Although giant diamond company De Beers created a crown of 974 diamonds for the Queen’s Diamond Jubilee, it may top that celebration by polishing up its own jewelry. The company plans to open at least five new jewelry stores in China with joint venture partner Louis Vuitton. New CEO Philippe Mellier revealed De Beers’ plans for expansion during a speech last week at South Africa’s Gordon Institute of Business Science (the University of Pretoria’s business school in Johannesburg).
With diamond demand in the emerging economies of China and India increasing by 15% during the last five years, De Beers hopes to take advantage and expand its retail operations in these markets. Not only does it plan to open five stores for its diamond wares, it intends to refurbish existing facilities owned by the joint venture. De Beers and upscale retailer Louis Vuitton have a 10-year diamond jewelry partnership with 49 stores. China has been a priority for De Beers for some time; in 2011 it opened stores in Beijing, Tianjin, Dalian, and Hong Kong.
With sales of $7 billion per year, De Beers now holds 10% of the global diamond industry, worth about $70 billion a year. The company wants to grow in all segments of the industry but sees retail as a favorable route for growth. The diamond retail industry is worth $30 billion a year, and De Beers wants to grab more of that market share.
Growth in mining has been difficult for the company recently, and De Beers has already sold some of its South African mines to Petra Diamonds. Although some saw the divestments as a possible exit plan for mining in South Africa because of threats of nationalization, De Beers is considering a $2.1 billion investment to convert its open-pit Venetia mine into an underground mine to extend operations by 25 years. The mine produces about 40% of South Africa’s diamonds, making it the country’s largest diamond mine. De Beers has mining operations in Botswana, Canada, Namibia, and South Africa.