Has the De Beer diamond lost its sparkle

Since the 1930's when Sir Ernest Oppenheimer established the Central Selling Organisation, De Beers Consolidated Mines have controlled the selling and marketing of approximately 80% of the world's rough diamond production (Capon, 1998). However, in 1996, Australian company, Argyle, stunned the world by announcing that they would no longer market diamonds through De Beers C.S.O. Many economists predicted that Argyle wouldn't be able to compete against the mammoth De Beers. Yet in the year to December 31, Argyle recorded a profit of $142.5 million, an increase of 76% (Treadgold, 1999). De Beers is currently looking like losing the monopoly it has had on the diamond industry for almost seventy years.

A monopoly is an industry in which there is only one organisation that supplies a particular good, service or resource which has no other similar alternatives. Monopolies are created by barriers which restrict the entry of new organisations (McTaggart et al, 1999). In a perfect monopoly, the seller has total control over the quantity of go

Argyle's entry into the market has changed the way in which customers are supplied and is one of the chief reasons behind its successful entry into the diamond marketing industry. The dictatorial style of marketing used by De Beers where packets of diamonds are shown at 'sights' and the customer must take what is offered with no possible negotiation is being threatened by Argyle's approach to marketing (Treadgold, 1999). According to the managing director of Argyle, Gordon Gilchrist, their marketing method has "aligned the customer and the supplier" (Treadgold, 1999).