Given its heavy involvement with Japan, the jewelry industry reacted in shock and horror to the March 11 Great Eastern Japan Earthquake and subsequent tsunami.
No member of the industry was known to be hurt in the events. On March 14, Avi Paz, president of the World Federation of Diamond Bourses, issued a statement saying that as far as he knew, every member of the Japanese diamond trade was out of harm’s way.
Likewise, Tiffany & Co., which owns 55 stores in Japan, said all its employees were “safe and accounted for,” although Tiffany’s stores in the Kanto and Tohoku regions did close temporarily. One store, located near the earthquake’s epicenter in Sendai, was damaged, Tiffany director of investor relations Mark Aaron told JCK.
Pearl producer Mikimoto said on its website it had “confirmed the safety of all Mikimoto employees in Japan. Mikimoto stores, buildings, factories, and facilities, including our pearl farm, have not sustained major damage.”
On a business level, many thought the tragic events would have serious repercussions. Shares of luxury companies like LVMH, Tiffany, and Richemont all fell in the days following the earthquake.
The New York Times on March 24 reported that many traditionally crowded high-end Japanese boutiques appeared empty following the string of catastrophes. “The Japanese have lost their taste for luxury,” according to the article. “Life’s priorities have taken on a starkly different cast.”
One diamond dealer heavily involved in Japan describes the market as “devastated.” He adds: “One person told me it’s the same as it was after World War II.”
In a March 21 conference call with analysts, Tiffany chairman and chief executive officer Michael J. Kowalski seemed less worried, predicting that his company’s Japanese sales would fall 15 percent in the first quarter of 2011 but declining to make forecasts beyond that.
De Beers spokeswoman Lynette Gould, meanwhile, expects the tragic events to have only “minimal impact” on diamond prices. “The real drivers of the strong price growth in the last six to 12 months have been China and India,” she explains. “Japan plays a relatively insignificant part in diamond price growth. Market growth in Japan has been pretty flat over the last decade. In contrast, China and India have seen dynamic growth at the retail level. In 2010 China was up 25 percent in local currency terms, and India even more than that, at 31 percent.”