Abstract

South Africa-based De Beers has enjoyed an unchallenged monopoly in the global diamonds business for close to 100 years. Until a few years ago, De Beers determined who could buy uncut stones, in what quantities and quality. De Beers also decided which cutting centres would be used. But its share of the international rough-diamond market, 80% five years ago, has now reduced to 45%. Meanwhile, Lev Leviev (Leviev), a former De Beers sightholder (one of the few exclusive direct buyers of De Beers rough diamonds) has emerged as the world’s largest cutter and polisher of precious gems. Frustrated by De Beers’ high-handed treatment of buyers, Leviev has decided to operate on his own. Leviev has begun dealing directly with diamond-producing governments, thus undermining De Beers’ all-important relationship with sightholders. Leviev is the diamond industry’s first dealer to operate across the value chain - from mining and cutting to polishing and retailing. The case discusses the circumstances leading to Lev Leviev’s rise and the consequent decline in De Beers’ monopolistic power. The case also explains how De Beers is repositioning itself to regain its lost glory.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Lev Leviev, De Beers, Diamond industry, Sightholder, South African company, Russia, Angola, Cecil Rhodes, Branding diamonds, Forevermark, Tashkent, Namibia, Vivid Collection, South African mining giant, LVMH, Moet Hennessy-Louis Vuitton