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De Beers, Sotheby's Battle Tiffany as Demand for Diamonds Booms

Posted: Dec. 29th, 2005  |  By JustLuxe Team
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De Beers, Sotheby's Battle Tiffany as Demand for Diamonds Booms Dec. 30 (Bloomberg) -- Atsuko Tamura says she hopes her husband splurges on a 1.3 million yen ($11,000) De Beers flower- shaped ``Cocktail Fizz'' diamond ring for their 15th wedding anniversary. She already has a Tiffany & Co. necklace.

``The diamonds are just sprinkled all over,'' Tamura, 40, says as she steps out of the De Beers shop in Ginza, one of Tokyo's busiest and most glamorous shopping neighborhoods. ``De Beers is the most genuine of all.''

Competition is intensifying in the $70 billion diamond jewelry market as rising wealth in Asia increases demand for higher-priced pieces. De Beers, the world's largest supplier of diamonds, is winning customers from companies such as Tiffany and Cie. Financiere Richemont AG's Cartier four years after creating a retail venture with LVMH Moet Hennessy Louis Vuitton SA. Sotheby's Holdings Inc. began selling a line of gems this month.

``Size is an advantage in this business, as is brand recognition,'' says Scilla Huang Sun, who manages a $100 million luxury goods fund, including shares of Tiffany, Richemont, LVMH and Rome-based Bulgari SpA, for Clariden Bank in Zurich.

The shares of Tiffany, which was founded in 1837 and opened its flagship store on Fifth Avenue in Manhattan about a century later, have fallen 11 percent to $38.63 since the U.S. Christmas shopping season began Nov. 25.

The stock has risen 21 percent this year, compared with a 35 percent gain for Paris-based LVMH and 52 percent for Geneva- based Richemont, which also owns jeweler Van Cleef & Arpels and watchmakers IWC, Piaget and Jaeger LeCoultre.

Year-End Engagements
The shares of Anglo American Plc, which owns 45 percent of De Beers, have risen 60 percent to 1,973 pence in London. The Oppenheimer family owns 40 percent of Johannesburg-based De Beers, and the government of Botswana owns the rest.

About 25 percent of all diamond jewelry is sold during the year-end holiday season, says Sally Morrison, director of the Diamond Information Center, which is affiliated with De Beers.

Christmas Eve tops Valentine's Day as the most popular moment to pop the question, according to New York-based jeweler Jacob & Co., whose clients include Nascar racing champion Jeff Gordon. The average price of a diamond engagement ring reached a record $2,600 in the U.S. last year.
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