“Russian diamonds are blood diamonds”. This dramatic statement was made at the end of January by Belgian Prime Minister Alexander De Croo. At the same time, De Croo announced the creation of some global “tamper-proof” system to track the circulation of natural rough diamonds which would supposedly prevent Russian ‘blood’ diamonds from entering international markets1. De Croo’s position can be regarded as making overtures to a number of radical EU members (primarily Poland and the Baltic countries) that demand an immediate ban on the trade in Russian rough diamonds in Europe and accuse Belgium of trying to torpedo such sanctions. Belgium, in its turn, is not at all eager to impose sanction on Russian diamonds reasonably thinking that in this case they will easily move from Antwerp to Middle East and Asian markets.
From a tactical standpoint, De Croo seems to have taken the right and timely step. Indeed, establishing a system of global control over the movement of natural rough diamonds will take a long time, two or three years for sure. The probability of normalizing Russian-Ukrainian relations over this period is quite high, and by the time the ‘De Croo tamper-proof system’ is launched, Russian rough diamonds will most likely regain the required legitimacy. Until then, it will be ‘business as usual,’ with the hardliners asked not worry because “we are working on this subject”. The diamond market has a wealth of experience in circumventing and overcoming all kinds of sanctions, and De Croo’s maneuver fits into this glorious tradition. But there is one problem.
It was not a journalist, analyst, cultural figure or any ‘alternatively’ gifted Scandinavian girl who stuck the ‘blood diamond’ label on Russian rough diamonds. This was done by the Prime Minister of the country that plays the first fiddle in the European diamond business. It is a weighty opinion to be reckoned with. But Russian rough diamonds account for one third of all natural rough diamonds in the world, meaning that every third natural diamond is now labeled as "blood"! Really, this has made an outstanding contribution to the generic marketing of natural polished diamonds, a considerable development of the general idea promoted by the Natural Diamond Council (NDC) - “Only Natural Diamonds!”
What an impressive chronology can be traced from this perspective:
- Only Natural Diamonds contributed to the outbreak of the Boer War (1899-1902) that resulted in the genocide against the Boer population when more women and children died in the extermination camps than combatants;
- Only Natural Diamonds were mined by prisoners in South Africa and the USSR;
- Only Natural Diamonds allowed Nazi Germany to develop advanced military technologies;
- Only Natural Diamonds were supplied to Stalin in the 1950s bypassing the requirements of the COCOM (Coordinating Committee for Multilateral Export Controls);
- Only Natural Diamonds were supplied to the market circumventing all sanctions imposed by the UN on the apartheid regime;
- Only Natural Diamonds were one of the drivers of “Program 7” (underground nuclear explosions) the consequences of which will be dealt with by more than one generation;
- Only Natural Diamonds have been and remain the cause of wars, environmental disasters and inhuman exploitation of the population in many African countries;
- and now comes the cherry on top of this delicious cake - every third Natural Diamond is a Russian ‘blood’ diamond!
It should be noted that the above statements are not separate “facts” but knowledge domains that can be used to churn out hundreds and thousands of stories easily adaptable to any target audience of the social media. This content can be used to give the ‘Only Natural Diamonds’ a negative value proposition, and these stones will not make people want to buy them but rather excite disgust. Consumers will ‘run away’. Where? Of course, they will switch to Lab Grown Diamonds (LGD) since these stones have nothing to do with the above awful things.
Does the history have examples of such ‘negative marketing’? Yes, the natural fur market was hit in a similar way in the 1980s when - through the efforts of animal rights activists - a powerful and effective anti-advertising campaign was unleashed, due to which the fur market lost up to 30% of its capitalization. By a ‘strange’ coincidence, the active campaigns held by the animal rights activists were preceded by the launching of mass production of new cheap and functional synthetic materials for clothing.
The assertions that the production of synthetic gems did not affect the markets for natural coloured jewellery stones are incorrect. These markets are too small, and it was simply pointless to carry out advertising (or anti-advertising) campaigns comparable in size to such markets in terms of value. It was not worth the effort. However, the polished diamond market promises a more impressive award. Of course, the manufacturing of synthetic jewelry diamonds is a competitive market and serves as a deterrent in generic marketing (anti-marketing). On the other hand, the cost of such campaigns, given their volume and quality, their attractiveness, as well as their potential content can be very low, while their effectiveness can be quite significant.
Today’s officials in the diamond market often forget that they stand on the shoulders of giants. Rhodes, Barnato, Beit, the older Oppenheimers created the information environment and image, without which a polished diamond is just a piece of crystalline carbon. It is this image that is a real commodity; without it, a polished diamond has no value. It is an erroneous statement that natural and synthetic polished diamonds compete in price only (or mainly). Marketing models are the focus of this competition. Unfortunately, the NDC’s model, which is basically a pale shadow of De Beers’ marketing approach used more than half a century ago, is not able to resist the cannibalization of the natural polished diamond market by synthetic diamonds, which is already clearly seen. The cannibalization rate and extent could be a subject for discussions, but the situation when a third of the natural diamond market is declared in one swoop as ‘blood’ gives Lab Grown Diamonds a very rare chance to solve the problem radically and almost in no time. Well, sooner or later, the scene of action occupied by giants and heroes is always visited by Herostratus.
Sergei Goryainov, Rough&Polished
1 Russian diamonds lose their sparkle in Europe. Belgian PM De Croo wants the world to hunt down and stop trade in Russian «blood diamonds». https://www.politico.eu/article/russia-diamond-europe-import-trade-sanctions-ukraine/
