News from All Diamond

Follow the latest insights shared by All Diamond in memory of Ehud Arye Laniado and access all articles written by Ehud Arye Laniado

Possible Solution for Fragmentation – Consolidation

Ehud explored possible methods of addressing the issue of fragmentation, drawing in part on lessons from other industries.  

First among them was simply consolidation, whether natural or through mergers and acquisitions.

In the diamond industry's midstream - the diamond polishing and wholesale sector of the pipeline - Ehud believed there were too many traders and polishers between miners and retailers.

"There are very many players competing for a small pie" 

Without a reduction in the number of players, competition is so high it erodes the ability to work profitably and as a result, businesses close. "A business where your revenue is declining, and your expenses are either fixed or rising, is one where profitability erodes to nearly nothing – and then beyond nothing. That is why there are so many businesses closing or going under in the midstream of the diamond pipeline. This is an unsustainable business model." 

Another form of consolidation which Ehud sought to highlight was vertical integration.

"Jewelry retailers have increasingly tried to get closer to the diamond source in order to get more security on the supply of precious gems and to provide consumers with more transparency on traceability. Various routes to get up the value chain have been explored."

"Both upstream and downstream companies have recognized the benefits of working with established midstream players, including taking advantage of their manufacturing know-how… It would seem to make more sense, for instance, for a rough producer to work with midstream clients like those who integrated with jewelry retailers that can handle larger volumes, are better financed and that can get better margins as a result of being closer to its consumers."

Ehud shared various successful examples of vertical integration, from Tiffany to Chow Tai Fook and Signet Jewelers. This follows, in part, successful models in other industries, whether for example LVMH's stake in one of the world's top cashmere makers or investments by Bulgari, Cartier and other luxury watch brands in parts providers.

Ehud shared further practical advise on how to make vertical integration work, with an understanding that proper execution is key and that there is no one-size-fits-all solution.

Related articles:

Is the Midstream Working for a Wage?

A Shrinking Industry

Join the Train or You Might Miss it

Stay Informed

When you subscribe to the blog, we will send you an e-mail when there are new updates on the site so you wouldn't miss them.

Possible Solution for Fragmentation – Alliances
Improve the Diamond Midstream



The diamond industry pipeline starts with mining, then rough trading, manufacturing, jewelry setting and finally retailing. It may look like a short and efficient journey, however it is anything but t...
It might surprise people to know that there are only around 50 active diamond mines in the world. These mines never seem to be found on the outskirts of major cities. Instead, they are usually located...
We have seen how the industry has undergone significant changes over the past 20 years and how smaller companies have emerged to play an increasingly important role in supplying rough diamonds to the ...
When I discussed fancy brown diamonds in last week’s article, I stated that unlike other fancy color shades that are extremely rare in nature, brown diamonds are plentiful and therefore command much l...
A major diamond rush, located in Lüderitz (in the former German colony of Deutsch-Südwestafrika - German South West Africa) is among Namibia’s most famous diamond sites. In 1907, the Germen railroad w...
When most people hear about diamond mining, they think of South Africa, where diamonds were discovered in 1866 in the Kimberley region. A 15-year-old boy discovered the now-famous 21.25-carat Eureka D...
In the last two decades, much has been said about an impending demand vs. supply imbalance in the diamond industry. Huge mines discovered over the past 40 years are nearly mined out, some argue, and n...
Copyright © 2022 - ALL DIAMOND - In Memory of Ehud Arye Laniado - All Rights Reserved.   | Privacy Policy | Terms of Use