Global Luxury Diamond Sales Leader
Harry Winston Diamond Corporation Mines & Markets Rare Jewellery
Well-known for jewellery at the Oscars, the world's largest publicly traded diamond company sparkles in both precious gemstone mining & international retail stores.
According to global luxury diamond sales leader Harry Winston Corporation, diamond jewellery sales around the world rose 25% to about US$70 billion in 2006 from $55 billion in 2004.
Consumers in India and China are principal growth drivers for luxury diamond sales. Harry Winston’s chairman Robert Gannicott notes that India’s diamond consumption has gained 27% annually for the past 5 years. Not only do Indians have a long history of wearing expensive jewellery, an increasingly wealthy population is buying more precious gemstones. Meanwhile in China, an emerging middle class continues to develop a taste for expensive baubles, driving up diamond sales in China by 70% last year.
Harry Winston Diamond Corporation
To build on the world-renown Harry Winston brand name, the company once known as Aber Diamond changed its name to Harry Winston Diamond Corporation on November 19.
The company owns 40% of Diavik Diamond Mine in Canada’s Northwest Territories. This prolific property produces about 10 million carats of white diamonds annually, or 10% of the global supply of rough jewels. Harry Winston has first-priority bidding privileges should majority owner Rio Tinto decide to sell its 60% interest in Diavik.
The diamond enterprise first bought a majority interest in luxury retailer Harry Winston in spring 2004. By fall 2006, Aber owned 100% of the iconic diamond jewellery and watch retailer.
Founded in 1932, Harry Winston has established a long and storied history as the world’s most recognized fine jewellery brand. One success story traces back to the early Oscar award ceremonies, where Harry Winston supplied the jewellery that stars wore on the red carpet – thus using Hollywood’s film industry as a platform to promote high-end diamonds. Another milestone was in 1958, when Harry Winston donated India’s 45.5 carat Hope Diamond to the Smithsonian Institute where more people view the intense dark blue gemstone each year than the Mona Lisa at the Louvre.
Luxury Jeweller’s Competitive Advantages
In production since January 2003, Diavik represents the world’s last major diamond find. No discovery since then is expected to be of sufficient scale to affect the supply of global gemstones for at least another 10 years. At the same time that rough diamond supplies are constrained, demand for fine jewellery is growing rapidly.
Harry Winston is uniquely positioned to benefit from an anticipated rise in diamond prices due to limited supplies coupled with surging demand from a growing cohort of wealthy consumers. The company owns both ends of the luxury diamond supply chain, namely a diamond mine and luxury retailer. Both business units have gross margins higher than 50%.
Winston’s Diavik mine ships its rough jewels to third-party diamond polishers who earn much lower margins. These third parties process rough jewels from around the world, and then sell the finest polished gemstones to Winston retail stores.
Harry Winston has a strong influence over the business flow of mined diamonds to luxury retailers around the globe, because the company can:
- send advance pricing intelligence from its retail stores back to its Diavik mining operations, enabling the mine to demand more competitive prices for rough diamonds; and
- leverage its relationship as a leading front-end supplier of rough diamonds to competing diamond polishers which makes Harry Winston a top-priority client for polished diamonds at the luxury retail backend.
Starting with just 6 retail stores in 2004, Harry Winston will have tripled to 18 outlets by fiscal year-end. New sales operations have been or will soon be launched in Chicago, the Japanese City of Nagoya, Hong Kong and Beijing, China - just in time for the 2008 Olympics.
Sources for this Article
This article presents independent insights from data presented in the Reuters article ‘Harry Winston sees growth as diamond prices rise’ (Cameron French on November 19, 2007) and Investor Relations on harrywinston.com
