Following a tough year for the diamond industry, emanating from economic uncertainties generated by unstable geopolitical climate arising from Washington –Beijing tension the multi billion industries is said to be showing slight signs of improvement.
Diamond companies are expected to pump in millions of dollars in the last quarter of the year to the first two months of 2020 in rigorous marketing to push jewelry sales figures and further spark confidence in industry players across the value chain especially bankers who had shrunk their financing dispatch to traders. Recently leading diamond mining giant De Beers Group announced that its marketing spend in the entire 2019 will be totaling to $180 million (around P1.9 billion) during the course of the year 2019.
This was revealed by De Beers Group Chief Executive Officer Bruce Cleaver on the sidelines of the Diamond Conference held in Gaborone recently. Bruce said the $180 million dispatch is De Beers largest marketing spend in 10 years. “This illustrates how difficult the market was in 2019 , and contrary to what many may think ,when the global demand is subdued we may cut down any expenditure for cost containment but not the marketing spend ,that is actually when you have to increase the marketing budget,” he said.
The De Beers Boss explained that on top of the traditional way of doing things in television the company will further expand its reach in the digital space. “Technological advancements and digital platforms which are the order of the day especially for millennials present great opportunities for us to reach our end consumer clientele,” he said.
Bruce Cleaver revealed that the larger part of the marketing budget is spent during the second half of the year with much concentrated expenditure in the last quarter of the year, spilling over to the first months of 2020. “We have to respond to trends in the market, and we usually spend large part of that amount in the last quarter of the year, this is because the main selling season is during the festive season in the US.”
The CEO explained that 30 percent of De Beers’s diamond jewelry sales in the US take place around Christmas and Thanks giving as well as increased demand for Chinese new-year celebrations. “Marketing is a tricky undertaking, it requires and needs long term programs, it is difficult to track its effectiveness if its rolled out under a short term, with us at De Beers we are much more concerned with big three places where our diamonds sell, India, China and US, so we have very sophisticated tools around the digital space and technological provisions to track market response. Last year, De Beers spent $166 million marketing.”
NATURAL DIAMOND AUTHENTICATION CAMPAIGN
Last week De Beers also announced its new partnership with Circa, buyers of pre-owned jewelry and watches, aimed at authenticating pre-owned diamonds. De Beers diamond detection technology will be adopted and implemented by Circa to provide confidence to those selling their jewelry.
“One of our core missions at De Beers Group is to develop and deploy ground-breaking, low-cost testing services designed to strengthen consumer confidence in diamonds,” said Jonathan Kendall, president of De Beers Group Industry Services. On top of providing Circa with the ability to authenticate pre-owned diamonds, the two companies will also host a series of educational consumer events in Asia, Europe and the U.S as well as, helping owners understand how to authenticate natural diamonds in their jewelry.
Information from De Beers explained that the collaboration will entail offering advanced diamond appreciation classes to Circa clients. “By partnering with De Beers Group and using its cutting-edge diamond detection equipment, our buyers are able to assure sellers that their diamonds are natural. We’ll also be able to clearly identify and avoid buying any diamonds which are not natural at the time they are submitted,” said Oren Schneider, chief executive officer of Circa.
De Beers has been putting its weight behind technology in the diamond industry. In May 2018, the company launched a pilot program, GemFair, an app that tracks a diamond’s journey across all stages, from sourcing to consumer in the name of traceability. That same year in September, De Beers launched its own lab-grown diamond company, Lightbox. The company has been working on entering wholesale with full expansion planned for 2020.Over than a decade ago; De Beers launched Forevermark, a brand of ethically sourced, numbered diamond
2019 TOUGH FINANCIAL YEAR
During 2019, the diamond industry didn’t have it easy, trade wars sparked uncertainty, depressing manufacturing inventories and slowing down the polished diamonds market uptake. These fostered a heightened sense of caution among the banks that finance the trade, as well as diamond brokers and consumers of luxury goods. An in-depth analysis by Paul Zimnisky, a New York based independent diamond industry analyst and consultant published recently alludes that these industry conditions are a “crisis.”
In some segments of the industry, anecdotes of “no business” have surfaced as well as “no demand” for certain categories of diamonds. A representative for a leading trade group of manufacturers in India has recently said the current “recession” is “worse than the one witnessed in 2008-2009” during the global financial crisis. De Beers' rough diamond sales in dollars are down 17% year-to-date through June compared to the same period last year. Russian diamonds outfit ALROSA’s sales are down 33%.
According to the Zimnisky Global Rough Diamond Price Index, a proxy for the like-for-like change of the global product mix, rough diamonds are down 2.3% year-to-date as of July 20 and are currently sitting at a 52-week low. In March this year the US diamond and jewelry industry hinted fear of the possibility of higher tariffs on goods from China as the trade war between China and United States of America escalates. The Trump administration had proposed a levy of up to 25% on products from China worth a total of $300 billion, the US Trade Representative (USTR) announced in May this year.
Raw materials and accessories used in the jewelry trade are among the 3,805 items on the list of goods noted to be possibly affected. Both natural and lab-grown diamonds in various forms, as well as precious and semi-precious stones, made the list. Others include metals used in jewelry creation, such as gold and silver, as well as certain finished jewelry items.
De Beers has thus far had a difficult year, with year-to-date sales of $3.21 billion compared to $5.39 billion by the same time in 2018. The trouble stems from 2017, when high levels of smaller stones were taken up by the diamond cutting and polishing firms, raising inventories and reducing their appetite for new sales.
Newly established wholly indigenous citizen owned retail chain Payless Retail (PTY) Ltd is set to partake in the first session of Botswana Stock Exchange (BSE)’s Tshipidi Mentorship Program (TMP) on Monday June 29th.
The TMP aims to train and capacitate SMEs so they can operate as corporates and eventually list on the local bourse. According to local bourse, BSE, the program aims to provide practical training to potential issuers through a comprehensive and interactive program that covers the key themes necessary to position a company to list on the BSE.
Payless Retail is a newly established supermarket chain whose mission is to become a convenient one-stop shopping destination as it is one of the Botswana oldest retailing brands. It started off as Corner Supermarket in January 1976, and to date boasts of nine stores in, among others, Gaborone, Mochudi, Molepolole and Tlokweng. Payless was recently acquired by Ellis Retail Group, which is led by businessman Elliot Moshoke.
The takeover catapulted Ellis Retail to the envious position of being the first wholly indigenous owned major retail chain. “We jumped at this opportunity because it gave us a chance to prove to Batswana that the retail business is open and lucrative.”
The objective is to create a proudly Botswana retail chain that fully supports our national Vision, economic development and citizen economic empowerment ambitions,” Moshoke told BusinessPost.
He further emphasized that Batswana are capable and able to run large scale businesses hence they need to accept invite foreign investors who will come in to support us not take the business. “Our win as Payless in the Fast Moving Consumer goods (FMCG) industry is a win for Batswana. We need their support in this difficult and challenging journey.
As you are aware, Payless is the only retail chain in the hands of Batswana ba Sekei. We need to take advantage of this to generate employment and create small businesses in retail and Agri businesses,” he explained.
The retailer has also partnered with Botswana Investment & Trade Center (BITC) on their #PushaBW campaign with a view to initiating earnest engagement with local producers to iron out bottlenecks and ensure seamless trading.
“Local producers have to be part of the phenomenal growth of the Payless brand. This will in turn facilitate employment creation and economic growth. We did this because we have the utmost respect for local manufacturers and producers,” he mentioned.
Payless is currently restocking all of its stores; a development that Moshoke says is testament to the retailer’s commitment to growing the brand and ensuring continuity of business. He further revealed that renowned retail suppliers like PST and CA Sales have reignited their trust in Payless, opening their doors for Payless as they have faith in the retailer’s new owners.
The takeover has reportedly saved more than 200 jobs and gave a new lease of life to the previously fledging Payless brand. According to a press release from the management team, the Payless work forces are also extremely excited about what the future holds. The TMP is a comprehensive and interactive program that covers the key themes necessary to position a company to list on the BSE.
The program is administered by experts within the listing ecosystem and seeks to bring the potential issuers closer to the listings advisers, investors and leaders of already listed companies. “As a strategic initiative, the BSE decided to set up this mentorship program in a bid to assist SMEs to strategize, corporatize and acclimatize in order to list to access equity finance and expand operations,” said the BSE.
The TMP will avail to SMEs practical insights, knowledge and feedback from institutional investors, increased awareness of the BSE listing requirements as well as an intimate network of advisors and CEOs of listed companies. After training, Payless will graduate with improve governance structures and better knowledge of articulating its business strategy. The retailer will also gain increased visibility through BSE marketing platforms.
Despite Covid-19 interrupting trade worldwide, exporting companies in Botswana which benefited from the Botswana Investment and Trade Centre (BITC) services realised P2.96 billion in export earnings during the period from April 2020 to March 2021.
In the preceding financial year, the sale of locally manufactured products in foreign markets had registered export revenue of P2, 427 billion against a target of P3, 211 billion BITC, which celebrates 10 years since establishment, continues to carry out several initiatives targeted towards expanding the Botswana export base in line with Botswana’s desire to be an export led economy, underpinned by a robust export promotion programme in line with the National Export Strategy.
The main products exported were swamp cruiser boats, pvc tanks and pvc pipes, ignition wiring sets, semi-precious stones, veterinary medicines, hair braids, coal, textiles (towels and t-shirts) and automobile batteries. These goods were destined mainly for South Africa, Zimbabwe, Austria, Germany, and Namibia.
With Covid-19 still a problem, BITC continues to roll out targeted virtual trade promotion missions across the SADC region with a view to seeking long-lasting market opportunities for locally manufactured products.
Recently, the Centre facilitated participation for Botswana companies at the Eastern Cape Development Council (ECDC) Virtual Export Symposium, the Botswana-Zimbabwe Virtual Trade Mission, the Botswana-Zambia Virtual Trade Mission, Botswana-South Africa Virtual Buyer/Seller Mission as well as the Botswana-Namibia Virtual Trade Mission.
BITC has introduced an e-Exporting programme aimed at assisting Botswana exporters to conduct business on several recommended e-commerce platforms. Due to the advent of COVID-19, BITC is currently promoting e-trade among companies through the establishment of e-commerce platforms and is assisting local companies to embrace digitisation by adopting e-commerce platforms to reach export markets as well as assisting local e-commerce platform developers to scale up their online marketplaces.
During the 2019/2020 financial year, BITC embarked on several initiatives targeted at growing exports in the country; facilitation of participation of local companies in international trade platforms in order to enhance export sales of local products and services into external markets.
BITC also helped in capacity development of local companies to compete in global markets and the nurturing of export awareness and culture among local manufacturers in order to enhance their skills and knowledge of export processes; and in development and implementation of trade facilitation tools that look to improve the overall ease of doing business in Botswana.
As part of building export capacity in 2019/20, six (6) companies were selected to initiate a process to be Organic and Fair Trade Certified. These companies are; Blue Pride (Pty) Ltd, Motlopi Beverages, Moringa Technology Industries (Pty) Ltd, Sleek Foods, Maungo Craft and Divine Morula.
In 2019 seven companies which were enrolled in the Botswana Exporter Development Programme were capacitated with attaining BOBS ISO 9001: 2015 certification. Three (3) companies successfully attained BOBS ISO 9001:2015 certification. These were Lithoflex (Pty) Ltd, General Packaging Industries and Power Engineering.
BITC’s annual flagship exhibition, Global Expo Botswana (GEB) to create opportunities for trade and strategic synergies between local and international companies. The Global Expo Botswana) is a premier business to business exposition that attracts FDI, expansion of domestic investment, promotion of exports of locally produced goods and services and promotion of trade between Botswana and other countries.
The portal also provides information on; measures, legal documents, and forms and procedures needed by Botswana companies that intend on doing business abroad. BITC continues to assist both potential and existing local manufacturing and service entities to realise their export ambitions. This assistance is pursued through the ambit of the Botswana Exporter Development Programme (BEDP) and the Trade Promotion Programme.
BEDP was revised in 2020 in partnership with the United Nations Development Programme (UNDP) with a vision to developing a diversified export-based economy. The programme focuses mostly on capacitating companies to reach export readiness status.
Prices for goods and services in this country continue to increase, with the latest figures from Statistics Botswana showing that in May 2022, inflation rate rose to 11.9 percent from 9.6 percent recorded in April 2022.
According to Statistics Botswana update released this week, the largest upward contributions to the annual inflation rate in May 2022 came from increase in the cost of transport (7.2 percent), housing, water, electricity, gas & other Fuels (1.4 percent), food & non-alcoholic beverages (1.1 percent) and miscellaneous goods & services (0.8 percent).
With regard to regional inflation rates between April and May 2022, the Rural Villages inflation rate went up by 2.5 percentage points, from 9.6 percent in April to 12.1 percent in May 2022, according to the government owned statistics entity.
In the monthly update the entity stated that the Urban Villages inflation rate stood at 11.8 percent in May 2022, a rise of 2.4 percentage points from the April rate of 9.4 percent, whereas the Cities & Towns inflation rate recorded an increase of 1.9 percentage points, from 9.9 percent in April to 11.8 percent in May.
Commenting on the national Consumer Price Index, the entity stated that it went up by 2.6 percent, from 120.1 in April to 123.2 in May 2022. Statisticians from the entity noted that the transport group index registered an increase of 7.3 percent, from 134.5 in April to 144.2 in May, mainly due to the rise in retail pump prices for petrol and diesel by P1.54 and P2.74 per litre respectively, which effected on the 13th of May 2022.
The food & non-alcoholic beverages group index rose by 2.6 percent, from 118.6 in April 2022 to 121.6 in May 2022 and this came as a result of increase in prices of oils & fats, vegetables, bread & cereal, mineral waters, soft drinks, fruits & vegetables juices, fish (Fresh, Chilled & Frozen) and meat (Fresh, Chilled & Frozen), according to the Statisticians.
The Statisticians said the furnishing, household equipment & routine maintenance group index rose by 1.0 percent, from 111.6 in April 2022 to 112.7 in May 2022 and this was attributed to a general increase in prices of household appliances, glassware, tableware & household utensils and goods & services for household maintenance.
The prices for clothing & footwear group index moved from 109.4 to 110.4, registering a rise of 0.9 percent during the period under review. Bank of Botswana has projected higher inflation in the short term, associated with the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices and added that the possible increase in public service salaries could add also upward pressure to inflation in this country.