I only state the bleeding obvious because there are calls for a new, $US1 billion global marketing campaign promoting natural diamonds, and especially engagement rings.
Martin Rapaport is on the record as saying that current generic marketing efforts need to improve and miners, supported by brands, must step up to the plate to reach consumers.
Few would disagree with such a concept – but where do the funds come from?
De Beers supported the industry for decades with its worldwide generic advertising campaigns. Indeed, it could be argued De Beers created the diamond industry, as we know it today, when it began using the slogan, ‘A diamond is forever’.
It was so powerful and successful that in 1999 the iconic US magazine AdAge awarded it the title of best marketing slogan of the 20th Century. So, 20 years later, and in a radically different market, who and where would the money come from to create an equally successful worldwide marketing campaign?
One suggestion is from small contributions from all diamond exports, including: a 0.05 per cent levy on all diamond exports (rough and polished) from non-mining countries; 0.5 per cent fee on all polished exports and 1 per cent on rough exports from mining countries; and a 2 per cent levy on all exports by the diamond-mining companies. It has been estimated that this would garner around $US500,000 annually.
The Diamond Producers Association (DPA) has the mission to ‘protect and promote the integrity and reputation of diamonds’. Its marketing budget increased from $US40 million in 2017 to $US70 million last year.
Meanwhile, according to De Beers, the international diamond jewellery market was valued at more than $US80 billion in 2017.
If all of these figures are reasonably accurate, it means that currently, around 1 per cent of consumer sales revenue is being spent on marketing to consumers by the DPA.
A 1 per cent marketing budget is clearly not enough, especially in the digital age where the internet has created a world of small tribes, rather than one large, more easily reached ‘homogeneous’ market.
But back to the problem – or problems – which need to be tackled. What are they?
It’s all too easy to blame the natural diamond malaise on the rise of synthetic stones. Yes, the man-made diamond suppliers have a loud voice in the consumer media, but I wonder whether the ‘noise’ equates to sales.
I think the narrative of synthetic stones hampering and harming the natural market is simply a convenient excuse.
There are other factors in play; people have been getting married later in life. The ‘arrival’ of man-made stones has also coincided with a new generation, Millennials, reaching the age of marriage. It is often said they are more focused on sustainability and see mining as unappealing and even morally outrageous.
Other theories suggest younger people don’t view diamonds as a display of love, as their parents once did. Some also suggest that Millennials have more difficulty meeting everyday needs, when compared to their parents, because of the higher cost of living; they prefer to save money for other life goals.
Another change is an increasing trend for colour diamonds and gemstones in engagement rings.
On the industry side, the malaise has also been caused, or at least not helped, by the US-China trade war. That’s inarguable – but the sales decline has in fact been in progress for some time. There has also been an over- supply of rough, while some suggest that poor quality melees and cheap stones have contributed to consumes’ loss of confidence.
There’s no doubt a concerted marketing effort can address some of these problems. But another catchy slogan won’t fix the underlying structural issues. For that, everyone in the supply chain will have to do more than throw money at the different problem(s); they will need to show vision and leadership.