How do I sell more diamonds, a diamond trader recently asked me. Why don't we see global promotion of diamond jewelry so that more diamonds are sold? How can diamonds compete with the latest iPhone, cute tablet or round-the-world trip? Does the younger generation, such as those born after 1980, regard diamond jewelry as a must-have item? Are we leaving the field open to manufacturers of lab-grown diamonds who can supply stones at lower prices while appealing to young people with claims of producing environmentally friendly goods not tainted by blood diamond issues and not dug out of the ground by allegedly wretched, oppressed and impoverished workers?
So, how do I sell more diamonds, the trader asked me again. How can the industry create demand for diamonds and pull demand through the pipeline? That issue is increasingly being asked by diamond industry organizations. Indeed, it is difficult to attend an industry conference anywhere in the world where the issue does not come up.
Generic marketing and promotion; such a boring title for such an important topic. As most industry players know, De Beers practically single-handedly paid for global generic promotion of diamonds at a cost of around $200 million annually for many decades. When the mining giant was mining/selling 80 percent and more of global supply, it was clearly in its interest to promote diamonds as widely as possible around the world. Indeed, the firm is credited with creating huge new markets in India, Japan and elsewhere.
As De Beers' share of global supply began to decline, however, the company's management increasingly questioned the wisdom and necessity of its large-scale investment in generic promotion of diamonds. Other large industry players did not want to share the cost but were happy to enjoy the benefits.
Consequently, De Beers came to the realization that other large firms in the diamond pipeline would not pay their share of the cost of adverts and promotional campaigns. As the firm has said on many occasions: the company, with about 36 percent of global supply, is no longer the industry's custodian. Of course, it is not just another diamond industry player, but it is no longer an overwhelming power. In that case, let's create our own brand and put our marketing spend into it, De Beers said. And that's what it did with the Forevermark brand. Some reports suggest it is spending as much as $20 million a year on advertising the brand.
And then, in 2015, came the launch of the Diamond Producers Association (DPA), of which De Beers is a member, along with Alrosa, Gem Diamonds, Dominion Diamond Corp, Petra Diamonds, Lucara Diamonds and Rio Tinto Diamonds.
The latest move in the direction of creating a generic body to promote diamonds – the World Diamond Mark Foundation – deserves support not only because it is critical to the global industry's future health but also because if it does not make headway, the issue of generic marketing will likely fall by the wayside for another half decade or so. By that time, the diamond jewelry industry may have fallen so far behind its competitors – and there are many of them since there is no shortage of products putting up a tough fight for consumer spending.
The DPA was launched in 2015 with a modest budget of just $6 million. In January came reports that its members are being asked to approve a huge boost in its annual budget to $60 million. That is likely to give it the type of firepower to make a dent in boosting demand for diamond jewelry. Given that its main market is the Millennials – born between 1980 and 2015 – the DPA badly needs the extra money. That’s because traditional advertising no longer works – certainly not with Millennials who appear to have an in-built rejection to anything conventional, including advertising.
Advertising has become hugely fragmented and therefore more expensive. Getting adverts in front of this new market requires a huge amount of ongoing research in the bid to slice and dice the market in order to find the most efficient way of reaching potential buyers.
As for whether the DPA will succeed in raising its budget to $60 million, this is still to be decided. It may be the case that not all of the miners will feel it fair that they each pay similar contributions. Why should De Beers or Alrosa, as the largest miners, pay far more in order to help Lucara, for example, may be one question raised. And looking forward to the future, how will the DPA develop? Will organizations in the countries that deal with diamonds be asked to contribute?
And if that is the case, will some countries be in favor because it is in their interest, such as India, for example, which has an estimated 1,000,000 workers involved in the diamond cutting and polishing and jewelry manufacturing sectors and annual gem and jewelry exports of around $20 billion. In that respect, other centers which once had large manufacturing industries and which are now little more than trading centers and do not have large diamond jewelry sectors – such as Israel and Belgium – may be less inclined to contribute.
Will large retailers want to put money into the project? The large chains are becoming ever more powerful and are happy to only advertise and promote their own products, while the smaller chains and, certainly, the mom-and-pop stores, do not have the spare cash to put into the project.
The truth is there are many reasons not to become involved. Money is tight and the advantages of marketing and advertising can often be difficult to prove. But not becoming involved and taking the approach of only being active where your own brand or sales area is concerned could be the path to ruin for the industry as a whole.
The World Diamond Mark has been founded by the WFDB to address the core issues of consumer desirability through generic marketing, consumer and media confidence in the integrity of diamonds, ongoing high quality educational programs and a commitment to ethical standards throughout the supply chain.
The World Diamond Mark’s (WDM) global objective is to ensure the health and future growth of the diamond and jewelry industry in the luxury market sector through the creation of consumer demand, via a network of accredited retailers and generic marketing campaigns.
The WDM project is based on three main points: there is education and training of the jewelry retail business community about diamonds through the Authorised Diamond Dealer concept of accredited retailers. Then there is confidence building with the consumer through the WDM’s Authorised Diamond Dealer retailer accreditation program. Finally, there is the issue of generic consumer marketing and promotional programs in core markets for diamonds and diamond jewelry, to improve diamond jewelry sales and market share, in collaboration with a leading consumer credit card company as global sponsor.
The foundation of the program is the Authorized Diamond Dealer concept. The international diamond business community, represented by the WFDB, will accredit jewelry retailers as Authorized Diamond Dealers. This aims to create greater and wider brand recognition of diamonds as a luxury product and to the increased visibility of diamonds in jewelry shops. And worldwide marketing campaigns aim to increase consumer confidence and enlarge the slice of diamonds in the luxury spending sector. Just recently, the WDM announced its latest ADD – the British jeweler F. Hinds.
Can the DPA initiative succeed to the next level or will it run into ‘political’ issues between diamond countries and organzations? Will the task of balancing the different political and economic interests be too tough? Will self-interest outweigh a more holistic approach? Are industry players enlightened enough to realize that only a global, all-encompassing, approach can take us all forward together?
By Albert Robinson for Rough&Polished