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Rob Bates

De Beers Price Increase: Biggest in 20 Years?

July 22, 2008

Details are now coming in on the recent De Beers price increase, which at least one sightholder described to me as the biggest since the go-go days of the early 1980s.

On some of the bigger goods, the increase may have been as high as 15 to 20%, all but wiping out the recent speculation-driven premiums, although is not clear whether this will increase polished prices.

What did annoy some is that the increase, while clearly weighted towards the biggest stones, also impacted many other categories that weren’t subject to speculation.

All this says some interesting things. First, it’s another, possibly worrisome, parallel between this current period and late 1970s/early 1980s. It's also interesting that, back not so long ago, when De Beers was urging sightholders to market their diamonds, it was willing to let them have the premiums so they could invest the money in marketing programs. Now that marketing is being pushed down the priority list, De Beers no longer feels the need to let sightholders "keep" those profits.

And finally, the fact that De Beers is getting so much pressure from its producer partners is probably a factor as well.

Posted by Rob Bates on July 22, 2008 | Comments (5)

July 25, 2008
In response to: De Beers Price Increase: Biggest in 20 Years?
peace out commented:

Knowing of the strike in africa and the looming price increase of diamonds, what is the likeliness that whitehall jewelers will liquidate shortly after the july 31st auction date?

July 25, 2008
In response to: De Beers Price Increase: Biggest in 20 Years?
Rob Bates commented:

Peace out... Look at my post on two bidders for Whitehall (tinyurl.com/5m54rb) ... There seems to be a pretty good chance someone will buy the chain, though many stores will probably still be closed. I don't see those two factors coming into it (and one strike was just averted). Good luck. (OK, I just saw your other post ... I haven't heard anything but I'm keeping an eye out ...)

July 26, 2008
In response to: De Beers Price Increase: Biggest in 20 Years?
peace out commented:

rob..thanks- i read an email that was sent from the president of whitehall "don" and it basically states that the offer in writing was 100-200 store of the 373. it also says that things could change at the auction. this letter was meant for the eyes of the regional managers. i got connections. but with 2800 employees on the line.. any input is great.

July 29, 2008
In response to: De Beers Price Increase: Biggest in 20 Years?
Jane Doe commented:

I have heard that there is not enough money for payroll past Aug. 8, and jewelers in my market are still owed ALOT of money and are still awaiting payment. I have to assume this goes for most of the jewelers company wide. Do you really believe that Gitanjali dropped out of the bidding? How much can our inventory be worth now without the "consignment" merchandise? Get ready for another large stockbalance!

August 4, 2008
In response to: De Beers Price Increase: Biggest in 20 Years?
Garry Holloway commented:

Hi Rob,
As long as De beers customers take the rough and turn 50% of it into rounds that sit in retailers memo or valuts somewhere, it makes sense that manufacturers will complain about price rises.
The quote from the head of Alrosa summed it up I think: "Swarovski take glass and treat it like diamonds and we take diamond and treat it like glass".

When we compare the avergae (mean or median) price of handbags and diamonds, then we see that ours is a pretty sick and sad biz. We need designers and inovation in every facet (pun intended) from cutting to marketing.
regards
Garry