1. LEV LEVIEV VS. DE
BEERS
Nikhil Agarwal | Navneet Kumar | Saurabh Kumar |
Sachin Pal

2. Introduction – De Beers
 Who is de beers?
 Not retailer
 Not manufacturer
 They are miner and buyer of 70% of the world’s
rough diamonds.
 De beers is a South African company and was
founded by Cecil Rhodes in 1888 by forming a
cartel with the ten largest merchants in South
Africa.
 By 1890, de beer controlled 95% of the world
diamond production.
 The company spends $180million a year world
wide to advertise cut diamonds.

3. De Beers as a Monopoly
 De beer was almost the sole seller of
diamond.
 Sells a commodity with no close substitute.
 De Beers took control of all aspects of the
world diamond trade in 1989.
 The main principle of de beer’s business
model was to match the supply of diamonds
with demand.
 They could determine who could buy uncut
stones, in what quantities and quality and
decide which cutting centers to be used.

4. Decline of Monopoly
 In 1991, the Soviet Union (the world's second-
largest diamond producer by value) collapsed.
 Involvement in a 1994 price fixing case.
 In 1996, Australia's Argyle mine became the
first major producer to terminate its contract
with De Beers.
 Several rich diamond deposits were
discovered in the Northwest Territories of
Canada.
 Diamonds became tainted by the term “blood
diamonds”.

5. Continued…
 High-handed treatment towards buyers.
 Alternative distributors came into prominence.
 Weakness in the economies of consuming
regions.
 The results: De Beers controlled a shrinking
share of output in a shrinking market.
 The resulting problems for De Beers helped to
demonstrate the inherent instability of a cartel.

6. Role of Lev Leviev
 Converted De Beers Monopoly into
duopoly.
 Opened his own cutting factory in
1977.
 Former sight-holder of De Beers.
 1st dealer to operate across the
value chain – from mining to
polishing & retailing.

7. Continued…
Russia Angola Namibia
• Close to Vladimir • World’s 3rd • Paid $30 million to
Putin. largest acquire 37% of
producer of rough Namibian Minerals
• Brokered meetings diamonds. Corp.(diamond
between Russian mining
President & Israeli • Invested $60 million outfit).
Politicians. in
exchange for 16% • Opened a polishing
• Formed a joint of factory on Namibian
venture Angola’s largest coast.
with Russia’s state- diamond mines.
run
diamond mining & • Gave 51% share of
selling group : RUIS. Ascorp. To Angolan
govt.
• By 2003, Leviev

8. Reorientation Strategies
 Trying to sell its existing products through
marketing and branding.
 De Beers unveiled two branding initiatives –
Forevermark and De Beers name itself.
 It employed the "Supplier of Choice" strategy
putting them in direct competition with its sigh-
holders.
 Started joint initiatives with its sight-holders.
 Buying other mining firms.

9. Conclusion
Area of improvements:
 To maintain artificial high prices and
encourage sustainability of the diamond
business.
 Convincing end customers they want a De
Beers diamond (“blood-free”, premium image ,
quality assurance, proprietary designs).
 Advertise more in premium fashion magazines
like People and Vanity Fair.

10. THANK YOU