Fewer, but better outlets is the aim

As part of the shake-up, De Beers has cut its client list by about 20%, De Beers managing director Gary Ralfe told BBC World Service Radio.

Less than 100 firms made it onto the revised list for 2004. They were picked for their ability to devote energy to the marketing jewellery, he said.

He said the process had been "painful" because many of those being dropped were long-standing De Beers customers.

Family firms

All were family businesses "so we are dealing not with perhaps more dispassionate professional managers but with the owner-managers," he added.

Diamond polishers, cutters and retailers who are being dropped from De Beers' list are to get six months notice before supplies stop.

De Beers produces about 60% of the world's diamonds.

De Beers' managing director stressed that the new customer rankings had been drawn up in "intense" consultation with the European Union (EU).

The new Supplier of Choice system ranks diamond sellers, known as diamantaires, by criteria agreed with the EU.

The system enables De Beers to be sure it is choosing from the industry's top end "rather than the bottom quartile" when distributing its stock to sellers, said Mr Ralfe.

Targeting

De Beers is keeping quiet about the names of dropped clients, which it says are "confidential". They will get the chance to reapply in 2005.

The US market is the biggest for jewellery

"In many cases the clients that are coming off are doing so particularly because we do not have adequate diamonds available in the category in which they are experts," explained Mr Ralfe.

But he stressed the shake-up's main goal was to "devote more energy to marketing diamond jewellery".

De Beers had therefore picked firms "where we can see through directly to which retail point they're selling and under which sort of marketing programmes," said Mr Ralfe.

Its diamantaires must also agree not to handle 'conflict diamonds', a term for illegally traded diamonds whose sale is used to fund wars, often in Africa.

Last year it launched its own De Beers branded stores to sell jewellery direct to customers.

De Beers warned in February that the retail diamond jewellery industry faced tough year, though it said the market had held up "reasonably well" in 2002, despite a fall in global consumer optimism.

The US is the world's most important market for diamond jewellery, with sales concentrated in the winter months from Thanksgiving to St Valentine's Day.