Ehud Arye Laniado on Vertical Integration: Don’t Get Caught Midstream Without a Plan

Opinion piece
05/06/2015 15:12

Industry analyst Ehud Ayre Laniado takes a look at the rise of vertical integration in the diamond industry, with upstream companies (like De Beers) moving downstream and downstream companies (like Tiffany) moving upstream. The challenging question is how midstream companies can play a key role in vertical integration – with options including strategic alliances and integration with players in other parts of the value chain – and how to determine whether integration is appropriate.

Overall, he claims that: “Both upstream and downstream companies have recognized the benefits of working with established midstream players, including taking advantage of their manufacturing know-how … It would seem to make more sense for instance for a rough producer to work with midstream clients like those who integrated with jewellery retailers that can handle larger volumes, are better financed and that can get better margins as a result of being closer to its consumers.”