DeBeers is having to rethink
its traditional way of doing business because of the global recession and the reduced demand for diamonds. For the first time, the commercial division of the conglomerate will go outside its restricted circle of authorized buyers or sightholders to help sell down its excess inventory of diamonds.
De Beers' sightholders are a group of 78 cutting and polishing companies worldwide that have first "sight" — or option to buy — of De Beers' rough diamonds. The sights take place 10 times a year, and before each event, these clients put in requests for specific types of diamonds.
Last month, the company cut its rough diamond offer to sightholders by 50 percent, and is likely to do the same for sight appointments this month and March and April, a DTC spokeswoman said, adding that the surplus was the result of weakened demand from the sightholders.
"The last two sights of 2008 were smaller than usual, and this trend continued into the January sight," she said.
The cutters have too many diamonds inventory because retail chains have cut orders because of low consumer spending. Although having an excess of inventory of diamonds sounds like a problem we would all like to have, it's not a great thing for DeBeers and the worldwide jewelry trade. Still, it's fun to think about what all that excess inventory looks like.
