DE BEERS LV POLISHES PLANS
Byline: Melanie Kletter
NEW YORK — A new day is dawning for De Beers.
De Beers LV, the independent joint venture formed by LVMH and the De Beers Group, is readying its first flagship in London for an October opening and is putting the finishing touches on its first-ever jewelry collection.
In an interview here last week, Alain Lorenzo, De Beers LV’s chief executive officer, revealed a number of new details about the company and its plans to create a jewelry brand around a name that has appeared in numerous ads and has immense consumer awareness throughout the world, even though there has never been a single necklace, earring or bracelet bearing the De Beers moniker. The venture will have sole rights to the De Beers name worldwide.
“De Beers reached a huge brand awareness, and we have not built on it,” said Lorenzo, who was in town to announce that longtime public relations executive Joan Parker has been named the firm’s head of global communications.
It has been 15 months since LVMH Moet Hennessy Louis Vuitton and the De Beers Group announced plans to join forces and create a new retail jewelry brand. Since that time, Lorenzo, an LVMH veteran, has been busy assembling a team of designers, merchants and sales staff to bring the project to fruition.
Among the key hires are Sylvie Freund Pickazance, a former Cartier executive who is retail sales director; Andrew Coxon, who had been a diamond buyer at De Beers and is now overseeing the new company’s diamond buying, and Jean Christophe Gandon, a former Procter & Gamble executive who is the marketing director. As reported, British jewelry designer Reema Pachachi late last year was named to head the company’s design team.
At this point, De Beers LV is being somewhat cautious about plans for the new venture, due in part perhaps to a difficult economic climate and a weakening demand for luxury goods. Lorenzo said that, in addition to London, the firm plans to open stores in the U.S. and Japan, but he was quick to point out that there is no specific timetable in place.
“We are taking this very slowly,” he noted. “There is a lot of risk in starting a new business and you have to be very focused. We really want to make sure we see what’s working before we plan a big rollout.”
The two firms have said they plan to invest about $400 million in the venture over the next five years, equally split between the two partners, and the profits will be split as well.
“We don’t see this as a quick money maker,” Lorenzo added. “It is very capital intensive, and we see it as a long-term venture.”
Construction has already begun on the 7,700-square-foot London store, which will be called simply De Beers and will be located on the corner of Old Bond Street and Piccadilly in the former location of the Isetan store, according to Lorenzo. The architectural company designing the store is Studio Citterio, a Milan-based firm that has worked with a number of other fashion companies, including Ungaro and Valentino.
Some specifics of the De Beers merchandise are still being determined, but Lorenzo said the offerings will span a range of price points and — not surprisingly — nearly every piece will have diamonds. Metals will include gold and platinum, but not silver, he noted, and many of the pieces will be stylish and fashion forward. Although the initial items are focused on diamond jewelry, Lorenzo also said it is likely other products such as watches will be added in the future. The watches could be sold wholesale, in common with other luxury brands like Cartier and Bulgari.
LVMH has been rapidly expanding its holdings in the watch and jewelry arena, and company chairman Bernard Arnault has made it clear that he wants to stake his claim in the $60 billion diamond jewelry market. The U.S. market is the world’s largest in diamond jewelry, accounting for $26.1 billion in retail sales in 2001, according to new information from the Diamond Information Center.
De Beers, meanwhile, is eager to boost demand for diamonds, which are generally not branded and have lagged behind other luxury sectors in recent years. De Beers controls much of the world’s rough diamond supply through its sightholders, who sell directly to manufacturers. Lorenzo said De Beers LV is sourcing diamonds both from De Beers sightholders and from other sources and it is not getting diamonds directly from the parent group.
At the new firm, both companies are represented on an advisory board of eight people who act in a supervisory, nonexecutive role.
Lorenzo was hard-pressed to name a competitor for De Beers LV, but said it was eyeing models such as Tiffany and Cartier, both of which have established a global retail presence based on high-quality jewelry and accessories. “We would like to be as successful as Tiffany or Cartier in 10 years from now, although we will get there in a different way,” said Lorenzo, alluding to De Beers LV’s greater focus on diamond jewelry compared with the other companies.
The De Beers Group, based in London, has had difficulties operating in the U.S. For more than 50 years, the London-based company has not been able to operate directly in this country due to an antitrust investigation. Its only presence here is through its advertising firm, J. Walter Thompson, and through its promotional arm, the Diamond Information Center. Nonetheless, De Beers LV seems undeterred by that since its company operates independently of the larger De Beers organization.
“We don’t foresee any problems operating stores under the De Beers name,” Lorenzo said, adding he believes that the European Union’s clearance of the joint venture after a three-month investigation indicates there should be no legal problems in the U.S.
To make room for its new sibling, the De Beers Group has shifted its marketing strategy so that it no longer uses the De Beers name in its generic advertising and marketing materials. Instead, the group now focuses on the “A Diamond is Forever” campaign and slogan, according to a spokeswoman with the Diamond Information Center.
In another development, De Beers LV has purchased the Millennium Diamond from its parent company. The huge, 203-carat diamond, worth about $300 million, caused quite a stir last year when robbers tried to steal it, but were stopped by police. Now in a new location, De Beers LV plans to showcase the diamond, but declined to reveal its exact location.
“It’s now in a safe somewhere,” Lorenzo said. “It’s a symbol that we have the best diamonds in the world.”