DTC Dictates Sightholder Changes

May 30, 2003

DTC Dictates Sightholder Changes

Sightholder applicants to the Diamond Trading Company's Supplier of Choice program were confidentially told May 29 whether they will continue to be customers of DTC after the Supplier of Choice Program is officially launched in July.

"Any existing clients who do not qualify as sightholders under Supplier of Choice will continue to be offered supplies by the DTC throughout 2003 in order that they are well positioned to meet their current supply commitments and to make alternative arrangements for future supply," a DTC press release states. While diamantaires and their customers will soon know of the decisions made by DTC, the company says a Sightholder Directory to be published in early 2004 will make their choices public.

Supplier of Choice is a sales and marketing program announced by DTC, a De Beers Group Co., in 2001 that was formally approved by the European Commission in January this year. The strategy changed De Beers status as the "custodian" of the market to one of fostering more competition and boosting global demand for diamonds. The change in strategy came after a detailed strategic review of the company's operations, which saw diamonds as being constrained by what it describes as "complex inefficiencies" in comparison to other luxury products. DTC's strategy is to continue to distribute diamonds through sightholders that are best suited to brand, market and distribute diamonds in an atmosphere of trade and consumer confidence. Sightholders are asked to accept and adhere to DTC's Diamond Best Practice Principles which, among other things, requires sightholders to not trade in conflict diamonds and not sell synthetic or treated diamonds without proper disclosure.

DTC sees its sightholders as large global players; niche players; manufacturing-oriented businesses with strong downstream operations; dealer-oriented businesses with strong marketing oriented customers; businesses that use a full range of diamonds; businesses highly focused on specific goods; existing sightholders; entities new to the sightholder list and those returning to the sightholder list.

DTC says its 10-year goal is to increase demand and value by more than 50%. Gary Ralfe, managing director for De Beers, says the Supplier of Choice strategy is well on its way to achieving that goal because:
• Sightholders have been involved in over 200 marketing initiatives in the past two years.
• Diamond trade advertising spending is at $178 million over 2000 levels, and well on its way towards the goal of $200 million by 2004.
• Retail sales for 2002 exceeded expectations.
• Almost all diamond jewelry consuming markets increased in 2002.
• More pieces of diamond jewelry were sold in 2002 (up over 6% vs. 2001).
• The retail value of jewelry increased by over 3% in both U.S. dollar and local currency terms.

by Robert Weldon, G.G.

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