Luxury World: The Past, Present and Future of Luxury Brands

by Tungate, Mark

  Once they’re on your feet, however, a pair of Corthay shoes should last you 20 years. Prices range from €3,000 to as much as €7,000 for bespoke, compared to €900 for ready-to-wear.

  The different aspects of Corthay’s craft fascinate him, he says. ‘There’s the sculptural and design element, the fact that you’re working with soft and hard substances, and of course the connection with others. There’s something intimate about footwear that you just don’t have with a bag. Designing a pair of shoes for a customer is a dialogue.’

  Customization has always been an important element of luxury, from haute couture robes to monogrammed luggage. The personal touch confers status and implies respect. From the tailors of Savile Row to the customized denim jeans of Earnest Sewn in New York, consumers are willing to pay a premium to take part in the creative process.

  Corthay observes that some clients have a talent for design. ‘They wouldn’t be able to transform the image in their heads into an object, but they have a feeling, an instinct for design. Sometimes, we’re just here to translate their ideas into reality. It would be arrogant to assume that we have a monopoly on good taste.’

  Like most niche luxury brands, Corthay gets a lot of his custom via word of mouth. But he doesn’t sniff at more sophisticated marketing approaches either. He welcomes the media with open arms and is a charming and attentive raconteur. The brand’s website is elegant, sophisticated and bilingual (www.corthay.fr). ‘For us it’s a window to the world. Thanks to the site, we’ve been contacted by clients from Japan, from the United States – all over.’ He recounts an amusing tale about the site’s conception. ‘I’m a vehicle nut. I’m crazy about cars, trains and planes. And for me, the shoe is another vehicle. So when I had to have the shoes photographed for the website, I worked with a photographer who specialized in taking pictures of cars. The play of light on the surface of the objects is very similar.’

  Partly due to the exposure afforded by the website, Corthay shoes are now stocked by a number of luxury outlets around the world: from Yohji Yamamoto in France to Bergdorf Goodman in the United States, as well as a handful of boutiques in Germany, Switzerland, Belgium, the Netherlands and – of course – Japan. The United Kingdom, which has its own strong tradition of bespoke footwear, has for the moment remained immune to the charm of French handmade shoes.

  When I embarked on the research for this book, I was granted a short and sharp interview with Tina Gaudoin, editor of the Wall Street Journal’s luxury magazine, WSJ. I mentioned my conviction that crafts-people were the real purveyors of luxury, while companies that churned out production line handbags were simply mass retailers with sophisticated advertising. Gaudoin replied ‘I think that’s a rather easy accusation to make. If you look at groups like the Gucci Group, for instance, within that group you have Bottega Veneta, which has always been an artisanal brand and has maintained that approach. Hermès in France has done the same thing. An interest in small, artisanal brands may be a trend, but unless they have some kind of financial backing, quite frankly, they’re screwed.’

  I repeated this to Pierre Corthay, who shrugged. ‘It depends if you want to do a job you love, or if you want to make money. If I wanted to get rich, I would do something else. Obviously the business has to turn over, to put food on the table and roofs over our heads, but our main goal is to take pleasure and pride in what we do. The notion of pleasure is, for me, fundamental. When I get up in the morning, I don’t have the impression that I’m going to work. I had a similar conversation with a client of mine recently. He said “Pierre, making a lot of money is not difficult, but there is one condition: you must think only of that.” Personally, I am driven by other things.’

  As consumers become increasingly demanding, they are likely to look more deeply into the provenance of expensive items. And they will find that the patient skills of men like Pierre Corthay offer a reassuring alternative to all that is flashy, insubstantial and evanescent.

  3

  Romancing the stones

  * * *

  ‘Jewellery has an emotional and sentimental resonance that few other products possess.’

  There is little glamour about the Antwerp World Diamond Centre. It lies in a narrow street behind the grandiose railway station that is a monument to former wealth, but now seems out of scale with this cosy Belgian city. Along the way, you pass a cluster of diamond dealers, most of which have faded frontages that make them look as banal as tobacconists. They have names like Antwerp Or, Design Jewellery and Golden I.

  The Antwerp World Diamond Centre is the heart of a square mile grid entirely devoted to the trade in precious stones. Overhead, security cameras track your progress along with that of the smart-suited dealers, who carry fortunes with them in blocky black briefcases – often handcuffed to their wrists as a movie screenplay might demand.

  The tiled lobby of the Diamond Centre looks like an efficient blend of hospital waiting room and metro terminus. People come and go through metal turnstiles. Piped pop music fills the air. On the wall is a jagged fresco of interlocking polished steel plates, presumably meant to evoke the sparkle of a diamond.

  For the moment, I am lost. I know that I want to find out how the diamond industry works, and where Antwerp fits into the scheme of things, but apart from that I am a rough hunk of mineral waiting to be hewn. I barely know how diamonds are formed, mined, cut or traded. I’ve never even bought one.

  The man who can help me with all but the last matter is Philip Claes, the centre’s chief corporate affairs officer, who welcomes me warmly in his office on the seventh floor. It is Philip’s job to protect Antwerp from encroaching foreign competition and maintain its position as a leading brand within the diamond industry.

  BRANDING ANTWERP

  In the streets below us, Claes tells me, approximately 1,500 companies and four exchanges – or bourses – take care of 80 per cent of the world’s trade in rough diamonds and half of all polished stones. Alongside the diamond banks there are grading labs, insurance, security and transport companies, brokers, consultants, travel agents – and the hotels and restaurants that have flourished alongside them. All in all, the Belgian diamond trade employs 34,000 people and has a turnover of almost US $40 billion a year. The obvious question, then, is why Antwerp?

  ‘Diamonds were first traded here as early as the 15th century,’ Claes says. ‘But we were the second choice.’

  There ensues a brief history lesson. From the very beginning, humans instinctively felt that diamonds were special. And yet these trans-parent gems are made of carbon, one the most common elements on earth. Perhaps their immense age gives them power. The formation of diamonds began with that of the planet itself, as it was moulded and compressed by unimaginable forces. Deep at the centre of the earth, deposits of carbon crystallized. Later, as the surface cooled, streams of liquid rock – magma – bore the diamond crystals upwards. These streams hardened into vertical pipes. Erosion later washed some of the diamonds into rivers, which was probably where they were first discovered.

  The first recorded mention of diamonds dates back 3,000 years, to India, where they were prized for their ability to refract light. The ancient Greeks were the first Westerners to come into contact with them. Indeed, the very word ‘diamond’ comes from the Greek adamas, or ‘unconquerable’. Meanwhile, the Romans believed that diamonds warded off evil spirits and bestowed health on the wearer. This belief lingered into the Middle Ages, when diamonds were thought to cure sickness and afford the wearer protection against the plague. In this context, the tradition of giving a diamond to a lover takes on a new significance.

  The 13th century trader Marco Polo brought diamonds back to Venice from India. Dishevelled and sun-baked, the bearded vagabond conjured a rain of gemstones from the folds of his ragged cloak, confirming at least one of his tall tales. From Venice, diamonds found their way to Bruges – the Venice of the north.

  ‘And here’s where we got lucky,’ smiles Claes, ‘because the harbour at Bruge
s silted up, so trade shifted to Antwerp. In fact there is a document from 1447 regulating the diamond trade here, ensuring that the gems were only handled by certain recognized traders.’

  The Antwerp trade enjoyed a second boom in the early 20th century, largely due to the Jewish community, which arrived en masse to escape the pogroms of Eastern Europe. Many hoped to travel to New York on the Red Star Line, the transatlantic steamship service that ran from Antwerp from 1873 to 1935. ‘Diamonds are small, valuable and easy to carry,’ points out Claes, ‘so they were an obvious way of transporting wealth abroad.’ However, not everyone could find a berth on the expensive and overcrowded Red Star Line vessels, while others simply decided to settle in amenable Antwerp. And so the trade in diamonds began in earnest.

  A second wave of Jewish settlers arrived during the Second World War. Once again, fate was on Antwerp’s side. ‘Although we’d traditionally been a diamond trading centre, we’d always been in competition with Amsterdam. But the Netherlands were occupied a year longer than Belgium, so when the Belgian authorities returned from London soon after D-Day, they restarted the diamond trade in Antwerp, which gave us an edge. That was really the secret of the success that we continue to enjoy today.’

  Many of the Belgian descendents of those original Jewish families are still in the trade, alongside the Indian dealers who arrived in the 1970s. Until that time, India had been better known as a source of diamonds than of dealers and cutters; now it is estimated that some 300 Indian families are active in the trade in Antwerp, providing as much as 70 per cent of the sector’s total turnover. But Jewish traditions remain strong. For instance, there are no formal contracts in the Antwerp diamond district: a deal is sealed with a simple handshake known as the mazel, from the Jewish phrase mazal u’bracha, or ‘good luck’.

  The Antwerp World Diamond Centre also dates back to the 1970s. It was set up in 1973 to act as the official spokesman and coordinator for all the Antwerp diamond sector’s activities. It runs the Belgian customs office for the import and export of diamonds. It’s the industry’s official liaison with international governments. And it is responsible for promoting Antwerp as the world’s leading diamond centre. This presents considerable challenges, however, because the diamond sector – like many segments of the luxury industry – is feeling the pressures of globalization.

  Africa is the world’s top producer of diamonds, but stones also arrive in Antwerp from Canada, Australia and Russia. The best-known mining company in the business – at least to the general public – is undoubtedly De Beers, the 120-year-old concern that has joint ventures with the governments of Namibia and Botswana. Until recently, De Beers dominated the market, with a share of between 60 and 70 per cent. Now it retains about 40 per cent and competes with Russia’s Alrosa, which has a slice of roughly the same size. The remainder is mostly divided between Canada’s BHP Billiton, Australia’s Rio Tinto and the Harry Winston Diamond Corporation.

  De Beers’ grip on the market loosened at the start of this decade, when its policies came under the scrutiny of regulators in the United States and Europe. After 1929, when Ernest Oppenheimer took over as chairman, the company transformed itself into a monopoly by buying up rough diamonds from its competitors. These were added to a vast stockpile worth US $5 billion by the end of the 1990s. In addition, De Beers sold only to an exclusive group of preferred clients – known as ‘sightholders’ – at sales called ‘sights’. In 2005, the Belgian Polished Diamond Association claimed De Beers was breaking EU competition rules by artificially restricting the supply of diamonds to the market. De Beers conceded, agreeing to phase out purchases from Alrosa – its main competitor – and stop selling its rivals’ gems by the end of 2009. It has also, it says, reduced its stockpile (‘De Beers loosens grip on diamond market’, International Herald Tribune, 22 February 2006).

  This move ought to have brought more rough diamonds onto the open market, allowing Antwerp to consolidate its position as the industry’s global hub. But things didn’t quite work out that way. Keen to appear transparent in its dealings, De Beers became fussier about its ‘sightholders’. It pledged to sell the bulk of its rough diamonds only to established jewellery brands, which as well as purchasing the raw stones could also undertake to cut them, polish them, mount them and finally sell them. In addition, De Beers launched its own retail network – De Beers Diamond Jewellers Ltd – in a joint venture with Louis Vuitton Moet Hennessy (LVMH). They now have stores around the world.

  The move made sense because De Beers had always been far more than a trade brand. In fact, it had carefully positioned itself in the minds of consumers as the supplier of the world’s finest stones. It owed this status largely to a campaign created by the New York advertising agency NW Ayer after the Second World War. In 1947, a young copywriter called Frances Gerety was asked to come up with a line for a series of De Beers visuals. After racking her brains all day, she jotted down one final line and pledged to take a fresh look at it the next morning. The note read: ‘A diamond is forever.’ In 2000, the magazine Advertising Age voted it the best advertising slogan of all time. When it finally became a retail brand, De Beers already had the perfect sales pitch.

  The other big mining companies have also shifted towards this vertically integrated model, creating a closed circuit that – some smaller dealers complain – trickles the bulk of rough diamonds into the palms of a shrinking number of powerful brands.

  In the face of these changes, Antwerp has been able to retain its prestige – at least in certain areas. ‘Eighty per cent of rough diamonds that are sold worldwide are still traded in Antwerp,’ Claes says. ‘Occasionally, they are also manufactured – that’s to say, cut and polished – here. But Antwerp is no longer a major manufacturing centre. In the 1960s and 70s, some 30,000 people were cutting and polishing in and around the city. Today that business has moved away to countries with lower labour costs: India, Vietnam, Thailand, Sri Lanka and so on. There are between 800,000 and one million cutters and polishers in India. There’s no way we can compete with that. It’s a problem familiar to almost every industry.’

  However, Antwerp still has the most renowned diamond polishers in the world: around a thousand highly skilled artisans. As a result, Claes says, the ‘Cut in Antwerp’ label is highly prestigious. ‘The very big, important, difficult rough diamonds are brought to Antwerp. In 2006, for example, the Lesotho Promise was sold and cut here. At 603 carats, it was the 15th largest diamond ever discovered.’

  The diamond was sold to Graff for US $12.3 million. It was later cut into 26 stones of various sizes, which were said to command a total price tag of US $50 million. The following year, a 493-carat rough diamond from the same mine – the Letseng in Lesotho – was sold in Antwerp for US $10.4 million. (It was still a mere bauble compared to the monstrous Cullinan diamond, found in South Africa in 1905 and weighing more than 3,100 carats.)

  Wherever they have been cut, at least half of the world’s polished stones make it back to Antwerp, where they are graded and sold to diamond merchants and jewellers – from small local entrepreneurs to representatives of giant brands based in Paris and Milan. Ironically, many of the gemstones follow the old Red Star Line route to the United States, where 50 per cent of the world’s diamonds finally arrive in – or on – the hands of consumers.

  CLARITY AND CONFLICT

  Far below the office where I’m sitting with Philip Claes is a laboratory where the polished diamonds that flow into Antwerp are graded according to the four Cs – carats, clarity, colour and cut – before being awarded a certificate of authenticity. (A carat, by the way, is 0.2 grams. The word has roots in Arabic and Greek and refers to the carob seed. The seeds were used to balance the scales when jewels were weighed in ancient times.) The lab operates under the traditional name of the Hoge Raad voor Diamant, or Diamond High Council. A certificate from HRD Antwerp is regarded as an incontestable assurance of quality, further enhancing the city’s status.

  When I tour the lab later
on, I’m disappointed to find that one enters through a fairly standard set of double doors – albeit under the gaze of a security camera – rather than having to run a gauntlet of armed guards and retinal scans. The laboratory itself is a wide, open-plan space with windows along one side. ‘Natural daylight’ lamps on the benches are regulated to augment the subdued light of Antwerp, ensuring the perfect conditions for studying diamonds. As soon as it enters the lab, a diamond is given both an identification number and a bar code. Each time a lab worker comes into contact with the stone, they scan it in and out. That way, a diamond’s exact location in the lab can easily be determined. Nobody leaves at the end of the day unless every diamond can be accounted for.

  Graders have no knowledge of the owners of the diamonds they are handling, so they can’t be influenced to ‘upgrade’ a flawed gem. At each of the four stages of its journey through the lab, a diamond is checked by three different graders of increasing seniority, using a combination of modern technology – for instance the D-Screen diamond tester, which was developed by the lab – and the traditional loupe method. (A loupe is a hand-held magnifying glass: those typically used by jewellers provide a magnification of ×10.) If there’s any discrepancy between the results, the gem is passed on to two or more graders.

  So what exactly are they looking for? After size comes clarity. All diamonds reveal traces of their growth history, visible as minute internal and external flaws. These ‘inclusions’ can occasionally be seen with the naked eye, but more often with a loupe. The best – and the most rare – quality is ‘loupe clean’.

  When the standard of clarity has been established, the diamond’s colour comes under scrutiny. Although diamonds can occur in a variety of colours – including pink, purple, red and blue – most of them are colourless to slightly yellow. The best grade is entirely colourless, known as ‘exceptionally white’. Technology can tell the graders whether a diamond’s colour has been artificially enhanced – by exposing it to extremes of pressure and temperature – and of course whether the gem itself is a fake, having been synthetically created in a laboratory.