Impact of DiCaprio film on gems ‘likely to be modest’

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-ReutersThe 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