The real deal
“Authenticity” is going year.
Not that the message of love and happiness in “A diamond is forever” is going to be abandoned.
That slogan, which has served De Beers well for 66 years, is the intellectual property of its Forevermark brand.
Market research undertaken by the recently formed seven-member Diamond Producers Association (DPA) shows that the millennium generation values brands and uses the words “real” and “authentic” in talking about relationships. So the DPA’s campaign, launched in June, will focus on the slogan “Real is rare. Real is a diamond”.
The formation of the DPA shows global generic diamond marketing, which relied on De Beers for decades when it dominated the market, is now being shared among a broader group of producers. Individual producers including De Beers will continue to promote their own brands.
Market research has also shown that consumers have confidence in brands. Bad publicity in recent years about “blood diamonds” financing armed conflicts and the difficulty of telling synthetics from real diamonds makes it important that buyers should know they are getting the real thing, ethically sourced.
Since launching its Forevermark brand in 2008, De Beers has showcased some of its finest pieces every year on leading actresses at red-carpet events. In the past year its diamonds have adorned Olivia Munn and Margot Robbie at the Oscars, Kate Hudson and Rachel McAdams at the Golden Globes, Saoirse Ronan at the Screen Actors Guild Awards and Adele at the Grammys.
De Beers head of media relations Lynette Gould says the group will spend about US$110m on marketing this year, including at Forevermark, its contribution to the DPA and at De Beers Diamond Jewellers, the retail outlets.
In China, De Beers to sell diamonds this has altered its marketing strategy slightly to encourage more diamond gifts giving than “self-purchasing”. From 2001 onwards its target market in Asia was women entering the workforce, with a “never underestimate a woman wearing a diamond” campaign.
Rio Tinto recently announced a new marketing campaign in China for diamonds from its Argyle mine in Australia. It said the message would be to inspire confidence that each “Australian diamond” bought was “natural, authentic and originates from the Argyle diamond mine”.
“Increasingly the value of a diamond is tied to where and how the diamond was mined, how it was cut and polished and the process of bringing it to sale,” says Bruno Sané, Rio Tinto Diamonds GM marketing. “This is a very reasonable expectation that is steadily reshaping the diamond industry for the better.”
The last De Beers Insight Report showed global spending on diamond jewellery advertising dropped to 23% of total luxury goods advertising in 2014 from pre-2008 crisis levels of about 30%. Advertising spend by jewellers tends to dip when the market slows, which is counterproductive.
The global diamond sector has been hit by difficulties in the past few years. Jewellery retail demand in the US, the biggest market, weakened after 2008 but has recovered, while growth in China, which averaged 18% between 2009 and 2014, has slowed as the Chinese economy has lost momentum.
At the same time as consumers have economised, the pipeline between miners and retailers, which includes cutters, polishers and wholesalers, was squeezed by lack of finance. Producers did not respond quickly enough with cutbacks and were blamed for weakening prices.
Recovery is still erratic. The Rapaport diamond index, which tracks polished diamond prices, shows diamond prices have been edging downwards between April and July, after a firmer start to the year. In the first seven months of 2016, the index for one-carat diamonds was 4.7% lower than a year ago. Rapaport says dealers are concerned about sluggish polished demand, rising inventory levels and narrowing profit margins in the seasonally weak second half of the year.
It adds that to ensure long-term demand, the industry must significantly increase its marketing activity ahead of the fourthquarter holiday season.
Lucara Diamonds recently withdrew its 1,109 ct Lesedi La Rona diamond from a Sotheby’s auction because it did not meet its reserve price. But that failure may have been less because of market factors and more to do with industry resistance to Lucara’s attempt to break out of traditional selling channels.
De Beers’ latest interim results were mixed. It sold 17.2m ct in the six months to June at an average $177/ct compared with 13.3m ct sold in the same period last year at $206/ct. It said in the first half the US market showed growth and China was stable. Japan grew modestly in local currency terms but sales in India were affected by a jewellers’ strike.