November 22, 1999
De Beers Likely To Go Consumer, Says Paper
"If Tiffany can buy into mining, why shouldn't De Beers move into jewelry retail?" That was the question posed by the Financial Post, a British financial newspaper, in an article last week featuring some of De Beers' most public statements yet on its consumer branding plans.
The article referred to Tiffany & Co.'s 14% stake in Canadian diamond mine company Aber Resources. "De Beers intends to unleash the power of its brand," Gareth Penny, the De Beers director responsible for implementing a strategic review of the company, told the paper. The Post also quoted analysts who predicted De Beers would not only eventually make jewelry, but also extend its brand into watches, handbags and other accessories.
Penny criticized the jewelry industry for its average 1% of income spent on advertising, compared to 10% spent by many companies with established brands. "De Beers can no longer afford to carry the rest of the industry," he said. "De Beers now controls between 60% and 70% of world supply through the CSO. This is not enough to justify the role it has traditionally played in holding costly buffer stocks and of advertising very expensively on behalf of the industry as a whole."
- by Peggy Jo Donahue