Famous Jewellers - De Beers

De Beers is best known as the company whichprove very influential. Harry Oppenheimer, Sir
for more than a century has largely controlled theErnest' son, set out to persuade women that
supply and pricing of fine diamonds throughout thediamonds, the quintessential symbol of romance,
world. However, it has also been very successfulwere meant to be kept forever. In order to
in marketing its own range of high-end diamonddiscourage the resale of diamonds by consumers,
jewellery.Oppenheimer sought to convince women that
Contrary to what might be assumed, De Beersengagement and wedding diamonds must be new
was not the family name of the founders of thein order to have any meaning. The campaigns,
famous company, but rather that of the Southlaunched in the United States, caught the public
African farmers who sold their land when the firstimagination, entrenching such phrases as "A
diamonds were discovered on it in 1866. The DeDiamond Is Forever" and "Diamonds Are a Girl's
Beers company was actually founded by CecilBest Friend" in the public psyche. Ironically, for
Rhodes in the 1880s, and was named after themany years the Group could not operate directly
De Beers diamond mine which had beenin the US because of laws prohibiting the
established on the farm which had beenformation of cartels, but they were still able to
purchased from the De Beer family. So,exploit the US market by supplying numerous
unfortunately for them the real De Beers neversmaller businesses. The campaign was also very
became rich from the diamond industry.successful on an international level, allowing the
Cecil Rhodes and his partners created the DeGroup to develop huge markets for its diamonds,
Beers Mining Company Ltd in 1880, and in 1888,especially in Japan.
after a long bidding war with their rival theThroughout the post-war period, the group
Bernato Mining Company, the two companiescontinued its strategy of aggressively acquiring
merged to become De Beers Consolidated Minesnew diamond mines, whilst at the same time
Limited, with Rhodes as chairman. The newlyensuring that the buying public retained the notion
formed group controlled most of the mines inthat diamonds had scarcity value. To ensure that
South Africa, and, more importantly, the groupthey continued to control supply, they bought up
controlled around 90 percent of world diamondexcess diamonds on the market and distributed
production at the time.them through the Central Selling Organisation
The company now sought to control diamond(CSO). Advertising constantly sought to persuade
prices as well as supply, so they set aboutconsumers that diamonds were rare and thus
persuading major dealers and brokers, particularlyvery valuable. In the main, De Beers' efforts in
in London, that they had much to gain by allyingthis respect benefited both the producers, who
themselves with De Beers, and in 1990 thewere assured of a stable inflow of foreign
London Diamond Syndicate was established, againcurrency, and dealers, who were assured of
with De Beers firmly in control.stable price increases. The group of course
During the years which followed there were manyprofited immensely from its stranglehold on
setbacks for the company. There were largediamond supply and distribution. They were able to
fluctuations in demand, disruptions in operationscharge very high fees to dealers who received
due to the Boer War, discoveries of diamonds byinvitations to become sightholders, and these
rival groups not only in South Africa, but also indealers were in effect obliged to pay whatever
German South West Africa, the Belgian Congo,price De Beers decided to set.
and Angola, and later on by the outbreak ofOver the years, some diamond dealers have
World War I. However, despite these setbackssought to challenge De Beers' control of the
De Beers always managed to maintain their gripdiamond market, but they were usually brought
on the market.back into line through a number of tough
In 1929, the entrepreneur Sir Ernestmeasures, including being barred from the CSO's
Oppenheimer, whose company Anglo had acquired"sights". In order to maintain the cartel's
several very productive diamond mines in Southstranglehold, De Beers were also prepared to
West Africa following South Africa's defeat ofinflict tough measures upon themselves, such as
German colonial forces in 1915, became chairmanlimiting their own sales substantially to allow stocks
of De Beers. In 1930 The Diamond Syndicate,that had built up in the cutting centres to be
which had already replaced the London Diamondabsorbed into the retail markets. But De Beers
Syndicate, became the Diamond Corporation Ltd,have always proved to be extremely resilient,
and in 1934 its subsidiary, the Diamond Tradingsurviving lawsuits and investigations by the likes of
Company, introduced the practice of selling roughthe Office of Fair Trading. Despite organisations
diamonds at invitation-only "sights," where boxessuch as the Argyle Mining Group of Australia and
of rough gems were offered to carefully selectedthe UK based Rio Tinto opting out of the CSO,
clients or "sightholders". This trading structure wasand their market share falling by some 10 percent
to become known as the Central Sellingduring the 1990s, De Beers still maintain their
Organisation (CSO), through which Oppenheimercontrol over the lion's share of the world market.
and the Group sought to limit the supply ofHowever, the increasing supply of diamonds from
diamonds, thus maintaining their value and thenew sources throughout the world will surely
perception of their rarity.continue to threaten the supremacy of the
In the early 1940s, the company embarked on anremarkably resilient organisation that is the De
aggressive marketing campaign which wouldBeers diamond cartel.