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New Diamond Millennium Will Respond To Shareholders Promptly

1990: New Diamond Millennium Will Add Major Profits to De Beers Revenues

October/November 1998

If you think that De Beers diamond branding is only a test of the popularity of it's name, or an empty threat to producers who sell outside the are wrong.

Despite loud protest by the diamond organizations, despite the fears of the sightholders (who told DRB that they expect to become cutting contractors for De Beers, as De Beers will know the resulting polished stone produced from each diamond in their box) and despite the threat by some smaller cutters to challenge branding as an Anti-trust violation, De Beers will expand its branding idea. The directors of De Beers are most responsive to their shareholders, which incidentally includes them. Branding will add profits to the De Beers bottom line.

At the annual conference of the Gemmological Association and Gem Testing Laboratory of Great Britain to be held on November 1, 1998, Derek R. Palmer, De Beer's Director of Western Marketing, will deliver a speech on the topic "De Beers Branding: A Service For A New Millennium."

This is not the first time that a small "initiative" by De Beers snowballed into a major money maker. De Beers initial projects of sawing some of its rough and the cutting some of its rough on a "test" basis became the large Polished Division, a major value added source of income. There are already discussions of special sub-branding "Millenium Diamonds" as a collectors item. Such a promotion may make quick profits but may backfire if these so-called "Millennium diamonds" fall in price as World’s Fair souvenirs do in the year after.

In any case, branding of diamonds is not something new: Keepsake and Lazare are registered trade marks for diamonds. Lazare diamonds are even inscribed on their girdle. As well, there is already in existence a more important type of "branding" that is the reputation of the trusted jeweler in the community. The most successful of these has been Tiffany. The Tiffany ads proclaim, "She will always know it is a Tiffany...." For years Tiffany has been able to get a hefty margin for its name. Only last week a Diamond Registry member jeweler told us that the easiest sales he makes are for customers who shopped at Tiffany’s, which marks up even certified diamonds by about 100%.

Millions of people, wealthy and less so, are willing to pay for an "authentic" brand a few hundred times the intrinsic value of the merchandise. That is why Donna Karan made $18.5 million last year.

But the question is this: is the De Beers name as valuable to diamonds as Bayer is to aspirin or as Calvin Klein is to sportswear? But the De Beers name will not be visible on the wearer, after all who walks around with a microscope?

De Beers ads say it's "the name that stands for diamonds," but now it will have to say it's the

name that stands for some diamonds. In fact the press usually follows De Beers name with something like: De Beers—the diamond monopoly or diamond cartel—not to mention benevolent dictator.

Can the De Beers name, which is also used for Synthetic Industrial Diamonds, be transformed into an assurance of the "genuine" fine diamond? Or will it be seen as an admission to Epstein's thesis (The Rise and Fall of Diamonds, 1982) that diamonds have no intrinsic value only the "illusion" created by Harry Oppenheimer and his advertising company.

We certainly believe that De Beers has the brain-power and the advertising budget to maintain the mystique of both diamond and the De Beers name for at least another 100 years. The question is will the premium paid for a branded De Beers diamond benefit anyone but De Beers?


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