Rumors of De Beers Special Deals Roil Diamond Market

De Beers isn’t commenting on an online report, and persistent trade rumors, that it offered dramatic discounts on select boxes to a handful of clients at the last sight.

“I can’t comment on anything relating to commercial details of that last sight,” says spokesperson Lynette Gould. “It’s not unusual—we don’t comment on price or volume other than at results. We recognize it’s a challenging period for our industry, and we don’t discount the difficulties being faced—this is why we have done things like providing additional deferral options and [Intention to Offer] re-phasing, as well as making that major additional investment in fourth quarter marketing.”

Last week, Charles Wyndham of Polished Prices wrote that about half of the goods at the last sight were sold to a few clients after the main event, at what he called “substantial discount[s].”

His sourcing is unclear on this, though he says he talked to a sightholder who was offered a De Beers–discounted business from another client. (Update: This was also discusssed in Edahn Golan’s October sight report.) 

A couple of thoughts:

– While I appreciate De Beers’ long-standing policy of not commenting on pricing, this story suggests the development of a new pricing mechanism, which would be worthy of comment.

Further, these stories have damaged trade confidence, which already is quite wobbly. As one person told me, this is potentially more serious than when Rapaport lowers prices, as De Beers was long considered the industry’s backbone.

If these rumors are not true, De Beers needs to stamp them out—quick. (I made that argument to De Beers this morning. It is still not commenting.)

– If the stories are true, that raises potentially thorny questions. A De Beers decision to lower prices across the board would be understandable. But if it just bestowed the goodies on a few lucky clients, one wonders: Why those companies? What was the mechanism? And what will this mean for prices going forward?

Writes Golan: 

If De Beers sold goods to Sightholders outside of the Sight, circumventing brokers and their 1% fee (and probably VAS as well), for a large discount – some argue that the company understands that prices are too high and a reduction is required to generate sales. 

Wyndham says:

By acting as it has, De Beers has effectively sold the same goods at two very different prices…why should anyone buy any goods from De Beers, unless they know that they are getting the same deal as one of the chosen few…. That is unless they are mad.

– In bygone days, it was common for De Beers to offer attractively priced “specials” to clients to lessen the blow of bad years. These were often big stones or unusual assortments, which were hard to comparison-shop. It is not clear if that’s the case here.

Further, as Wyndham writes, in the 1980s De Beers could offer special deals and no one would know. That is harder in today’s information age.

– De Beers has, as Gould says, instituted a number of measures to improve trade confidence. Most of these are welcome, but sadly, very few seem to have worked, and the market remains on edge. The mood at the last sight was reportedly as gloomy as ever. A healthy holiday season coupled with smart buying and selling could turn things around, of course, but this latest brouhaha—and De Beers’ frustratingly close-mouthed reaction to it—will likely not help. 

JCK News Director