Tuesday, January 03, 2006

It seems that the Red Donkey is still looking for additional booty- now it had to give up its smoking habit. Although the parent company of Marlboro have bought all the advertising space of the Maranello crumpet, it seems that rumours are awash with potential sponsors to replace Vodafone in 2007

JANUARY 2, 2006

Ferrari and De Beers

Although there is no official word at all on the subject there is much speculation that the De Beers diamond company is to replace the Vodafone sponsorship in 2007. If this is confirmed it will mean that De Beers is investing at least $50m a year in Ferrari. The company, which was started in 1888 by Cecil John Rhodes, is a complicated one although it is still controlled by the Oppenheimer Family. In 1994 De Beers was charged by the United States Justice Department with antitrust violations for conspiring to fix prices for industrial diamonds.
This embarrassment (which was settled in 2004 with De Beers pleading guilty and paying a fine) led to changes in the business with Nicky Oppenheimer becoming chairman in 1998. This led to a split with its longtime partner Anglo American and a major rethink. The firm was delisted from the Johannesburg Stock Exchange and split into different businesses: including DTC, the rough diamond trading company, which sells around 40% of the world's diamonds. In addition De Beers set up a 50-50 joint venture with Louis Vuitton Moet Hennessy, each party investing $250m, to create an independently managed and operated retail chain using the De Beers brand to challenge customers such as Tiffany and Cartier. The first De Beers LV jewelry store opened in London in December 2002 and others have since followed in Japan, New York and Paris. The aim is for there to be 100 stores around the world selling De Beers-branded jewelry by 2012.
The retail business was only given the go-ahead by the European Union after the main De Beers company agreed not to give preferential treatment to De Beers LV which must buy its diamonds on the open market.
De Beers LV is still to create any serious profits but is planning to increase its marketing spend to promote sales.
We believe that De Beers LV will probably be one of several companies to replace Vodafone.
We continue to hear that another will be Telecom Italia broadband business Alice.

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