Senior executives from De Beers have this week been discussing the strong long-term fundamentals of the diamond industry, and the company’s strategy for maintaining diamonds’ market share of discretionary spend during the current global economic crisis.
Presentations made by Gareth Penny (Managing Director, De Beers Group), Varda Shine (Managing Director, Diamond Trading Company (DTC)) and David Lamb, Chief Strategic Officer, Forevermark) focused on De Beers’ production, sales and marketing strategies during the downturn.
Key points from the strategy include:
- The medium and long-term fundamentals of the diamond industry are strong
- De Beers’ confidence in the future is unshakeable given the increasing rarity of diamonds and its promise of enduring value
- De Beers is fully prepared to reduce production to reflect the prevailing level of demand for new rough diamond supply from our clients
Varda Shine outlined a 6-point action plan to ensure that the DTC maintains the competitive advantage that Sightholders gain from doing business with the company, including a consistent and reliable supply, consistent value and exceptional assortments of rough diamonds.
She highlighted the following points as part of the action plan:
- DTC encouraged Sightholders to look carefully at their box mixtures and scheduling
- DTC has received a highly focussed set of applications from clients. Consequently, the next two Sights will be smaller, with DTC prices reflecting, as always, the sustainable polished outcome from the rough
- Depending on client needs, this could continue into Q1 2009
- DTC is considering ways in which Sightholders' prevailing purchase levels can be factored into next year's ITO
- DTC encouraged clients to demonstrate leadership behaviour. Businesses that demonstrate leadership behaviour in tough times will earn the benefit when times improve
- De Beers will show leadership in supporting consumer demand
Speaking about the plan Varda noted “It is this measured and considered approach that will help to maximise the opportunity to take advantage of the economic recovery when it happens.”
On the consumer front, David Lamb announced a doubling of the US marketing budget during the all-important Christmas buying period, in response to new, independent research which demonstrated that:
- Diamond jewellery is still the #1 gift for the holidays in 2008. Twice as popular as consumer electronics.
- Women want fewer better things. 62% of women would strongly prefer one wonderful gift – like a diamond – than several small ones.
- Men want to be the hero. 80% of men agree that ‘nothing else shows her I love her’ like a diamond.
- Diamonds have an enduring value. 66% of women agree that it is wonderful to hand jewellery down to the next generation.
- Diamond jewellery is a smart purchase. It is worn every day – it never wears out. It is considered a safer store of value than many things today.
“The research has demonstrated that, in tough times, consumers gravitate towards quality. They buy fewer, but better things – things that last, which are not disposable and which hold their value. It shows that consumer desire for diamonds is as strong as ever. People will still get married and will still celebrate important events with diamonds” said David.
David unveiled new print and broadcasting advertising to the Sightholders, which capture the move toward fewer, better things, and will be seen widely throughout the US market during the Christmas buying season.
Gareth Penny reminded Sightholders of the fundamentals of the business - diamonds are becoming increasingly rare and known diamond reserves are at an all time low. "By the end of next decade diamond production is forecast to be below current levels. Medium to long term demand will outstrip availability, particularly with the expected growth in demand from emerging economies. As leaders of the diamond industry we are, of course, confident in, and committed to, its continued success.
"The confidence that De Beers has in the long term success of the industry is further demonstrated by the opening earlier this week of the Voorspoed mine in South Africa which will provide a new source of diamonds well into the next decade.
“The supply/demand side strategies outlined in these presentations will, I am sure, help to provide an underpinning and a strong base to move forward during these difficult times. I’d rather be in diamonds than just about any other I can possibly think of," he concluded.
About De Beers:
De Beers, established in 1888, is the world’s leading diamond company with unrivalled expertise in the exploration, mining and marketing of diamonds. De Beers and its joint venture partners operate in 25 countries across five continents employing around 20,000 people, 17,000 of whom are based in southern Africa. From its mining operations across Botswana, Namibia, South Africa, Tanzania and Canada, De Beers produces and markets approximately 40 percent of the world’s supply of rough diamonds. As part of the company’s operating philosophy, the people of De Beers are committed to Living up to Diamonds by making a lasting contribution to the communities in which they live and work. De Beers encourages sustainable working to ensure long-term positive development for Africa, and returns approximately US$4.9 billion to the continent every year. For further information about De Beers visit www.debeersgroup.com
De Beers UK
Lynette Gould
Tel: +44 (0) 207 430 3509
lynette.gould@debeersgroup.co.uk
DTC
Louise Prior
Tel: +44 (0) 207 430 3779
louise.prior@dtc.com