South African-based diamond mining group De Beers is eager to realise the under-exploited value of its brand by auctioning or licensing the name to the highest bidder. It is the brand alone that is up for genteel grabs; De Beers has no intention of surrendering its lucrative near-monopoly on production and sales.
Talks are said to be ‘at an advanced stage’ with a single unnamed luxury goods group – whittled down from several with which De Beers has held talks. Informed observers believe this to be Louis Vuitton Moët Hennessy of France, although neither LVMH nor De Beers would comment.
The proposed joint venture would be autonomous, De Beers being anxious to avoid alienating its main customers for uncut diamonds. The jointly-owned (or licensed) business would not buy directly from De Beers, instead sourcing its diamonds directly from the group’s inner circle of key customers.
In contrast with De Beers’ quasi-monopoly – it controls around 60% of world diamond production – the retail sector is highly compartmentalised with no major player holding more than a fragment of the market. 'NewCo' hopes to remedy this parlous state of affairs.
News source: Financial Times