De Beers To Offer Bespoke Rough Diamond Assortments to Sightholders

Rough Market
06/10/2016 11:11

JCK's Rob Bates reports that De Beers is introducing a significant change to the 'take it or leave it' policy of its traditional sight system, as they will be, "experimenting with offering sightholders boxes made to order for their needs. Traditionally," writes Bates, "De Beers has separated its product into 120 standard assortments. And while that continues, it is also working with certain clients to create tailored mixes." He then explains that, "This represents a significant break from how things have generally worked in the century-old sight system. In the past, clients would buy boxes with goods they didn’t want in order to get the ones they did. (Creating a well-balanced assortment has always been one of the “arts” of the diamond industry.) The new customized boxes will include only what the clients want."

Bates cites Nigel Simson, head of De Beers’ new product planning department: “We want to hit our clients’ sweet spot and ultimately create more efficiency,” adding that De Beers “doesn’t have a target” for how extensive this practice will be. “It is very early days. We have half a dozen nonstandard products and are really assessing the merits of those as we go forward,” Simon says. “There will be an additional cost to us for producing this. We would have to take that into account. [But] we are not looking at this as an additional revenue stream.” This new policy is a far cry from what former De Beers chairman Phillippe Mellier told Rob Bates in a January 2015 interview: "Customers’ profitability is important to me. But I am not responsible for the margin of my customer. They are responsible for their margin. It is down to them to maximize their profitability." This angered sightholders who were complaining about the high cost of De Beers 'boxes' of rough diamonds, and were selling them on at a loss.

This new policy therefore appears to be the next step in De Beers attempt to accommodate its customers' needs in an increasingly challenging market. It remains to be seen how far they will go, and if any of the other major miners will follow suit.