The company is planning to invest $20 million in marketing in the US ahead of Christmas
De Beers, which accounts for 40 per cent of the world’s supply of rough diamonds, is likely to raise prices again next month. The company is also lining up a promotional effort ahead of the Christmas season, traditionally a buying time for diamond purchases.
Late last month, the company raised prices by 30 per cent from its October level, which Varda Shine, managing director of Diamond Trading Corporation (DTC), the marketing arm of De Beers, had termed as price adjustment to the signs of the global economic recovery.
Talking on the sidelines of a meet in Mumbai today, De Beers Managing Director Gareth Penny said the prices would go up on rising demand from consumers, especially from developing countries.
Without divulging any numbers or time frame for the second round of price increase, Gareth said the demand for diamond jewellery was increasing in line with the economic growth of these countries. While India and China were able to cope with the recent financial crisis engulfing the world, economies of countries such as the US were distressed.
When asked whether DeBeers will cut prices if other roughs producers did, Penny said, “We cannot buy others’ produce and our marketing strategy suggests we maintain the price level and we would do that.”
He said the prices would respond to the rise in demand since supplies were unlikely to rise to levels of 2007 and 2008, when prices slipped to historically low levels.
Meanwhile, De Beers is planning to invest $20 million in marketing in the US ahead of the Christmas season. Another $20 million are expected to be raised from US retailers to fund such efforts. Additionally, De Beers will raise funds in the form of retail fee from members in the US for extensive promotional efforts to attract US consumers towards diamond jewellery.
The mining major is planning to promote its own jewellery brand “Forevermark” and some generic products in the US. India was likely to gain from this effort since a major chunk of India’s exports went to the US, Gareth said.
The diamond major has no such plan for India since the overall consumption of diamond in the country today stands at a marginal 7 per cent as compared to 40 per cent in the US. In the next two-three years, however, the figures are likely to improve with consumption in India to rise to 11 per cent but, though the consumption of the US may decline to 35 per cent.
Varda said that India diamontaires should take a cautious approach for future growth projection and plan for long term rather than short term since the recession is bound to re-visit once a decade and diamond industry will be directly hit by the global economic crisis.
