Forecast: a glittering Christmas

Despite threats of recession, and with a little help from Posh'n'Becks, the UK diamond business is in sparkling form this winter. To celebrate, Darius Sanai is granted a rare glimpse inside De Beers, the jewel in the industry's crown

Anthony Oppenheimer puts down his glass of vintage claret, lets his fork rest beside some gratin dauphinois, and clears his throat. "Posh'n'Becks," he says, "have done us a lot of good. A world of good. There's been a cultural change in the UK over the past five years, and they are the embodiment of it." There is a murmur of agreement from his colleagues around the table.

You wouldn't expect someone like Mr Oppenheimer to be thanking the Beckhams for making his Christmas very happy indeed. The head of the UK operation of De Beers, he is an affable, amply built man who was born into a share of a fortune that is literally worth a couple of African countries – it is their diamond and mineral wealth that De Beers exploits. To hear Posh'n'Becks, symbols of transient fame and wealth, invoked in the private dining-room of one of the richest companies on the planet seems a little surreal.

"People's perceptions of what a diamond is, what it's for, and when they can wear it have changed dramatically in the UK," Oppenheimer continues. The historical view, he says, was that diamonds were for the very wealthy, for royalty and aristocracy. And now, "all of that is being flipped on its head. It's quite exciting."

Forget the recession, the war in Afghanistan, the stall in house prices, and worries about global economic collapse: the diamond industry, in the UK at least, is riding the crest of a wave this winter. At this month's opening party of the Royal Exchange, the new luxury shopping arcade in the City of London, one guest, perhaps in a generous mood after too many complimentary martinis, walked into Boodle & Dunthorne's new shop on a whim and purchased a £29,000 solitaire diamond ring, reportedly as a surprise Christmas present. Others are clearly following suit, as the latest UK diamond sales figures attest. And though December is a busy month, it is not a phenomenon confined solely to the festive season.

On the wider scale, it is the Bridget Joneses as much as the Beckhams who embody the transformation. More than 10 per cent of diamond sales in the UK now are "self-purchase" by (mainly) young, unmarried women looking to treat themselves to something more enduring than a bottle of Chardonnay. This is more than four times the figure of a decade ago, and they are spending more than they ever did.

"Women's confidence and spending-power has been transformed," says Oppenheimer. So has the time they have to make such purchase decisions: the average age of marriage for women has risen from 22 to 34 in the past 20 years, making it all the more compelling to buy oneself a ring instead of waiting a decade or more for that quavering, kneeling gesture.

The democratisation of diamonds has a second prong. According to last year's figures, there has been a sharp rise in the number of men wearing diamonds. "It was once in the more Mediterranean countries that diamonds were worn by men," says Oppenheimer. Now the likes of David Beckham, Guy Ritchie, and every gangsta rapper you care to mention are following this trend, along with tens of thousands of young guys snapping up bargains by up-and-coming designers and outfits like cooldiamonds.com, where small, subtle and (relatively) cheap diamonds set in rings, bracelets and other accessories are hip.

"There are a lot of interesting young designers in Britain and Europe working on making jewellery that looks like nothing seen before," says Steven Lussier, global head of marketing for the Diamond Information Centre, De Beers' marketing arm. Roland Mouret, Jasper Conran and Solange Azagury-Partridge – just taken on as the head of global design at the luxury jewellers Boucheron – have been at the forefront of the "diamond style" revolution. They are competing with international names that have created or enhanced their brands in recent years by playing with the diamond theme. Tiffany and Cartier designs cost many times more than the stones themselves. (Last week, Tiffany opened a new flagship store in central London.)

And, after a century of occupying a behind-the-scenes role as chief supplier, monopolist and controller, De Beers is moving into the retail side for the first time, in a £276m joint venture with the French luxury conglomerate LVMH. Their expectations are high; property sources say that the new retailer has secretly bought 1 Old Bond Street, one of the most prestigious shops in the country. It's a suitable address for a company founded by Ernest Oppenheimer, a German Jewish immigrant to South Africa, almost 100 years ago, and which established a near-monopoly situation in the diamond world under his son, the legendary Harry O.

But not everything is lustrous for the diamond industry or for De Beers. The fact that I am sitting in the private dining-room at the company's London office at all suggests a desire to court publicity, which the company has never been known for before. What, I ask Oppenheimer and Lussier, about the rise of synthetic diamonds? For years, these stones, formed by industrial tools, were obviously flawed and discoloured; but now many jewellers find themselves unable to distinguish between them, and an American company, the Gemesis Corporation, claims it will soon be making top-quality diamonds industrially. There is an rather uncomfortable silence and a little seat-shuffling. "Consumers don't want them, but the issue is, how is everyone in the distribution system going to have full confidence," says Oppenheimer, finally. "We can tell the difference, but not everyone can."

"If you were given a fake, how would you feel?" Lussier asks.

I'm not sure about the answer to this ("delighted" is an option), but it is an open secret in the industry that Nicky Oppenheimer, Anthony's cousin and the company's worldwide head, took the decision to go into retail after the refusal by some former Soviet states to join in the De Beers cartel meant that the company's supply near-monopoly ended. Now De Beers buys up and distributes only 60 per cent of the world's diamonds, compared with 80 per cent a decade ago. There is also the issue of "conflict diamonds", which have fuelled vicious fighting in Sierra Leone, Zaire and Angola for years; De Beers has now been persuaded by a group of charities to refuse to accept or distribute such stones, in an attempt to choke off the trade.

Earlier this year, the Oppenheimers took the massive step of buying up all publicly traded shares in De Beers for £12bn, and going private for more control; but the news was quickly tempered by figures showing the global economic slowdown had cut worldwide diamond sales by 5-7 per cent. De Beers made "only" $744m in the first six months of this year (down by $133m on the previous year). North and South America and continental Europe had suddenly deflated as markets; apart from the buoyant UK, the only rapidly expanding market for diamonds was China.

After lunch, I'm taken down to the diamond show-vault on the first floor (the real diamond vaults are out of bounds). Oppenheimer paws what is labelled as the Centenary Diamond, a cut stone the size of a tennis ball. It turns out to be a replica made of cubic zirconium; the original was sold a couple of years back to the Sultan of Brunei for around £100m. Even the replica is worth £100,000.

On a shelf is a tray full of rough (real) diamonds, some large, some just specks. I pick up one, the size of a small egg, and toss it from hand to hand until told, offhandedly, it is worth £1.5m. Suddenly, it becomes crystal-clear why, global recession or not, times have never been more interesting for the world's biggest family firm.