De Beers prepares new sales strategy

Diamond giant De Beers is preparing to introduce a new sales system making its dealings more transparent as part of a strategy to transform itself into a modern competitive player, the South African publication Business Day reports today.

The company is awaiting approval from the European Commission for its supplier-of-choice strategy.

The strategy seeks to modernize the group’s secretive dealings with its sightholders, the publication reports. By doing so, the company also hopes to shed its image as a cartel, which means that it is banned from selling directly in the United States because of anti-trust concerns.

De Beers also hopes the changes will help it win back dwindling market share lost to rivals such as Anglo-Australian groups Rio Tinto and BHP Billiton, and Alrosa of Russia.

As part of its transformation, the South African company recently teamed up with European luxury goods group Moet Hennessy Louis Vuitton (LVMH) to sell De Beers-branded diamond jewelry.

“The De Beers group operates in an increasingly competitive environment,” De Beers spokeswoman Lynette Hori, reportedly said. “Its market share has reduced significantly over recent years with the emergence of new competitors and new sources of rough diamonds.”

The initial draft of the new system unveiled in July 2000 sought to make minor changes to, and formalize, the strategy that De Beers has used over the past 70 years to sell its own diamonds, and some of those of its competitors.

But the European Commission’s antitrust regulators became concerned that De Beers could use the new strategy to restrict distribution of rough diamonds to a select few middlemen and thus limit competition. The Commission outlined these concerns in a statement of objections sent to the company last year.