Description
Are Diamonds Forever?
History
Till late 19
th
century diamonds were rare and scarce. Only two countries in the world were the suppliers of diamond, India Brazil. It was in 1867 in Africa
Are Diamonds Forever?
History
Till late 19th century diamonds were rare and scarce. Only two countries in the world were the suppliers of diamond, India Brazil. It was in 1867 in Africa
Diamonds in South - the Birth of Monopoly
To limit the supply of rough diamonds reaching the market De Beers invited one hundred wholesalers to London where each was offered a box of uncut diamonds at a fixed price (non-negotiable). If De Beers needed to prop up the price of certain size and quality of diamond then few of those diamonds would show up in those boxes and thus reducing the supply.
What fuels the demand?
De Beers Marketing Programs 200 million $ spent every year trying to convince people that diamonds are scarce, valuable and perfect reflections of love. “Diamonds are forever – (i) A diamond lasts forever, and so should love (ii) Diamond should remain in family and not be sold (iii) A diamond retains its value With the help of this slogan the second hand diamonds (which otherwise would be a good substitute for new ones) are kept off the market. Idea of diamond as an engagement ring, ‘right hand ring’ a diamond ring wore by a woman as a symbol of independence
Current and Forecast World Demand, Supply, Consumption and Prices Conflict diamonds Political/Socioeconomic Issues/Civil War
Reports estimated that as much as 20% of the total production in the 1980s was being sold for illegal purposes, and 19% were specifically conflict in nature. By 1999, the illegal diamond trade was estimated by the World Diamond Council to have been reduced to 3.06% of the world's diamond production. The World Diamond Council reported that by 2004 this percentage had fallen to approximately 1%.
Challenges and Threats to De Beers
A monopoly that relies on the control of the key resource loses market power once that control slips away. In 1990 Russian miners started selling rough diamonds (half of the supply) to independent dealers.
doc_696067178.docx
Are Diamonds Forever?
History
Till late 19
th
century diamonds were rare and scarce. Only two countries in the world were the suppliers of diamond, India Brazil. It was in 1867 in Africa
Are Diamonds Forever?
History
Till late 19th century diamonds were rare and scarce. Only two countries in the world were the suppliers of diamond, India Brazil. It was in 1867 in Africa
Diamonds in South - the Birth of Monopoly
To limit the supply of rough diamonds reaching the market De Beers invited one hundred wholesalers to London where each was offered a box of uncut diamonds at a fixed price (non-negotiable). If De Beers needed to prop up the price of certain size and quality of diamond then few of those diamonds would show up in those boxes and thus reducing the supply.
What fuels the demand?
De Beers Marketing Programs 200 million $ spent every year trying to convince people that diamonds are scarce, valuable and perfect reflections of love. “Diamonds are forever – (i) A diamond lasts forever, and so should love (ii) Diamond should remain in family and not be sold (iii) A diamond retains its value With the help of this slogan the second hand diamonds (which otherwise would be a good substitute for new ones) are kept off the market. Idea of diamond as an engagement ring, ‘right hand ring’ a diamond ring wore by a woman as a symbol of independence
Current and Forecast World Demand, Supply, Consumption and Prices Conflict diamonds Political/Socioeconomic Issues/Civil War
Reports estimated that as much as 20% of the total production in the 1980s was being sold for illegal purposes, and 19% were specifically conflict in nature. By 1999, the illegal diamond trade was estimated by the World Diamond Council to have been reduced to 3.06% of the world's diamond production. The World Diamond Council reported that by 2004 this percentage had fallen to approximately 1%.
Challenges and Threats to De Beers
A monopoly that relies on the control of the key resource loses market power once that control slips away. In 1990 Russian miners started selling rough diamonds (half of the supply) to independent dealers.
doc_696067178.docx