| De Beers will increase its impact on the minds of luxury lovers Not only the top officials of the corporation itself (chairman Nicky Oppenheimer and executive director Gary Reif) and its partner, ALROSA (president Vyacheslav Shtyrov), but also the president of Yakutia, Mikhail Nikolaev, came to the presentation of the new strategy of De Beers at the Moscow President Hotel. the head of Gokhran Valery Rudakov, governors, employees of the embassies of diamond-mining countries, etc.
The De Beers management is killing two birds with one stone with its visit: the presentation coincided with recently begun negotiations with ALROSA regarding a new trade agreement, and a public presentation of De Beers’ position will be very welcome.
Gary Reif was quick to dispel rumors that De Beers was abandoning its leadership role. “We want to be the largest diamond miner,” he said, “we will expand production volumes, particularly in Canada. There have been suggestions that De Beers will become an ordinary player in the market, and this is obviously not true. De Beers is proud to have been a leader in this market for 120 years and intends to remain a leader.”
Mr. Reif then spoke about what was troubling the corporation. What worries her is that over the past ten years, the increase in consumption of diamond jewelry has lagged behind the growth in consumption of other luxury goods. Experts see several reasons for this, including, for example, a lack of advertising and marketing initiatives. It should be noted that De Beers spends $170 million annually on advertising diamond jewelry (this is an exceptional case - the manufacturer of the raw materials advertises the final product). The Russian consumer also had a short opportunity to appreciate the power of commercials with the slogan “A diamond is forever.”
Several years ago, the corporation conducted a trial advertising campaign here, however, having made sure that the mass consumer did not and does not buy diamonds, it left advertising only in print media designed for a certain category of citizens. Now De Beers plans to increase its impact "on our clients and our clients' clients" to encourage the latter to choose diamonds over all luxury goods. Whether Russian clients will be stimulated too, time will tell.
One way to boost sales would be, as Mr. Reif puts it, to “expand the brand presence.” Mr. Reif pointed out that 80% of perfume sales and 50% of watch sales are from name brands, while only 13% of diamond jewelry is sold under name brands. De Beers has already announced its intention to brand its diamonds (and, by extension, the polished diamonds produced from them) so that, as Mr. Reif puts it, “the customer will think of De Beers before he thinks of other suppliers.”
Russia, represented by ALROSA President Vyacheslav Shtyrov, responds to all these statements as follows: in the new trade agreement between ALROSA and De Beers there will be a greater bias in the sense of strategic development of the industry and joint actions to stabilize it and less on trade relations themselves. In addition, ALROSA, like De Beers, is working on creating its own brand. World diamond production
The global diamond production volume is about $6.8 billion. De Beers Corporation and companies with its participation produce almost 50% of the world's diamond volume by value. De Beers searches and explores for diamonds in 18 countries. Mining is carried out by 20 mining enterprises of the corporation. De Beers sells about two-thirds of the world's gem-quality diamonds. It is a joint stock company whose shares are traded on the Swiss and South African stock exchanges. The corporation's market capitalization is $12 billion.
Russia ranks second among other countries in terms of production volume. In the first place is Botswana with an annual volume of 1.8 billion dollars, Russia has 1.6 billion. Then comes South Africa - 0.8 billion, Angola - 0.6 billion, Canada - 0.4 billion, Australia - 0.4 billion, Namibia - 0.4 billion and other countries - $0.8 billion.
World diamond consumption
Last year, diamonds worth $8.3 billion were supplied to the world's cutting centers. The difference between this figure and the global production volume ($6.8 billion) was covered by miners' reserves. Of this $8.3 billion, diamonds were produced, with a wholesale price of $13 billion. The wholesale value of diamond jewelry was $28 billion. Retail sales of diamond jewelry last year reached $56 billion, i.e. . Compared to 1998, the jewelry market grew by 10%.
In the first half of 2000, growth rates continued. This is largely facilitated by the advertising campaign of De Beers, which annually spends about $170 million on sales promotion. This is not the limit. According to De Beers experts, global spending on advertising luxury goods is 10.5% of sales volumes, on advertising watches - 6%, and diamond jewelry - only 1%. Anastasia NARYSHKINA |
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