Warren Buffett's Growing Jewelry Empire

With the news that the Richline Group, part of Warren Buffett’s Berkshire Hathaway holding company, has purchased Alarama, it seems that Warren Buffett is expanding his jewelry empire.

Among the names under the Richline umbrella: Bel Oro, Auarafin, Sardelli, Oro America, Pace Designs, Michael Anthony, Silver Bell, Gold Expressions, and Baby Gold — and now Alarama. (ALA Castings and Overnight Mountings will remain separate companies.)   Buffett clearly did not get into this business to do something small, and wants to cobble together a mega-supplier (even if marketing and sales for all the companies will remain independent, at least for the time being.)  More acquisions are apparently in the offing, including designers. (They don’t seem too interested in purchasing diamond companies or sightholders, wanting to focus more on finished jewelry.)

One thing Richline CEO Dennis Ulrich stressed to me: Richline will have an "arms-length" relationship with B-H’s other jewelry properties: Retailers Ben Bridge, Borsheim’s and Helzberg’s. "They will deal with us like they deal with any other supplier," he said. This has always puzzled people I spoke to in the market. Why wouldn’t all B-H’s jewlery companies work together?

But after speaking to informed sources about the relationship between retailer Four Points (now in Chapter 11) and diamond company LID — which both have the same owner (David Elishayov, a.k.a Lev Leviev’s brother-in-law) — it seems that having a retailer and manufacturer under the same umbrella is not always a winning combination. The products LID was producing were not necessarily appropriate for Four Points, and LID was hurt in the marketplace by the association. Four Points was also, I hear, hampered by not having executives with jewelry experience, and producing its marketing materials in-house. (There is some very good chatter about the company in the comments here.)  In addition, creditors think that LID’s own problems — it is currently in Chapter 11, but has an agreement with its banks — played a role in Four Points’ current problems. The people at FPC have not returned my calls, but I will let you know when they do. (I should also add that the people at LID New York — whose CEO, Lyle Rose, resigned about a month ago – say they are up and running, and not impacted by what is going on at FPC.)

Of course, the jury is still out on the Gitanjili’s acquisition of Samuels, but it’s worth noting that Gitanjili was widely rumored as  a bidder for Alarama.