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Cultivating demand for natural diamonds

23 november 2020

Image credit: CIBJO

excl_23112020_xx.pngCIBJO, the international jewellery confederation, hosted a webinar last month on cultivating demand for natural diamonds.

CIBJO had been holding a series of webinars on the impact of the COVID-19 pandemic.

The webinar examined ways to cultivate demand for the natural stones and looked at the history of diamond marketing, among other things.

Asked to qualify the differences between diamond category marketing and diamond jewellery brand marketing, Natural Diamond Council (NDC) chief executive David Kellie said the difference is that the natural diamond industry is unusual.

“Most industries are dominated in their entirety by a handful of top brands and those top brands dominate in terms of their marketing and their positioning, et cetera,” he said.

“We have an unusual industry; we have a handful of brands that are well known…considerable marketing investments behind them.”

“We then have a number of less well-known brands, small-end scale, but have great brand equity, great positioning, do great work and then you have a third category, which is generic jewellery, which is sizeable but doesn't receive any marketing and communication…”

He said the best way he can relate to this is to think as individuals, how many products do we buy over $500 or maybe if not over $100 that are generic or don't have any brand or some branding, et cetera.

Kellie further noted that consumers buy into things because of brand equity although they don't like to admit it.

“For those of you involved in research, consumer research specifically, the consumer doesn't like to believe that they are being led by marketing and brand communication, but in practice they are,” he said.

“All of our behaviours are defined by that. So to me, generic diamond category marketing is how do we build the industry and the equity in diamonds and diamond jewellery, specifically in total?

“Within that, all of the brands, however, they position themselves, brands, retailers, individually position themselves within that category…a lot of the equity that is built around diamond jewellery and diamonds were built by De Beers and their generic advertising campaigns over many decades. So that's how I look at this.”

Forevermark chairperson and De Beers executive vice-president, consumer and brands Stephen Lussier also noted that the structure of the natural diamond industry is quite different in that most industries are entirely brand-driven or brand-led.

“We are an industry where brands are growing in strength and taking a greater market share, but not we are not like these other industries,” he said.

“I think the core of this is that if you step back for a moment and think about diamonds within the world of luxury goods, diamonds themselves - I think this is attributable to decades of generic or what I would call category advertising - but the diamond itself acts in its way as a brand.”

He, however, said that the problem is that it doesn't have all aspects of a brand, which one needs, around things like driving differentiation and margins.

“Think [of] diamond as a brand within the world of luxury goods, the diamond itself speaks in a way that differentiates itself from all other luxury goods,” said Lussier.

“Historically at the core of that is the ability of a diamond to stand in society as the ultimate symbol of commitment, appreciation and love in a way that nothing else in the luxury goods sector can give.

“It has its unique selling proposition if you think about it in that way relative to its competitors…, and that makes the diamond a very different animal than other luxury goods, it meets different needs and most importantly it precedes by both the giver and the receiver and anyone who sees that to represent those needs and that's classic.”

Emergence of diamond advertising

Asked to provide a brief history of diamond advertising and category marketing, Lussier said if there were one or two elements of inspiration in that historical mark, the first belongs to Harry Oppenheimer who is the son of the then chairman Sir Ernest Oppenheimer of De Beers.

“He had an inspiration that was way before his time…,” he said.

“Harry Oppenheimer had this vision that unlike all the other products within the greater Anglo American and De Beers groups mining commodities they could only control the supply curve. Harry Oppenheimer had this vision that diamonds were different from all the other things that Anglo American and De Beers were involved in terms of mining.

“What made diamonds differently was that they were an end product and not meant you could influence the demand curve.”

Lussier said De Beers’ market share at the time was so great that all one had to do was impact the end demand curve and revenues would in one way or the other flow back through the whole channel of stakeholders back to De Beers.

“So Harry had this vision of creating a diamond brand but the brand was the product diamond,” he said.

“So it was his inspiration that took him off in 1937 to America where he met NW Ayer and the rest in many ways is history.

“A decade later, the famous line – ‘A Diamond is Forever,’ was written by NW Ayer copywriter named Mary Frances Gerety one of the early women pioneers in advertising and that line summed up what would be for decades was the promise of a diamond.”

Lussier said the promise of eternal love, the promise of eternal elegance, fashion not in, not out, the promise of enduring value and eternal value for diamonds and that basic core idea was started in America, started with the engagement ring, which was built up from a small tradition to marketised behaviour across America and then taken around the world to Japan, China, India, Europe through the decades of different De Beers marketing operations.

“But again at its core was a simple idea: make the diamond stand for something, which came from its history because the first …ring was given in the 15th century came from its history of which could differentiate a diamond from all the gemstones and all the luxury products,” he said.

“Harry Oppenheimer was a real visionary and often doesn't get the credit that I think he deserves for being the founder of modern luxury goods marketing.”

History of Natural Diamond Council and its importance to De Beers

The NDC, formerly Diamond Producers Association (DPA) was started five years ago, and it was set up by seven founding members to invest in the advertising, communication and the rebuilding of diamonds and the values of diamonds as a category.

“We rebranded ourselves this year, when I came in I had a discussion with our board of directors and with our teams and said look there is a different way to look at this and so we rebranded ourselves, new identity under NDC, new platforms, etcetera,” said Kellie.

“So it's a very recent history by any stretch of the imagination in this industry and when you look at what Stephen was saying in terms of equity and values that were built, that took decades to build for De Beers and it was so strong…I think we can do great things, we are still in our infancy and we are looking to grow rapidly and support everyone in this industry.”

Lussier said if there is no consumer desire and consumer demand for natural diamonds then the industry will fight over a shrinking pie.

“That's a brutal game, so we know that value in our industry comes from what the consumer perceives in the products that they buy,” he said.

“Having the consumer demand growth is crucial, I would argue of course to producers, which is why De Beers and other seven founding members were so keen to establish what is now the NDC, that I would argue to all of us in the chain, we all benefit from growing consumer demand and I think it's a lot more complicated to grow consumer demand than it was 20 years ago when De Beers category marketing largely on its own could create that desire and growth…”

Evolution of diamond jewellery sales

Chow Tai Fook North America and Hearts On Fire chief executive Caryl Capeci said it is funny that in some ways it is similar and then in another way very different.

“So I think Stephen is right in that it starts with a basic need, they have to desire piece and then desire the brand, desire the category for all the reasons we have always said like lasting value from the earth, and emotional symbolism of diamonds,” she said.

“But then you have to connect that to a piece that they want. It is one thing to want diamonds and its another thing to campaign to go get them or to go to the store and buy them and the acceleration of that movement from 'I want it' to 'I am going to buy it this year for $3000 rather than that handbag or that other item that costs $3000', that is the difference.”

She said the category is the same, is still two buckets, it's the bridal category which is critically important to get the young women to want a diamond engagement ring that is natural that is not lab-grown or a pearl, gemstone or another material.

“So that's one category that we have to constantly feed and that is one of the biggest jobs that NDC can help with because that is an area where it starts young, it is all through new platforms and then [other] categories, either older, married women who are constantly building their (inaudible) of diamond jewellery…,” said Capeci.

“In terms of how different, technology plays an enormous role, in the research, in inspiring desire…and all the ways you can buy and be exposed to the other pieces of diamond jewellery that don't look like the cases that you might go to.”

She said the biggest change for the younger people is that they don't walk into jewellery stores, the way 25-year olds did 20 years ago.

“To get them to cross the threshold of that retail store is an enormous undertaking so all the work that is done online and through all the platforms that we have at our disposal have to create a desire have to get them to want to see something or buy it some other way and have to take them like 85% along the way…,” said Capeci

Marketing diamond industry (or lack thereof)

Edahn Golan, owner of Edahn Golan Diamond Research and Data said as soon the diamonds are forever as a campaign was killed in 2008-2009, there has been a continuous drop in demand for diamond jewellery.

“It was very obvious in Japan where we saw growth and then a year later it started to disappear,” he said.

“In the United States, it took longer [to drop] stating that as a campaign it was very successful…Diamond jewellery or diamond engagement rings were trending down since 2004…but what we are seeing is that people are still getting married, still interested in engagement rings even if they are not officially getting married…”

He said the big question is, ‘how come people are not looking for diamond engagement rings?’ “One answer is, of course, is that this reflects the end of the ‘Diamonds are forever’ campaign and another one is that there is a shift to other items because the rubies, be it other semi-precious gems in anyways I think the American consumers, in particular, shifted from 'I want the same but better toI want the same but different',” said Golan.

“So the same but better is 'my neighbour has a BMW I will also have a BMW but a newer model or a better model’… ‘I also want an engagement ring but not necessarily the traditional ones…'

The NDC chief executive said the connection between diamonds and jewellery has become diluted over a period of time due to lack of communication to the consumer in keeping diamonds relevant at the forefront of culture.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished