De Beers has now been without a permanent CEO for six
months. And in a way, that could stand as a symbol for the company itself, which appears not just leader-less, but confused about its future direction.
After a decade of nearly non-stop change, De Beers remains
very much in the process of reinventing itself. The company recently sold its
Finsch mine in South Africa, further shrinking its market share. It also has
been selling more of its diamonds via tender. All of which seems a big step
away from the Supplier of Choice model.
And yet … After
basically dropping references to Supplier of Choice in speeches during the
recession, DTC managing director Varda Shine was again talking about being “demand-driven”
and “adding value to diamonds” at the
recent DTC cocktail party.
So where is all this going? No one is sure, and we may not know until the new De Beers CEO is installed. But in a way, De Beers has become a
victim of the forces it helped unleash. Ten years ago, the company reigned
supreme as the biggest diamond experts in the world. But there has been a real
“knowledge drain” from the company, and now many of its competitors know just
as much as it does.
Even on the marketing side, the days when everything De
Beers did was unquestionably accepted are long over. While many sightholders recently applied to be part of the U.S. Forevermark program, they still (privately) express doubts
about it, and are confused over exactly what it is—is it a program based on a
mark, a series of new “beacon”-type products, or something else?
One sightholder noted, regarding the Forevermark, that jewelers still harbor considerable reservations
about brands—particularly a brand that is considering asking retailers to spend
$10,000 per year, per store, to become a Forevermark retailer. (One other question that has been raised: Who will deal with the Forevermark retailers? Forevermark USA has indicated it plans to do a lot of that itself, and yet sightholders have forged considerable relations with retailers over the last decade—mostly, we should note, at De Beers’ urging.)
For all this, as a Rapaport editorial noted
yesterday, De Beers will likely report good financial numbers next week—and
whether a company knows where it’s going is less important than whether it’s
making money. Still, one of its most successful divisions today is possibly its
lowest profile (in this neck of the woods, at least): Element Six, its
synthetic diamond manufacturing arm. Perhaps this kind of low-key,
non-political, but highly profitable business will point the way to the