The diamond trade is one of the oldest, most insider-controlled enterprises there is. It’s a trade in which million dollar transactions are made with a handshake and major players get first pick of the world’s top diamonds.
The industry is dominated by De Beers Group, with mines in South Africa, Botswana, Namibia and Canada that produce 30 percent of the world’s rough diamonds. Founded by African colonialist Cecil Rhodes, De Beers is the trade’s controller—selling its own and other mines’ rough diamonds to buyers, called “sightholders, ” through its diamond-selling arm, the Diamond Trading Co.
DTC estimates that its sightholders collectively handle 75 percent of all the world’s diamonds. “Back in the day, De Beers itself controlled 80 percent of the diamond market. Even today, it’s still the industry leader, ” says Frank Bromberg, chief executive officer of Birmingham-based Bromberg’s, a 175-year-old company that is one of the oldest diamond retailers in the country.
Sightholder companies, which generally are also diamond cutters and wholesalers, are typically based in Antwerp, Tel Aviv, Mumbai, Johannesburg and New York, in addition to the diamond-mining countries of South Africa, Botswana, Namibia, Russia, China and Canada. The DTC offers a box of diamonds, called a sight, which might be priced at several million dollars, to each sightholder company about 10 times a year. “The sightholders don’t get to choose which diamonds they’ll buy, it’s all or nothing, ” says Bromberg, who, now in his 80s, has turned over daily operations to his son, Ricky Bromberg.
“Our suppliers know the high quality level required for our customers, so they pull product we’ll be most interested in seeing, ” says Ricky, the company’s president.
In a trade in which value is tightly tied to tradition and connections, Bromberg’s pedigree is its best asset.
German immigrant Frederick Bromberg first opened the doors of Bromberg’s in 1836 in Mobile, where the business initially sold musical instruments, then jewelry, gifts, furniture and antiques. Bromberg’s grandson, also named Frederick, opened a Bromberg’s jewelry store in Birmingham in 1900. “He knew Birmingham was a boom town, ” says Ricky Bromberg, who represents the family’s sixth generation in the retail business.
Bromberg’s is the oldest known family-owned retailer in the United States, according to Family Business Magazine. Bromberg Holding Co. Inc. currently employs 75 workers at its Birmingham headquarters, two Birmingham area stores, and three Underwood Jewelers locations in Jacksonville, Fla.
Bromberg’s buys diamonds from its three favored New York sightholders. Diamond buyer Lewis Leopard, vice president of merchandising for Bromberg’s, travels to New York to purchase loose diamonds to supply all the company’s stores. “I hand select every one of those diamonds, ” Leopard says.
Smaller jewelers that don’t have the tight ties in the diamond trade typically get second choice of available diamonds after they have been picked over by top jewelers. “It’s definitely a competitive advantage in the jewelry business to be well established and have strong relationships, ” Frank Bromberg says.
Leopard uses an American Gem Society ASET (Angular Spectrum Evaluation Tool) to evaluate each diamond’s cut. He also notes the color and clarity of the gem, as well as its carat weight when deciding whether or not to choose it.
Because of the trust level in the business relationship with the gem dealer, even though diamond transactions amount to hundreds of thousands of dollars, no money exchanges hands. “When a price is agreed upon, although it’s not written in a contract, you know that’s what it will be, ” Leopard says.
Diamond suppliers periodically offer product “on memo, ” consignment, that Bromberg’s may display and sell in its stores. “The greatest return is on product you own vs. what you have on memo of course. At our level we prefer to purchase our product, ” Leopard says.
Bromberg’s raised its quality bar higher several years ago and now only sells diamonds cut in the “very good” to “ideal” quality grades, which equates to an American Gem Society scale of from 3 to 0.
Cut is critical and enhances the value of a diamond because it determines the gem’s lively quality. “There’s a lot of rough diamond wasted to produce a well-cut, properly proportioned finished diamond, ” Ricky Bromberg says. “You can get a bigger diamond with a poorer cut for the same price, but the diamond won’t sparkle as much.”
Hearts On Fire diamonds, which Bromberg’s features prominently among its selection, are considered the most perfectly cut diamond in the world. Advanced technology is used by expert diamond cutters to create a diamond that reflects light like none other. “You will especially notice the difference in low-lighting conditions. The diamond radiates light like a strobe, ” points out Terrie Moore, vice president and manager of Bromberg’s at The Summit.
Customers who view various cut diamonds at a Bromberg’s store using an ASET machine will be struck with the precision of light patterns seen in a Hearts On Fire diamond vs. even an ideal-grade cut stone, company officials say. The gems are dazzling in full light, but become even more so as the light dims. Hearts On Fire diamonds, available through a Boston vendor, are sent directly to Bromberg’s. “The cut is perfect so there’s no reason to travel to Boston to pick out our Hearts on Fire diamonds, ” Leopard says.
One facet of the long history of the diamond trade that definitely is not an asset is its involvement in violent conflict. Insuring customers that they are not contributing to tragic linkage of blood and diamonds has become an industry standard, as well.
“We are thrilled to be part of a program that assures our customers that their diamond is not a conflict diamond, ” says Ricky Bromberg.
Because of Bromberg’s standing, diamond industry leader De Beers asked the company to become one of its first Forevermark retailers in the United States.
Forevermark diamonds not only come with De Beers’ promise of being responsibly sourced, they are individually tracked from the time they emerge from the mine to their delivery to jewelry store. Forevermark diamonds are only available in top cut, color and clarity grades.
Each Forevermark diamond, which is the only De Beers-branded diamond on the market, is inscribed with a tiny serial number and Forevermark symbol. The mark is invisible to the naked eye and doesn’t affect the reflective properties of the diamond. “We started receiving and selling Forevermark diamonds this fall, but we’re still in the process of receiving new product, ” Bromberg says.
The Forevermark diamond tracking system is the latest in the diamond industry’s efforts to assure customers that diamonds aren’t mined by enforced or child labor and sold to fund terrorism or rebellion. In 2003, the Kimberly Process Certification Scheme was created through the United Nations General Assembly to help stop the flow of conflict diamonds. While the process was adopted by members of the diamond industry and diamond countries, it isn’t foolproof. Some blood diamonds still find their way into reputable markets. “Forevermark diamonds only come from a few of De Beers’ own mines where the diamonds can be carefully monitored, controlled and tracked, ” Bromberg says.
Bromberg’s bought the much-sought-after Underwood stores in 1975 from Herb Underwood, who was well respected in the jewelry business. The deal was another case where a long-term relationship in the jewelry business was a competitive advantage. “Herb Underwood could have sold that business to anyone, but because of his relationship with our family, he sold it to us. The best part was that he stayed on and mentored my son, Clayton, who took charge of the Jacksonville stores and has become an industry leader, ” Frank Bromberg says.
Bromberg’s and Underwood Jewelers both are members of the American Gem Society, which is only open to a small percentage of top jewelry stores. “Our customers continue to appreciate the excellent quality and customer service we give them, ” Ricky Bromberg says. “After 175 years in business we must be doing something right.”
The Goldstein’s Standard: Mobile’s 133-year-old Jewel
Goldstein’s, once a cornerstone of Mobile’s old mercantile downtown, now located in suburban west Mobile, is the city’s oldest jeweler. Established in 1879 by Julius Goldstein, the company has been owned by the Richard Frank family since 1956.
“While times keep changing, the constant at Goldstein’s is our strict adherence to quality standards and our professionalism, ” says Richard Frank Jr. “I very carefully check the quality of every diamond before I buy it.”
One of the biggest changes in the industry in recent years, Frank says, is the emergence of retailers that don’t tell the full story on the quality of diamonds they sell.
“They lead people to think they’re getting a certain quality diamond at a bargain price, but they’re actually selling you a lesser quality diamond, so you’re not saving money, ” Frank says.
Goldstein’s is Mobile’s exclusive Hearts On Fire dealer. The Hearts On Fire diamonds, which feature a perfect cut, are known for the their dazzle. Goldstein’s also serves as a Pandora Gold Partner and offers a large selection of Pandora products. The fine jeweler is a member of the prestigious AGS and a number of other top jewelry associations.
Kathy Hagood is a freelance writer for Business Alabama. She lives in Birmingham.
text by Kathy Hagood • photos by Dan Anderson