De Beers’ CEO, Al Cook, is steering the diamond mining titan towards becoming a premier luxury jewelry retailer. This ambitious pivot comes in the wake of the company’s most challenging year in over two decades, marked by a significant industry downturn.
Despite its global presence through various boutiques, De Beers plans to double its retail outlets, positioning itself alongside luxury stalwarts Tiffany and Cartier. This initiative is part of a broader strategy to evolve from a mining-centric operation to a dominant force in the luxury jewelry market. Owner Anglo American is preparing the company for a potential sale or public listing following BHP’s unsuccessful £39bn acquisition bid.
“If I look at the future of diamonds, it is way beyond mining,” Cook expressed to the Financial Times. “I’m really excited by the idea that we can deploy our full strategy to create the world’s greatest jewelry maison, a natural extension beyond mining.”
Last year, De Beers faced a steep decline in diamond sales due to high interest rates and inflation, coupled with rising competition from synthetic lab-grown gemstones. These factors led to a plunge in the company’s core earnings, which dropped to $72 million in 2023—its worst performance since it delisted from the Johannesburg Stock Exchange in 2001. Lab-grown diamond sales, estimated at $4.5 billion, siphoned off an estimated $7 billion in potential sales from mined diamonds in the US.
In response, Cook introduced the “Origins” strategy to combat the synthetic diamond threat and expand market share in India, projected to become the world’s second-largest diamond market this year. His goal is to increase De Beers Jewellery stores from 40 to 100 globally by the end of the decade, alongside the development of new product lines.
Under the revamped strategy, De Beers will subcontract manufacturers to polish a portion of its rough stones for sale in branded stores and other retail channels. This shift marks a departure from the traditional model of selling rough diamonds to select customers and repurchasing them as polished stones. Cook aims for $1.5 billion in annual core earnings by 2028.
Anglo American, which holds an 85% stake in De Beers (with the remaining 15% owned by the Botswana government), plans to divest or spin off De Beers as part of its broader restructuring post-BHP bid. Potential buyers include Gulf sovereign wealth funds, Chinese investors, billionaires, or luxury houses. However, a sale might be complicated by De Beers’ recent sluggish growth.
Anglo American CEO Duncan Wanblad cautioned that market conditions could delay a divestment until after 2025. Meanwhile, Richemont has denied any interest in acquiring De Beers.
One of Cook’s more radical plans involves selling polished diamonds beyond the exceptionally rare or large stones, challenging the exclusive “sightholder” sales system that allows only 69 buyers to purchase its diamonds at 10 annual events. Initially, polished stone sales will be limited, with the company’s return to profitability expected to stem from cost reductions and increased rough diamond prices.
A company presentation highlighted that by 2028, 7% of core earnings would come from retail activities, including De Beers’ jewelry boutiques and its Forevermark brand, which operates in China, Hong Kong, India, Japan, and the US.
“Expanding De Beers Jewellers makes sense as branded jewelry is the industry’s fastest-growing category,” said independent diamond analyst Paul Zimnisky. “I just hope the company has enough capital and support to execute these initiatives, given its precarious current state under Anglo American.”
While previous retail ventures have faced challenges, success could also bring De Beers into competition with its customers, such as Van Cleef & Arpels and Hong Kong’s Chow Tai Fook, underscoring the risks involved.
In another strategic shift, De Beers will cease selling lab-grown diamonds for jewelry, instead focusing on technological applications, including materials for next-generation 6G semiconductors.
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