De Beers, the South African company which controls about 65 per cent of the world's rough diamonds market, yesterday outlined a strategic overhaul aimed at boosting consumer demand for its products to help drive profitability.
A spokesman for the group, which had sales of 7.6 billion pounds (NZ$25 billion) last year,said: "It's all about redefining our role from 'buyer of last resort' to supplier of choice."
The company has traditionally seen itself as the custodian of the diamond sector, buying up surplus stock to prevent prices from slipping. But the strategy, which will be announced at a clients' meeting in London next week, will focus on how the company can work with the industry as a whole to boost global demand for gems rather than rely on supply constraints to maintain prices.
The group has reportedly set aside a marketing budget of £300 million over the next few years.
Roger Chaplin, an analyst at Canaccord Capital, said: "The company has recognised that it can't keep adding to its stockpile forever."
At the end of 1998, the value of the diamonds bought in the market by De Beers stood at £3.33 billion.
Next week's presentation is also likely to include a change in the way De Beers manages its relationships with customers.
The group now sells uncut gems to a pool of about 120 "sightholders" who prepare the products for marketing. De Beers is likely to want to formalise its ties with big buyers and drop others to distance itself from the controversy over "blood diamonds" in conflict-torn areas of Africa.
Human rights groups such as Global Witness have threatened a consumer boycott of diamonds following claims that rebels from Sierra Leone to Angola have used them to help fund their activities.
Jack Jones, an analyst at CIBC World Markets, said the initiatives would have a positive effect on shareholder value.
"De Beers has been, from a shareholder point of view, a poor investment over the past 10 to 20 years," he said.
Several issues remained to be addressed. They included De Beers' crossholding in Anglo-American, the mining firm, and its long-term ban from trading in the US.
