|
|
 |
|
| Feature |
De Beers' New Fashion
Jill Newman
03/01/2005
|
Non grata standing, however, even during the era of sanctions against South Africa, did not completely block De Beers from the world’s most lucrative market; the company simply sold diamonds to intermediaries, which then sold jewels to retailers. In 1947, not long after the United States indicted De Beers, the company’s advertising slogan, “A diamond is forever,” debuted in the U.S., marking the apogee of Harry Oppenheimer’s marketing campaign. On Harry’s watch, diamonds first became enduringly entwined with the question: “Will you marry me?” Even today, ever-romantic Americans account for over half of all global diamond sales.
De Beers’ legal reparations have opened the way for what will likely be one of the most notable retail ventures of 2005. De Beers and LVMH Moët Hennessy Louis Vuitton plan to open a new store that will sell jewelry under the De Beers LV brand on New York’s Fifth Avenue, along the shopping mile that already glitters with the likes of Van Cleef & Arpels, Harry Winston and Tiffany & Co. The scheduled spring opening will mark the fifth De Beers LV store. The first opened in 2002 on Old Bond Street in London, and there are now three in Tokyo, the capital of the world’s second-largest diamond market. Until now, brand names were largely absent from diamond jewelry sold in specialty boutiques. But this move represents the multifaceted face of the new De Beers.
The new plan requires once-anonymous sight holders, the industry term for the companies to which De Beers granted the privilege of buying its diamonds, to invest in building diamond jewelry brands to compete against other high-profile luxury marques. “The very fact De Beers has its own brand name jewelry and encourages all other diamond companies to push their own diamond branded jewelry is part of the reason that diamond sales are so strong,” Nicky Oppenheimer says. | ELEPHANTS IN the Venetia Limpopo Nature Reserve. |
This is a far cry from the monopoly engineered by the company’s founder, Cecil John Rhodes, one of the first wave of British prospectors to mine the diamond fields of South Africa in the years after the jewels were first discovered there in 1866. After Rhodes began excavating the famous Kimberley Mine, he bought a steam-powered pump for draining water from flooded mines. He happened to be the owner of the only such pump in South Africa. When small mine operators ran out of cash to pay Rhodes, they were forced to sell him their mining claims. Nicky’s grandfather Ernest, a German-born diamond buyer, arrived in South Africa in 1902 and worked his way up through the business, eventually becoming chairman of De Beers. He gained a controlling interest in 1930.
Ernest—Sir Ernest after he was knighted in 1921—quickly realized the benefit of controlling the output of diamonds and established a single-channel marketing structure, which eventually became known as the Central Selling Organization. This syndicate distributed De Beers diamonds to preselected dealers around the world. De Beers’ policy tempered price fluctuations by allowing independent buyers to pay what the market would bear when prices were up, and when prices plunged, the company would pay more than the going rate, buying up excess stones before the market became saturated. In return, diamond producers were forced to abide by sales quotas that De Beers would readjust whenever necessary to match demand. There was a time when the supply of diamonds would have outpaced demand had De Beers not controlled it. Then came Harry Oppenheimer’s stroke of brilliance: linking diamonds to romance, establishing a virtual guarantee that even in hard times women would hang onto their diamonds, thereby eliminating the chance of a flood of used gems competing with the cartel.
| De Beers and its reigning family have long lived behind a veil of mystery, but changing times are beginning to rouse Nicky Oppenheimer and Jonathan, his 35-year-old son who will presumably be CEO one day. |
Lev Leviev is another reason the Oppenheimers have had to realign their strategy. Leviev is an Israeli who has become the world’s second-largest diamond supplier of both cut and uncut diamonds. He currently sells $2.5 billion worth per year, according to industry estimates. Leviev is also exploring new diamond mining projects, forging industry partnerships and funding his own branded jewelry collections. The Oppenheimers refuse to sell to Leviev in their current business plan, but Nicky Oppenheimer claims the competition does not worry him. “For a century, we have been the biggest and best miners and marketers of diamonds,” he says. “Our ambition is to maintain that position. From every ton of ore, we will discover more diamonds than any other company.”
While De Beers continues to stress the celestial image of its terrestrial minerals, the company is becoming more vocal about its own conservation initiatives. These are not new efforts: Rhodes used part of his wealth to create the Rooipoort Nature Reserve on the land surrounding Kimberley Mine. Rooipoort remains one of the largest private nature reserves in southern Africa and is home to more than 2,000 animals.
“My grandfather said, ‘In business you can’t just look to make money, but you must do it in a way that makes a real and lasting contribution to the countries and the people in which we operate,’” Oppenheimer recalls. Few people outside his immediate circle are familiar with the family’s longstanding commitment and dedication to wildlife conservation and other philanthropic endeavors. The latter include a multimillion-dollar project to prevent the spread of AIDS and treat its victims, and a cooperative in Botswana that teaches natives farming skills and develops new industries in the country, which is currently dependent on its diamond revenue.
|
|
|
|
|
|
|
