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Tuesday, 16 January, 2001, 12:55 GMT
De Beers ties up with luxury goods firm
millenium star
The Millenium Star, one of the world's finest diamonds
The world's biggest diamond producer De Beers has confirmed a sparkling tie up with the French luxury goods conglomerate LVMH, which owns the Moet champagne brand and clothing labels such as Christian Dior, amongst others.

We look forward to the day we will see a De Beers store on Bond Street in London, Place Vendome in Paris and Fifth Avenue in New York


De Beers managing director Gary Ralfe

For more than a century, De Beers has sold uncut - or rough - diamonds for cutting and polishing.

Under the deal, branded jewellery under the De Beers name would be sold in "a small number" of stores in prestigious locations.

The two companies said they will each invest $200 million over a four or five year period in the new luxury jewellery retailing joint venture.

"We look forward to the day we will see a De Beers store on Bond Street in London, Place Vendome in Paris, the Ginza in Tokyo, and Fifth Avenue in New York," De Beers managing director Gary Ralfe told a news conference.

But LVMH managing director Myron Ullman will lead the new company which will start operating within 12 to 18 months.

Developing the brand

LVMH brands
Moet & Chandon
Veuve Clicquot
Hennessy cognac
Hine cognac
Christian Lacroix
Fendi
Dior
Louis Vuitton
Kenzo
Tag Heuer watches

Analysts have long been critical of the South African diamond group for not realising its full potential.

If the De Beers brand was expanded to other luxury goods, as has happened in the case of Gucci and Chanel, then the name could be worth billions of US dollars.

"If you put the quality of the brand alongside the muscle, the resource and reach of someone like LVMH, then the sky's the limit," said Rita Clifton of branding experts Interbrand, Newell & Sorrell.

Last year, De Beers boasted diamond sales of $5.67bn (3.85bn).

The company owns the De Beers diamonds, worth an estimated 350m, which were the target of a daring raid at the Millennium Dome last November.

Police foiled the attempted robbery of the set of 12 diamonds, including the priceless 203-carat pear-shaped Millennium Star.

But while the firm controls 65% of the $8bn global market for uncut diamonds, the retail market is highly fragmented.

Shake-up

The move follows a strategy shift last year billed as the biggest shake-up at De Beers since the 1930s.

The change saw the company focus on actively selling diamonds rather than, as historically been the case, underpinning gem prices by mopping up excess supply.

The strategy had left the company with a $4bn diamond stockpile which the firm has sought gradually to deplete.

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See also:

09 Jan 01 | Business
De Beer mines brand for value
14 Dec 00 | Business
Dazzling diamond sales
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