Family-owned diamond wholesaler with $5 million turnover collapses

A family-owned diamond wholesaler with a turnover of $5 million has collapsed.

Sule Arnautovic of Jirsch Sutherland was appointed as liquidator for Miller Diamonds on July 18, with a notice issued to the Australian Securities and Investments Commission that a decision had been made to wind up the company.

The liquidators are now seeing expressions of interest in the company’s assets, including the ‘Miller Diamonds’ and ‘Passion8’ intellectual property, plant and equipment and customer lists.

Arnautovic told SmartCompany Miller Diamonds was incorporated in Australia in 1997, before which time the Miller family operated in the diamond business in South Afrcia. 

Arnautovic says, based on draft accounts for the past two years, the company was turning over approximately $5 million a year, however this figure has not been verified by the Jirsch Sutherland. 

He says the company employed five employees, all members of the Miller family, who decided to appoint a liquidator when the business’ “major overseas diamond supplier called in its debt”. 

According to Jeweller magazine, the collapse of the family business was a shock to the jewellery trade, although there had been been speculation Sydney-based Miller Diamonds was “in trouble” for some time.

Arnautovic previously told Jeweller magazine the company’s stock has been returned to the overseas supplier and apart from the Miller family and the supplier, “there are not many other creditors”.

Coleby Nicholson, publisher of Jeweller magazine, told SmartCompany local jewellery suppliers, like many wholesalers in other industries, are facing increasing pressure from overseas competitors. 

“Most jewellery suppliers have had to compete with overseas products manufactured in lower cost-base economies, most notably China, India and Thailand,” says Nicholson. “There is nothing new in that, however, in turn the internet has created greater competition, especially for the Asian-based manufacturers which have had to fight harder for sales.”

“This has reduced the volume that manufacturers once required, or demanded, and now order volumes can be quite small, and can be reached by smaller retailers who can now deal directly with overseas manufacturers,” he says. 

Nicholson says this means Australian suppliers, like Miller Diamonds, are “fighting on two fronts: increased international competition and their customers now being able to deal directly with overseas manufacturers, often circumventing the local supplier”. 

And Nicholson says it is even more difficult for products that have had “no added value as they come through the supply chain”. 

“Diamonds are a good example,” he says. “Once cut and polished, they essentially remain the same but have, traditionally, gone through a number of hands before they reach the end consumer.”

Nicholson says the state of the Australian economy and falls in consumer spending, especially on discretionary goods, have added pressure on jewellery suppliers, who are continually looking for ways to differentiate their products. “Part of the solution could be in helping to increase the market for bespoke pieces, which will not be judged on price alone,” suggests Nicholson. 

According to Jeweller magazine, Miller Diamonds is best known for its Passion8 range of diamonds, which was launched in 2001 and its Passion8 range of jewellery, which it has been selling since 2011.

But Nicholson says “it’s fair to say that the company’s prominence in the industry had declined over recent years”. 

“It appears that its collapse was also caused by a falling out with its major supplier, another concern where you don’t own, or have little control over, intellectual property,” he says.