[miningmx.com] – WHILST De Beers has every confidence its
sightholders will make the trip to Botswana, De Beers’ marketing arm, the Diamond
Trading Company (DTC), is equally interested in making visits of its own.
One of the benefits of finally removing impediments to conducting business in the
US for the DTC is that it can visit clients there for the first time, says Varda Shine,
CEO of DTC, in an interview with Miningmx. Given that US consumers
comprise 40% of total diamond sales, being unable to reciprocate visits to US clients
has been long a crucial omission.
De Beers said at its interim results announcement on July 20 that a $295m class
action settlement, related to anti-trust litigation in the US, had become
unconditional. The outcome is that De Beers can trade totally unencumbered in the
US for the first time since 1948 – a development De Beers CEO, Philippe Mellier,
said was “historic’.
At the time, Mellier declined to provide details as to how De Beers would expand its
business in the US, but Varda provided a shred of light by saying there would be no
radical shifts in approach so much as an acceleration of business activities. This
approximates to a broader retail presence, a further entrenchment of the
ForeverMark brand, while the joint venture with luxury goods group LVMH would
continue.
A consumer thrust termed “The centre of my universe’, which appealed to the
centrality of women in modern life, and is manifested by a diamond piece
surrounded by a halo or smaller pieces, will also be taken forward in the US, Shine
said.
Visiting clients, of course, helps further build the DTC’s relatively newly found client-
centric approach to sales. These days clients are not required to take all of the goods
given to them as per the “take it or leave it’ approach of De Beers, especially when it
operated as a syndicate, the Central Selling Organisation (CSO). As a further
example of this, one can’t imagine the CSO agreeing to the largesse shown by the
DTC recently when it told buyers they could defer payments on up to half of their
June sight boxes to next March.
It’s because of De Beers’ innovations such as “supplier of choice’, where the client is
a partner, that Varda believes a potentially negative effect of the shift of sights to
Botswana next year can be mitigated. Roughly 270 diamond experts elected not to
move to Botswana, which provides a host of competitive-edge opportunities to DTC
rivals in the market. “We’ve always moved on as with our supplier of choice
strategy,’ says Shine. “De Beers is not the same place it was even two years ago.’
Clearly, De Beers still views itself as a market leader and with the exit of BHP
Billiton and Rio Tinto from the diamond market, assuming these companies complete
sales of their diamond assets, the old diamond group’s dominance will be further
entrenched in a market that has highly promising mid-term fundamentals.
Incidentally, before Anglo American shareholders send CEO Cynthia Carroll to the
gallows, as has been reported earlier this week, the wisdom of having bought higher
exposure to the diamond market for the UK group should be recognised as a savvy
piece of positioning.
