The Man in the Middle
For those of you who follow the wisdom of Warren, his latest move suggests that jewelry middlemen may not be obsolete after all. Berkshire Hathaway has announced plans to buy two of the industry’s largest gold importers and distributors, Bel-Oro International and Aurafin, merging them to create the largest jewelry distribution company in the country. The new uber-distributor will be called The Richline Group. Leaving aside QVC, the largest single customer for Italian gold in the US, the two companies probably handle the majority of gold jewelry imports and distribution in the country. Bel-Oro, in particular, has been in the news lately thanks to its Gold Expressions marketing partnership with the World Gold Council that has made it the category’s largest marketer. Bel-Oro’s president Dennis Ulrich will be the chief executive officer of the combined company and Aurafin CEO Dave Meleski will be the president. Berkshire Hathaway is no stranger to the jewelry industry, of course: it owns Ben Bridge Jewelers, Borsheims Fine Jewelry, and Helzberg Diamonds. But up to this point, its jewelry interests have all been in the retail arena. That’s not surprising, since most of the profits in the business have been in mining or retailing, and nothing in between. Aside from a few very successful brands, jewelry manufacturers and wholesalers have seen declining margins and increased financing costs. So why acquire two large companies who primarily supply the majors and are known more as importers than manufacturers? To create a supplier with the financial resources to successfully deal with large retail customers? To vertically integrate? To provide a large parent company that can acquire brands or troubled manufacturers in Italy and elsewhere, and more effectively market their products? To add other kinds of jewelry products to the combined company’s offerings and become the industry’s super supplier? Stay tuned. The middle just got a lot more interesting.
Will they come up with some fresh designs that aren’t just copies of someone else’s jewelry? A fresh bold approach to design in the middle market sure would help. Everyone’s lines look too much alike.
[…] Actually all the signs point the other way. It’s pretty obvious when you look at Dubai’s diamond trade statistics — $3.93 billion in 2006 – that it is well on its way to achieving its stated goal of developing itself into a “gateway to the Middle East”. The really interesting thing about Dubai is that without any real roots in the diamond manufacturing pipeline, it traded fully half of the world’s annual rough production of some 160 million carats in 2006.Investment guru Warren Buffet too sees a future in the middle market, acquiring two of the largest jewellery suppliers in the US. Cheryl Kremkow pointed this out when she wrote about the Man In The Middle in her blog. […]
[…] Modern Jewelry Trends ? The Man in the MiddleThe Man in the Middle. For those of you who follow the wisdom of Warren, his latest move suggests that jewelry middlemen may not be obsolete after all. … […]