Life After Sightholder-hood

Chaim Even-Zohar caused some anxiety a while back when he wrote that, after the new DTC selection process, he foresaw “no New York sightholders.” It has not escaped attention in New York that no De Beers spokesperson has stepped forward to swat this down. Yesterday, in a lengthy memo, Even-Zohar went further and said:

The conclusion seems inescapable that New York, Ramat Gan and Antwerp will be hit almost fatally in terms of having the DTC as a principal supplier to their respective industries.

This certainly may be true — although, talking about New York, at least, this does seem to contradict the principles of SoC. If you really want to bring companies closer to the consumer market, who better to service the U.S. market than New York companies? In any case, we will probably be hearing a lot more “back of the envelope” speculation before the final list is announced, probably in December.  Most observers think at least 20 sightholders will be cut — possibly more.

Frankly, I don’t know how sightholders put up with this. Much of Supplier of Choice has been smart, but this selection process remains a horror. De Beers says it wants its clients to “innovate” and “be excellent” but it’s hard to do that in a climate of perpetual fear. It also says it wants the industry to “modernize its mindset,” while at the same time the DTC’s thinking appears stuck in the 19th century. This whole “selection process” sometimes seems like the DTC throwing its power around in ways that would make Cecil Rhodes blush.

Anyway, it is quite possible for some companies, losing a sight could be a death warrant. After the first selection, some of the cut sightholders became shells of their former selves; one even sued and went out of business. Still, the picture is not all bad – another sued and then ended up becoming a sightholder again. A third joined up with an existing sightholder is still attending sights in London. 

And if you look at the list of non-axed sightholders (a.k.a. “sightholders”), many of them aren’t doing so hot either.  Two of them have divisions (or former divisions) in Chapter 11. Some have very quietly scaled down their business. Others have rumors of financial problems.

Which brings me to Kwiat, the former sightholder whose party I attended at the Wynn last night (co-sponsored with Mikimoto). The party had great food, free booze, a nice view of a waterfall, a singer from a reality show, and many attendees, including several from the DPS.

To say it didn’t make sense to cut Kwiat from the sightholder list in 2003 is an understatement; even someone from DPS told me at the time they “didn’t understand” it. Kwiat had spent heavily on branding and marketing, and were producing jewelry long before De Beers uttered the words “vertical integration.”

But when the axe came, they were lucky — unlike other sightholders, their sight wasn’t their entire reason for being. And so, they kept on doing their thing and building their name. Two years later, they did not reapply for a sight, even though at least one broker urged them to.  In retrospect this seems like a sensible decision. Why go for a sight when there is a very real danger, perhaps even a likelihood, of getting cut off again in three years?

At a time when many sightholders are cutting back their marketing, Kwiat has had its jewelry featured on American Idol and is opening up a retail store on Fifth Avenue. And, as I mentioned, they had a very nice party last night. Not many sightholders had parties in Vegas this year.

So, to all the companies now worried about being cut, I say, yes, there is life after sightholder-hood. My advice: Go Kwiatly.

JCK News Director