When Frances Gerety of the NW Ayer advertising agency coined the phrase “A Diamond is Forever” in 1947, her challenge was to persuade American men to buy diamond engagement rings. She also helped her client De Beers, the mining group, in its relationship with Tiffany & Co, the jewelry retailer.
De Beers controlled the diamond industry through a cartel that finally broke down in the mid-2000s. Tiffany was founded by Charles Lewis Tiffany in 1837 and invented the modern engagement ring, with a jewel lifted off the band, in 1886. Theirs was a marketing match made in heaven.
If the luxury group LVMH succeeds with its $14.5bn unsolicited bid for Tiffany, the New York jeweler will soon be in a new partnership. LVMH wants to reinforce its $5.2bn acquisition of the Italian group Bulgari in 2011 by venturing further into the “hard luxury” business of jewelry and watches.
It seems an eccentric moment to double down on jewelry. De Beers is suffering a dip in sales of rough diamonds: too many mines are producing too many stones and prices are falling, exacerbated by US-China trade tensions and riots in Hong Kong, a luxury retailing hub. Petra Diamonds, a London-listed miner, reported a full-year loss of $258m in September.
LVMH is presumably hoping for a cyclical rebound as mining capacity is reduced and Chinese buyers return. Even if Tiffany lacks the ultra-high-net-worth cachet of Bulgari or Van Cleef & Arpels, the jeweler owned by Richemont, it has a global brand. The 1961 film of Truman Capote’s novella Breakfast at Tiffany’s, starring Audrey Hepburn, lent it a shimmering romance.
Read more about the LVMH bid for Tiffany’s on the Financial Times website HERE