.Trev,
More food for thought(courtesy of douglas on SW):-))
- BUSINESS
De Beers abandons gem price controls
London: Diamond producer De Beers is to abandon its 60-year policy of attempting to stabilise supply and demand in the world gemstone trade and concentrate instead on mining and marketing.
The move, sure to send shock waves through the industry, is to be announced on July 12.
There will be fears of a re-run of the early 1930s, when gems flooded the market and prices collapsed, the event that led to the creation of the De Beers cartel.
But it believes aggressive marketing by the industry as a whole is a better way to boost demand and soak up supply than the operation of what effectively has been a private monopoly.
The company's London-based Central Selling Organisation will cease mopping up spare diamond supplies around the world in order to hold up prices, and De Beers generally will abandon its role as international policeman for the industry.
In years gone by, this has involved secret agents, freelance spies and an intelligence network spanning Europe and Africa.
Now De Beers - shaken by the colossal expense of trying to stabilise the market during the 1990s - is to put its own shareholders first and aim instead to be the industry's "preferred supplier" rather than buyer and seller of last resort.
Research by Bain, the management consultancy, has shown that the advertising-to-sales ratio in the diamond business is just 1 per cent, against 10 per cent for most luxury products.
The CSO will continue to function, but primarily as the marketing arm of De Beers, whose own mines produce about half the world's diamonds.
In 1996, Australia's Argyle mine, the world's largest in terms of quantity, walked out of the De Beers cartel and by the end of the decade De Beers had effectively abandoned price support for the lowest-quality stones.
The Guardian |
