I just returned from London, after visiting with DeBeers (now officially known as the Diamond Trading Company or DTC for short). When I first entered the business some 30 years ago (yeah, I know I’m now officially considered an old codger); DeBeers had a virtual monopoly on diamonds. They dominated the world diamond mining and distribution, controlling over 85% of the world’s supply of diamonds.
However, over the years, as governments became more sophisticated, DeBeers’ world changed. Governments were less willing to just hand their diamond resources over to DeBeers for the shorter end of the profits.
Thus, some of these diamond producing countries began to mine and distribute their diamonds on their own. Many of the countries elected to form partnerships with DeBeers (DTC), in order to take advantage of DeBeer’s knowledge of mining and distribution and still participate in a greater share of the profits.
The bottom line was that over time, DeBeers lost more and more control of the world’s supply of diamonds.
Now here it is 2007 and DTC readily admits that they only control about 40 to 45% of the world’s diamonds. We now also know that their diamond supply is more hand to mouth. In other words, they have to keep mining diamonds or their supply will run out. Thus because their supply of diamonds has shrunk, the DTC has had to keep cutting the number of companies (otherwise known as Siteholders) that they sell the rough diamonds to. And because profits have dropped, they have been forced to put more of the cost and responsibility of advertising diamonds, as they themselves cannot afford to keep doing this on a world-wide basis.
DTC even sold the rights to the name DeBeers to the luxury brand company, LMVH which owns Louis Vuitton, Moet & Chandon, Dom Perignon, Hennessy Cognac, Tag Heuer watches, Givenchy, Fendi and many other luxury brands. This company has opened DeBeers diamond stores around the world including London, Paris, Beverly Hills, New York and many more to come. These stores are not wholly owned by the DTC but their famous name allows them to play on the consumer’s awareness of the DeBeers brand.
In any case, the DTC people could not have been more gracious. We met with many of their top people and came away feeling that they are more socially conscious that many of us gave them credit for. Maybe it is for selfish reasons, but they are very aware that they must continue to link diamonds with love and positive emotions and thus do all they can to see to it that diamonds help the people who mine them, the people who cut them and the people who distribute them. They have gone to great lengths to shut down the flow of conflict diamonds.
I came away from the meeting with DTC more convinced of several factors.
First of all, I am now convinced that diamonds are becoming increasingly harder to come by and that because of this rarity in supply, the cost of mining these rare miracles of nature will continue to increase as the supply of diamonds dwindles.
And I am further convinced that we at E.E. Robbins buy our diamonds from one of the finest cutters in the world and that our close relationship with these cutters, allows our local three-store operation to be as competitive in our buying as any store in the world. Like many other natural resources, although a diamond is forever, the world’s supply of diamonds are becoming ever more scarce.