De Beers

The De Beers Group is a Johannesburg - and London -based Diamond Mining and trading Corporation . It has historically held a near-total Monopoly in the Diamond trade, although recent Israeli interests have captured 20% of the market. In 1994 De Beers was charged by the United States Justice Department with Antitrust violations for conspiring to fix prices for Industrial Diamonds . On 14 July 2004 De Beers pleaded guilty to the charges and paid a $10 million fine. The plea has enabled De Beers to trade directly in the United States diamond market after years of acting through intermediaries. The US diamond market is the largest in the world, purchasing approximately $500 million in industrial stones and $60 billion in diamond jewelry annually.

Using its monopoly, De Beers has created an Artificial Scarcity of diamonds, thus keeping prices high. The modern tradition of diamonds as a part of Engagement in many cultures has been largely created by De Beers through an amazingly effective advertising campaign started in 1938. The "A Diamond is Forever" campaign not only convinced the public that the only suitable gift for engagement is a diamond, but also served to limit the market in used diamonds. {Link without Title}

De Beers distributes diamonds to favored customers (called '' Sightholder s'') by selecting batches of diamonds themselves and offering them "as is". Now and in the past De Beers has sold diamonds mined from their own mines, most of which are in South Africa and Botswana . Currently, De Beers is involved in a joint venture that is developing a diamond prospect in Canada .

HISTORY

De Beers was founded on factory near The Strand and Somerset West . The factory was located on the False Bay coast just west of the mouth of the Lourens River . In the 20th Century the Oppenheimer family became the major shareholders. Sir Ernest Oppenheimer , his son Harry Oppenheimer and his grandson Nicky Oppenheimer have been chairmen of the company. Also see Alex Oppenheimer and Taylor Plant , both heirs and relatives.

The company's name comes from Johannes Nicholas de Beer and Diederik Arnoldus de Beer, two Afrikaner farmers on whose farm, called Vooruitzicht, near the confluence of the Orange River and the Vaal River , diamonds were discovered. The brothers were not able to protect the farm from the ensuing diamond rush, and sold it for £6300. Two diamond mines formed on the site, known as the "Big Hole" or Premier Mine . Although the brothers did not become the owners of the mines, one of the mines was named after them. Cecil Rhodes and Charles Rudd gained control of both the De Beers mine and the Kimberley, South Africa mine and merged them, forming De Beers Consolidated Mines Limited.

Because of South Africa 's labor demand in the mid to late 19th century, De Beers constructed the first private prisons in South Africa , which the state filled. De Beers provided the funds to incarcerate the prisoners and also paid the state to allow the Company to use the prisoners for Prison Labor . By the end of the 19th Century , De Beers was using over 10,000 prison laborers daily. The majority of the prisoners were incarcerated because of strict apartheid laws, similar to the Pass Law which was enacted in 1952 . {Link without Title}

DeBeers is currently building a retail location in the Beverly Hills section of Los Angeles. This is DeBeers' second retail location in the U.S. The first one is located in New York City.

MARKETING

De Beers has proactively promoted diamonds as being symbolic of eternity and love, and therefore the ideal jewel for an engagement or wedding ring. Their famously successful advertising campaigns have included measures such as:

showing diamonds as wedding gifts in popular Romance Film s

publishing stories in magazines and newspapers which would emphasize the romantic value of diamonds and associate them with Celebrities

employing fashion designers and other trendsetters to promote the trend on radio and, later, television

enlisting the British Royal Family to directly promote diamonds

This campaign was described by De Beers' PR Agency N.W. Ayer & Son as "a new form of advertising which has been widely imitated ever since" with "no brand name to be impressed on the public mind. There was simply an idea—the eternal emotional value surrounding the diamond." Indeed, the campaign succeeded in reviving the American diamond market, which had been weakened by "competitive luxuries", and in opening new markets where none had existed before. In Japan , for example, diamonds were successfully promoted as a western symbol of status, which coincided with Japan's cultural opening after World War II . Japan is today the second largest market for retail diamonds.

The Slogan "A Diamond is Forever," invented by Ayer, is one of the most successful slogans in marketing history. Its purpose is to prevent the creation of a Secondary Market by dissuading women from selling the diamonds they have received and by discouraging them from buying diamonds which other women have owned. The consequence of this is that retailers can sell diamonds at a high price without competition from a Secondary Market , and it allows De Beers to maintain control of the diamond trade at wholesale level.

This was incorporated in the James Bond film Diamonds Are Forever where De Beers is directly cited.

RETAIL VENTURE

In 2001 , De Beers launched a joint venture with French Luxury Good s company LVMH in order to establish De Beers as a retail brand. The joint venture, called De Beers LV, has a license from De Beers SA to use the De Beers brand name in a retail environment. Before the venture was allowed to begin, the European Union competition commission launched an investigation into whether the venture would give De Beers too great a control over the rough diamond market. An initial one-month probe determined that a longer investigation was necessary. The commission eventually allowed the joint venture to go ahead in July 2001.

The venture has since opened ten retail stores across the globe.

List of locations