Ingenious marketing schemes have transformed a rock dug out of the earth into an object of Michael Kors Outlet Online
desire for women all over the world. Some say that if it weren't for the De Beers Corporation, diamonds would be much more common and much less expensive. So how did one company grow to control most of the world's diamond supply and distribution?Does this Spark an idea?Other People Are ReadingWhy Are Diamonds Relatively Expensive?How to Buy De Beers Stock Early MinesIn the mid-1860s, diamonds were discovered on the farm of Nicolaas and Diederick de Beer, which was near the town of Kimberley, in southern Africa. They dug two diamond mines on the farm, the Kimberley and the De Beers. For years, these two mines produced more diamonds than any other mine in the world, but they are no longer in operation.Cecil RhodesCecil Rhodes, a British businessman who rented out mining equipment, bought a claim to the De Beers mine in 1871, and used it to finance the purchase of most of the diamond mines in southern Africa. He incorporated De Beers Consolidated Mines Ltd. in 1888 as a separate company to manage the mines. Rhodes then set out to control worldwide diamond distribution to keep demand steady and prices high.The Central Selling OrganizationRhodes formed the Diamond Syndicate in the 1890s, which became the Central Selling Organization (CSO), a group of financial and marketing organizations that grew to control most of the global diamond trade. This company was formed to oversee the distribution channels for diamonds. It consists of an alliance of diamond merchants who abide to De Beers's terms of business. The CSO forced each supplier to sign contracts, thereby disabling them from doing business with other companies. By controlling the mines and distribution, De Beers was, and still is, able to keep prices high and supply low, which benefits the merchants as well.Ernest OppenheimerIn the early 1900s, large diamond mines were discovered near Pretoria and along the coast of German South West Africa (now Namibia). This seriously weakened De Beers's control of the diamond industry. Ernest Oppenheimer founded the Anglo-American Corporation in 1917, and he increased his influence in the diamond market throughout the 1920s by gaining control of the South West Africa mines. Oppenheimer, a diamond and gold expert who had begun his career in the gold industry, wanted to join De Beers to increase his knowledge and power in the diamond industry. He gradually bought up shares of De Beers until he was one of the most significant shareholders, thus earning a spot on the board in 1926. He became chairman in 1929 and formed a larger company called the Diamond Corporation with subsidiaries all over the world.The De Beers MonopolyThroughout the 20th century diamond suppliers in various countries have attempted to undercut De Beers's monopoly through means such as hoarding, flooding the market or trading on the free market . But since De Beers controls so many aspects of the industry, cutting off De Beers usually turns out to limit a mine's profits. In addition to owning most of the world's diamond mines and holding exclusive contracts with suppliers, De Beers's marketing team controls which diamond dealers have access to each year's limited supply. They also control the market value of diamonds by only releasing a small amount each year, which limits supply, thus driving demand and prices up. Today, De Beers markets two-thirds of the worldwide supply of diamonds from its headquarters in London.Conflict DiamondsIn the 1990s, rebel armies in African nations such as Angola and Sierra Leone began to finance their armed conflicts with legitimate governments by selling rough, uncut diamonds from local mines. In 1998 Global Witness, a non-government organization, publicized this and diamond companies such as De Beers began working with the United Nations to stop diamonds from being used to fuel war. Andrew Coxon, president of the De Beers Institute of Diamonds, helped to create the World Diamond Council, which instituted the Kimberley Process in 2002, a certification procedure that requires uncut diamonds to be ensured by their source nation's government as conflict-free.Modern Changes for De BeersIn 2001, the De Beers Group joined with the French luxury goods company LVMH (Moet Hennessy Michael Kors) in a retail venture to sell its diamonds exclusively in De Beers stores under the name De Beers Diamond Jewellers Ltd. The following year the company's flagship store opened in London, and over the next seven years more stores followed in cities all over the world, such as Tokyo, New York, Beverly Hills, and Naples. Today, De Beers stores are among the highest-end Michael Kors Outlet
jewelers in the world.