1990: Diamond Branding Plan by De Beers Violates Anti-Trust Acts
No one knows what will happen with De Beers’ “branding” plan, currently being tested at a retail chain in England—or even whether the company will go ahead with it. But so far, its introduction has to be rated something of a flop.
The plan has raised near-unanimous fear and disapproval from dealers, with even some sightholders and retailers expressing reservations about it. The thumbs-down from non-sightholders could be expected; after all, De Beers is giving their competitors an item they will have only limited access to.
But the vehemence of the reaction must be taking the company by surprise, with some threatening to do everything from call the U.S. Justice Department to treat the De Beers stones (which are supposed to be non-treated).
Some sightholders say they are interested in the idea, feeling it will give them an edge in the market. Yet, a surprising number were skeptical — they worried about De Beers getting more power, and viewed shipping the stones back to De Beers to be “branded” as a cumbersome bother.
When we asked Leon Tempelsman of Lazare Kaplan, one of the first companies to go into “branding,” what he thought about the plan during a teleconference announcing the company’s financial results, he didn’t see how it would work, noting there wouldn’t be any difference between De Beers-branded diamonds and anyone else’s. He added that the stones would sell in both mass-merchant and high-end outlets, which could send a mixed message to consumers. “I don’t feel they are particularly well-positioned, nor is it appropriate for them to be doing this,” he said.
Tempelsman, like other sightholders, considers the plan was a political ploy to warn other diamond miners that they should join the CSO, rather than anything the market will ever have to seriously reckon with.Retailers, meanwhile, note that margins on branded products, such as Rolexes, are typically lower than other products. One official from a major chain couldn’t see spending the money on hundreds of De Beers brand-detectors for all of her stores.
Some New Yorkers were also worried that the plan could hurt the industry here. Since De Beers cannot officially do business in this country to avoid conflicts with anti-trust laws, New York could be the only center without an official “branding” station.
Yet even those who are calling the plan foolhardy don’t want to underestimate the power of advertising. If De Beers can come up with a compelling reason for women to buy its branded stones—the same way it has created markets for products like the diamond anniversary band, or engagement rings in Japan—then it’s likely to the trade will scramble to have their stones “branded”—the way they now scramble to give them reports.
One consumer has already contacted us by e-mail to inquire about the location of a De Beers store in which he might purchase a De Beers diamond.
Still, for the time being, De Beers should probably do a better job of explaining how the plan will work — if indeed they know themselves — and calming trade fears.
GIA inscriptions: a different kind of branding?
While De Beers is still tinkering with its “branding” program, the trade can develop its own brands using the GIA’s new laser inscription service offered at its New York and Carlsbad labs.
While the GIA has been offering to laser-inscribe stones for some time, the new service is faster, cheaper and more advance. Of course, any trade brands probably wouldn’t be backed up by a multi-million dollar advertising campaign like De Beers’ will be.