According to the press release issued by De Beers on the occasion of the annual Diamond Trading Company (DTC) Sightholder reception held in London last Tuesday, the gathering reflected on a strong 2010 that exceeded expectations, while preparing for further growth opportunities in 2011. The reception was hosted by Nicky Oppenheimer, Chairman of De Beers Group, and Varda Shine, CEO of the DTC.
In his welcome address at the annual Diamond Trading Company (DTC) Sightholder reception, Mr. Oppenheimer congratulated Sightholders and the DTC for their successes in 2010, commenting that “the entire industry should be both proud and encouraged by the resilience of diamonds during the past few years and especially in 2010”.
Mr. Oppenheimer noted that throughout 2010 consumers proved that the desire for diamonds as the ultimate gift of love is still strong and emphasised that, “now is the time to build on the recovery by making the most of the opportunities emerging across the industry”.
In her turn, Varda Shine addressing to the DTC Sightholder Cocktail Party, said:
Ladies and gentlemen, as ever it’s great to see you all here for our annual January cocktails. I always look forward to speaking at these events because with them taking place at the start of the year, there is the feeling of a new beginning and the atmosphere is alive with possibility. The whole of 2011 is all still to unfold and there is excitement at what opportunities may yet arise – although before I go any further I think it’s worth reminding us all of Mark Twain’s advice: January is one of the peculiarly dangerous months in which to speculate – the others are February, March, April, May, June, July, August, September, October, November and December.
The reason that I highlight the sense of anticipation at what is still to come and the attendant need for an element of prudence is that, more than ever before, we are living in an uncertain world. This is of course true of the global economy as a whole but also of the diamond industry. At De Beers we have seen several changes in recent times and there are more to come. We have announced updates to our distribution approach and before long we will have a new CEO at the head of the business. Both of these have meant and could continue to mean considerable change within our organisation and we have needed to embrace this to ensure that we prospered in this environment.
These changes will of course also affect all of you, as will the Sightholder selection process later this year. It is undeniable that this lack of certainty can have an unsettling effect. It is worth remembering, however, that in uncertain times there is always opportunity if we can prepare ourselves well to be flexible and agile and to focus on business strategies that will survive the uncertainty. As Barbara Jordan, one of the leaders of the US civil rights movement noted, “For all of its uncertainty, we cannot flee the future”. Instead of disregarding the changes and unpredictability surrounding us, we can benefit by embracing it.
From my own perspective, I think that the things that have benefitted us most at De Beers in dealing with unpredictable times have been to focus on things within our control. We have therefore looked closely at our strategy. Understanding the world around us has been crucial in this process and so we have brought as much information into our decision making approach as possible.
Alongside this, scenario planning has proved its worth as a tool. It is a very useful technique even in normal times, but when you find your expectations undermined by uncertainty, it becomes invaluable.
Naturally you will all also be considering your strategic direction and financial situation as we head into the Sightholder selection process. This room is full of highly skilled and successful diamantaires and so it will be informative to see which businesses have best been able to differentiate their offerings and establish a strong strategy for sustained success.
I am also excited to see how well all of the players within the industry are set up to compete with the other products which luxury consumers will be tempted by. Winning the hearts and minds of the iPod and iPad generation could see us grow the value of the diamond industry to levels never seen before.
But as Mark Twain suggested, now is not the time for speculation. As always, Sightholder selection decisions will be based on strong business fundamentals and an ability to add value to the increasingly rare supply of diamonds we sell. Financial recklessness will not win any prizes, nor will the development of showy initiatives that have no real substance; my feeling is therefore that our watchword has to remain ‘responsibility’.
For me, this involves making the right decisions to put our businesses on the strongest footing for the long term. This means exploring options in the emerging markets, while continuing to develop opportunities in more mature markets; it means taking a realistic and demand-driven approach to buying and selling decisions; it means working with financiers to ensure good financial health and standing; and of course it means focusing efforts on how to make one’s offering as attractive and unique as possible to help ensure sustainable businesses.
Happily, in spite of the unpredictable times, we start the year in a good place thanks to the continuation of recovery in the diamond market that we saw in 2010. We should all take some credit for the hard work and commitment we showed during the year, but we cannot ignore that the industry was assisted greatly by the restocking that took place throughout the year as the world climbed out of recession. In 2011 we are likely to see much less benefit from restocking and we face an uncertain global economy. The US appears to be on the mend but consumers are still cautious; meanwhile in the Eurozone, the PIGS economies seem to be living up to the acronym a little too accurately for my taste.
And it is because of this unpredictable environment that we need to focus myopically on the business approaches required to succeed. As recognised by the mathematician John Allen Paulos, who also appreciated the importance and value of embracing change and living without knowing what might happen next:
“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.”
Ladies and gentlemen, the physical nature of the product we work with is characterised by endurance, immutability and a lack of change. It is now down to us to marry these qualities of diamonds with our own flexibility, agility and responsiveness. A Diamond Is Forever but a diamond business is only as strong as its strategy. Let’s make sure we don’t stand still in this fast changing world.
Thank you very much.
Rough&Polished
