De Beers Shoots Down Rumors

July 19, 2001

De Beers Shoots Down Rumors

The economic slowdown and De Beers' smaller July sight caused rampant speculation about De Beers' sales targets and its Supplier of Choice program. On Tuesday, The Financial Times reported De Beers abandoned its $4.8 billion sales target for 2001 to focus on restoring stability to the market. The report also suggested the changes could mean De Beers would return to its age-old role as custodian of the diamond market.

De Beers says that's not the case.

De Beers spent the last year-and-a-half unveiling its Supplier of Choice strategy, in which the diamond giant vows to abandon its role as market custodian. Andrew Lamont, a De Beers spokesman, says the Supplier of Choice program is not in jeopardy, despite recent industry rumors. "Supplier of Choice is non-negotiable. The way the world conducts business demands that we improve efficiencies in supply and change the way the industry as a whole markets diamonds," Lamont says. "Some traditionalists may want to see us revert to the old way of doing things, but we absolutely will not. De Beers is committed to transforming itself." He also says reverting to methods of the past could lead to the demise of the diamond industry within a decade.

Lamont acknowledges the many changes De Beers is advocating for its Supplier of Choice program can't happen overnight, but that doesn't mean they won't happen at all. "The roll-out out of Supplier of Choice is awaiting the formal European Union notification on August 28 of the De Beers joint venture with retailer LVMH," he says.

Meanwhile, due to market conditions on a global scale, De Beers decreased the size of its diamond sight in July and is expected to do so again in August. Lamont dismisses the notion this was done in an effort to exert a custodian role. "We clearly will not sell at a price that undermines the market," he says. Also, De Beers doesn't plan to release a revised sales target for the year.

- by Robert Weldon, G.G.