In the halls of Charterhouse Street, five years ago, I had a question to ask. It was the day after De Beers had announced Supplier of Choice—the end of the cloistered, parochial, supply-driven diamond world as it had been known for a century—and I was puzzled: "Why the name change?" Why was the world's great diamond miner taking the diamond's worldwide brand name off its awning?
"I suppose," said the company man I asked, smiling enigmatically, "to have our cake and eat it too?"
I smiled enigmatically myself, having no idea what he meant. Surely De Beers wasn't going into jewelry? "We'll see King Fahd pumping gas on Route 3," I wrote with the clueless certitude only a journalist can muster, "long before we'll see Nicky Oppenheimer selling solitaires on Fifth Avenue."
With the LVMH joint venture two years later, it was clear the former market custodian had reserved its brand name for exactly that purpose. And the De Beers Fifth Avenue jewelry store that opened this summer has few solitaires in its fashion-forward cases. Diamond Trading Company managing director Gareth Penny, in his comments on the 2005 sightholder list, made it explicit that each company on the list needed to work to increase the value of the diamond jewelry market. "Supplier of Choice is helping us, our sightholders, and the wider industry to achieve this," says Penny.
In most cases, the sightholder move downstream has been a classic marriage of power and style. The world's top diamond companies have transformed themselves into "Jewelers of Choice." And a few savvy manufacturers and even retailers have made the reverse move, becoming sightholders.
In any other industry, a mandate to grow the bottom line by reaching the end consumer would seem redundant. It shows how far we've come in the Supplier of Choice era. Five years ago, De Beers had two mandates: mine rough and publicize polished. Period. A "sightholder/jeweler" verged on conflict of interest, and besides, everyone knew better. "Diamonds and jewelry," as a third generation New York dealer puts it, talking about downstream moves diamantaires had tried over the decades, "are just different headaches."
HOW DID THIS HAPPEN SO FAST?
"With Supplier of Choice," explains Chuck Lein, president and COO of Stuller, Lafayette, Louisiana, America's newest sightholder, "the DTC did reaffirm their core competencies of mining rough and marketing loose diamonds, but they also stepped into a new arena and a new philosophical direction. And with an evaluation format that applied internally consistent and identifiable criteria to gauge their clients' core competencies, they strongly encouraged these moves downstream. For both existing clients and aspiring ones, the metric was universal: added value."