Diamond Firms Increase Sales
New Diamond Organization Wants to Help Diamond Firms Increase Their Sales
One of the most exciting developments for the global diamond and jewelry industry over the past year is the establishment of the Diamond Producers Association (DPA). The body, whose founding members are ALROSA, De Beers, Rio Tinto Diamonds, Dominion Diamond Corporation, Lucara Diamond Corporation, Petra Diamonds Ltd and Gem Diamonds Ltd, aim to boost consumer confidence in, and demand for, diamonds and diamond jewelry.
By creating demand among consumers for diamond jewelry, they will create more demand for polished diamonds across the world. As a result, there will be a ripple effect throughout the industry: bigger demand for diamond jewels will mean bigger sales of polished stones by traders and manufacturers to jewelry makers and others.
The body was set up after the world's main diamond producers realized that diamond jewelry was being left behind in the race for consumers' disposable income across the world, especially in the United States and Europe, as the public developed a taste instead for smartphones, tablets and fancy vacations. There has been no program of unified worldwide generic promotion of diamonds and jewelry since De Beers decided around seven years ago that it was no longer in a position to spend around $200 million annually on advertising diamond jewelry on behalf of the global trade.
The new organization aims to create marketing programs that will appeal to consumers so that they will discover diamonds in the case of the younger generation, or re-discover diamonds and jewelry in the vase of the older generation. The campaigns will emphasize that diamonds symbolize meaningful feelings in life such as love, commitment, and long-lasting relationships.
With De Beers' share of the global supply of rough falling to less than 40% in recent years from 80% just 20 years ago, and before that for around 100 years having almost a total monopoly on rough supply, the giant miner came to the conclusion that it was no longer its role to serve as the industry's custodian. Instead of promoting diamonds generically, it decided to slash its marketing budget and concentrate instead on its Forevermark brand. It is estimated to spend around $100 million per annum on marketing Forevermark.
Initially, at least, the DPA has set an initial annual budget of $6 million, funded by the seven member companies. The funds will enable the group to start operating effectively with an executive director. The budget will be reviewed annually, based on the activity plan submitted to the board for approval. Its Chairman is the chief executive officer of De Beers' Forevermark brand, Stephen Lussier, while the executive director is the former managing director of Rio Tinto’s diamond division, Jean-Marc Lieberherr.
The companies believe that the DPA will play an important and positive role in the diamond sector and will actively engage with industry and non-industry organizations to promote the interests of the sector. The DPA’s 2015 activity plan includes the commissioning of research as a base for building a targeted activity plan over the next three years and recently announced that it will launch its marketing campaign at the JCK Show in Las Vegas in June.
The campaign is based on research on so-called millennials – people born between 1980 and 2015 – including extensive surveys and focus groups conducted by its marketing firm – Mother New York. The research found that millennials graduated into a tough and uncertain economic climate. They are faced with more debt and fewer job prospects than their parents' generation. As a result, they are less likely than previous generations to own their own home. Despite the financial constraints, however, they are generally optimistic and upbeat.
The research also finds that millennials regard diamond jewelry as being “too formal” and that diamonds may appear to their peers as being rather blingy and ostentatious. The millennials value experiences rather than material possessions and when they do buy something, they want it to have a significant personal meaning.
As Thomas Henry, a senior strategist with Mother New York told JCK Online: “If you think about the fact that they are living in an oversaturated world, they are desperately seeking these moments of meaning, which are few and far between, what they love about diamonds, and what we heard over and over again, is the authenticity. [Diamonds are] a product that they still believe carries authenticity, they are from the earth, they are very rare. That is an exciting opportunity. The way that millennials live their life now opens up a lot of space for diamonds,” he concluded. “It is just a very different space than diamonds used to occupy through most of the 20th century.”
Clearly, it is still a little early to draw any conclusions about the success or otherwise of the Diamond Producers Association project. However, it is an excellent sign for the industry that it is aware of the need for such a grouping and created a professional staff to start the process.