The End of Sightholder Exclusivity

Isaac Mostovicz writes...

I read this week’s Memo from Chaim Even-Zohar with great interest. I think that Chaim is finally willing to be a bit more honest and less diplomatic about the current state of diamond industry. Nevertheless, despite the data is in his article, the collapse of the industry did not suddenly happen–it was a long process.

Chaim sees the one side of the equation –the oversupply of rough, because his focus is, as always, on the rough market. I believe that the problem is the growing under-demand. One way or another, the financial result is the same. No money is left in the industry: there’s $45-50 Bn of unsold polished stock, which amounts to a three-year supply (as I previously estimated), and huge debt which is only partially covered by diamonds that nobody wants or can buy at any price. Now De Beers is planning to lose its last proper luxury marketing element – the exclusivity of the sightholder.

They do not understand the value of the asset they plan to dispose–once it’s gone, it’s gone for good. If we look at this cynically, sightholder exclusivity allowed De Beers to wash a good amount of unneeded goods at premium prices in the last ten years. They used their clout and influence; now there’s nothing left. The Emperor is Naked. Unfortunately, this time the onlookers do not laugh.

[…] with every solution, there are new issues raised.  This blog has an interesting argument that selling “outside” the system might “devalue” a company’s […]

You say of this article...

Bookmark and Share