Diamonds have always been perceived as highly valuable and desirable… or have they? Your family’s most precious heirloom’s value may be more perception than monetary value. But “A diamond is forever,” right? Where did that quote even come from? The quote didn’t originate from a person, but rather a company – De Beers. De Beers is a lucrative diamond cartel that effectively monopolized diamonds from the end of the 19th century up until recently; it’s now in decline. Let’s take a look at how good branding took diamonds from barely worn in the US to the ultimate symbol of love.
Is a Diamond Truly Forever?
Despite De Beers convincing you otherwise, diamonds are not indestructible. They can be chipped, discolored, shattered, burnt to ash. Further, diamonds lose about 50% of their value as soon as you leave the store. This shows the effect of truly remarkable branding. Diamonds aren’t intrinsically valuable; they’re valuable because of De Beers’ effective marketing and business decisions. How did they communicate this value? Read further.
Some Background about Diamonds
Diamonds have an interesting history. Up until the middle of the 19th century, diamonds were scarce and rarely worn by anyone other than royalty, but then everything changed. The diamond rush of South Africa in the 19th century led to markets being flooded with diamonds, so expectedly, diamonds lost much of their value.
In comes De Beers to change that. Businessman Cecil Rhodes bought up multiple diamond fields in the 1880s, including one field from two brothers named “de beer.” De Beers Consolidated Mines Ltd. was formed and by the time of Rhode’s death in 1902, the company controlled 90% of the world’s diamond production and distribution.
While Rhodes was living, he created distribution arms to distribute diamonds and control supply, thus bringing up prices. He reversed diamond’s falling value, but it was the addition of a man named Ernest Oppenheimer that completely changed the industry.
Oppenheimer was a rival of De Beers, but then bought his way into the board of directors, eventually becoming chairman in 1927. When diamond prices declined worldwide in the 1930s, the Oppenheimer family took a new approach. Under their leadership, the company launched the highly successful “a diamond is forever campaign.” This branding would change the way Americans looked at diamonds.
A Diamond is Forever
Ever heard of the pathos (emotional) appeal of persuasion? Well, when Henry, Oppenheimer’s son, and ad agency N.W. Ayer formed a campaign to appeal to the American market, they targeted the ultimate emotion: love.
Through careful advertising, De Beers sent one clear message to men looking to propose: the size of the diamond on an engagement ring equated to how much he loved his fiancee. In 1947, they created their most memorable slogan: “A diamond is forever.” Following, they used it in every single ad since 1948. AdAge also named it the #1 slogan of the century in 1999.
The marketing went beyond ads. Movie stars were given diamonds to use as symbols of their romances. When the stars wore them, magazines and newspapers would then publish photographs of these diamonds and write about them. Fashion designers would talk about how trendy they were. They even sent lecturers to high schools to talk about diamonds. All of this led to vast influence on couples of all classes.
All of these marketing efforts cost De Beers quite a bit of money. Between 1939 and 1949, their annual ad budget went from $200,000 to $10 million. And it paid off – wholesale diamond sales went from $23 million to $2.1 billion in the same span of time.
Diamond Branding in Asia
De Beers successfully launched in some markets outside of the US, including Japan. Japan was an interesting case. In the US, creating an association between diamonds and love was extremely effective. In Japan, however, marriage wasn’t seen as a romantic tradition, so the same branding that worked in the US wouldn’t translate as well here. An additional challenge was the fact that no diamonds were allowed to be imported up until 1959. In the 1960s, however, De Beers was able to enter the market and did so remarkably.
Instead of aligning diamonds with the idea of love, they focused on positioning it as a symbol of modern Western culture. Western culture was a popular influence in Japan at this time, so this was an effective strategy. Only 5% of brides wore diamond rings in 1967. By 1981, that number was 60% of brides.
Currently, De Beers is experiencing growth in other Asian countries, like China and India. 30% of Chinese brides, for example, now receive diamond rings. This was almost unheard-of in the 1990s.
All Good Things Come to an End: The Decline of De Beers
De Beers’ diamonds are sourced from Africa, but diamonds were later found in Russia, Canada, and Australia, reducing the influence of the De Beers monopoly. They’ve also sold the majority of their ownership to Anglo American. Revenue remains strong, but they’re definitely not the powerful monopoly they once were.
In addition to greater competition among diamond miners, De Beers faces another threat: man-made diamonds. Man-made diamonds are real diamonds, but produced in labs instead of nature. Their appeal is obvious: they’re more eco-friendly, ethical, and affordable. Forbes even discussed how they’re disrupting the industry.
De Beers response to this has been to tear down man-made diamonds’ credibility and focusing on new marketing campaigns, like “Real is Rare.”
Remember the fact, too, that many sources have reported that millennials simply aren’t buying diamonds as much as previous generations, and you can see that De Beers and other diamond industry players are facing some challenges.
So far, De Beers strategies have worked well for them. It remains to be seen how effective these will continue to be. It’ll also be interesting to what ultimately happens with the diamond industry. Will diamonds cease to be popular? Will they simply lose favorably in the US, but continue to grow in Asian markets? Will man-made diamonds overtake mined ones? It’s difficult to say what will happen next, but undoubtedly, De Beers has proved itself as extraordinarily effective branding.