of shoppers.

 

"But how much that would be ...

 

I'd be very surprised if it was a material amount," Armstrong

said, adding that the issue is not new and that large retailers

already have strict programmes in place to prevent or minimise the

possibility that their diamonds have left a bloody trail.

 

To help prepare for a possible public backlash, the World

Diamond Council, a trade group, earlier this year hired a crisis

public relations firm to design a campaign stressing the industry's

efforts at reducing the number of blood diamonds.

 

The campaign included full-page advertisements in national and

international newspapers and an educational Web site,

www.diamondfacts.org.

 

High-end retailer Tiffany, which said it tries to assure the

responsible mining of all materials used to make its jewellery,

said it encourages consumers to ask jewellers how they support

efforts to promote responsible mining.

 

"The film 'Blood Diamond' serves as a horrific reminder of the

terrible costs of uncontrolled diamond trading ...

 

and we are hopeful it will contribute to ongoing international

efforts to assure history does not repeat itself," Tiffany told

Reuters.

 

In 2002 diamond production companies and most countries involved

in the mining and trade of diamonds agreed on the Kimberley Process

Certification Scheme, which is a process designed to prevent blood

diamonds from entering the mainstream diamond market.

 

"The industry has worked hard and effectively to keep conflict

diamonds from the mainstream markets, including certifying stones

as conflict-free," wrote ThinkEquity Partners analyst Edward Weller

in a note to clients.

 

"Though the industry has, we think, done a very good job, the

release of this movie could temper overall demand modestly, we

believe, and briefly."

 

The fourth quarter, which includes the all-important holiday

shopping season, accounts for the lion's share of the year's sales

for jewellery retailers.

 

Telsey Group's Hurley said that signs such as recent strength in

the stock market bode well for strong holiday jewellery sales.

 

Nampa-Reuters

 

The film, starring Leonardo DiCaprio, highlights the precious gem's

role in Sierra Leone's civil war during the 1990s.So-called

conflict diamonds, or blood diamonds, refer to stones mined in war

zones and sold illicitly to fund war, insurgencies and human rights

abuses.James Hurley, an analyst with research firm Telsey Group,

feels the movie will likely affect sentiment with its star power

and advertising push.But he doubts people will stop buying

diamonds, which would hurt retailers such as Zale Corp, Tiffany

& Co Inc, Blue Nile Inc, and Signet Group Plc, as well as

diamond processor De Beers Group."What a diamond means and what it

stands for has been ingrained in people's psyches for decades, if

not centuries.That's a pretty powerful attachment to ...destroy

with just one film," Hurley said.CL King analyst William Armstrong

said the movie would likely alter buying patterns for a small group

of shoppers."But how much that would be ...I'd be very surprised if

it was a material amount," Armstrong said, adding that the issue is

not new and that large retailers already have strict programmes in

place to prevent or minimise the possibility that their diamonds

have left a bloody trail.To help prepare for a possible public

backlash, the World Diamond Council, a trade group, earlier this

year hired a crisis public relations firm to design a campaign

stressing the industry's efforts at reducing the number of blood

diamonds.The campaign included full-page advertisements in national

and international newspapers and an educational Web site,

www.diamondfacts.org.High-end retailer Tiffany, which said it tries

to assure the responsible mining of all materials used to make its

jewellery, said it encourages consumers to ask jewellers how they

support efforts to promote responsible mining."The film 'Blood

Diamond' serves as a horrific reminder of the terrible costs of

uncontrolled diamond trading ...and we are hopeful it will

contribute to ongoing international efforts to assure history does

not repeat itself," Tiffany told Reuters.In 2002 diamond production

companies and most countries involved in the mining and trade of

diamonds agreed on the Kimberley Process Certification Scheme,

which is a process designed to prevent blood diamonds from entering

the mainstream diamond market."The industry has worked hard and

effectively to keep conflict diamonds from the mainstream markets,

including certifying stones as conflict-free," wrote ThinkEquity

Partners analyst Edward Weller in a note to clients."Though the

industry has, we think, done a very good job, the release of this

movie could temper overall demand modestly, we believe, and

briefly."The fourth quarter, which includes the all-important

holiday shopping season, accounts for the lion's share of the

year's sales for jewellery retailers.Telsey Group's Hurley said

that signs such as recent strength in the stock market bode well

for strong holiday jewellery sales.Nampa-Reuters

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