1990: Millennium Diamond Branding Is A Way to Brand-Consciousness
From the Bangkok Diamond Congress in July 1998 to the GIA Symposium only this July, the introduction by De Beers of a brand-name diamond – even on a limited, experimental scale – has continued to cause an uproar in the industry. The initial testing in the U.K., still ongoing, and the introduction of the Millennium Diamond campaign – limited to 20,000 stones – has further increased the concern of many in the diamond industry. Are these fears well-founded or is it all just industry hysteria?
The questions uppermost in the industry are, How will this affect the diamond cutters, merchants, jewelers and consumers? Will it add value by having customers pay a premium on top of the intrinsic value of the diamond or will it create confusion as to the basic mystique of a diamond, “nature’s masterpiece”? These were voiced at the Presidents’ Meeting of the World Federation of Diamond Bourses (WFDB) held in Moscow in July, and the echoes continue to be heard in the diamond clubs and bourses worldwide.
Eli Haas, President of the Diamond Dealers Club of New York (DDC) and spokesman for the WFDB Presidents, asked Gary Ralfe, Managing Director of De Beers, whether the Company intends to continue with its plans to produce a brand-name diamond beyond the 20,000 Millennium stones. The response was a guarded affirmative: if, after the results of the U.K. testing prove positive and the sale of branded diamonds is in the interest of De Beers’ share holders, then the Company will proceed with the plan. The Presidents expressed severe reservations concerning the proposed De Beers branding project and urged Mr. Ralfe not to proceed in a manner which would be contrary to the interest of all the members of the industry. It was decided that the WFDB will continue to monitor the situation closely and to maintain a continuing dialogue with De Beers.
But as for how it will affect you, let’s look at both sides of this heated argument.
The Cons: Against the De Beers Brand
From the standpoint of the diamond manufacturer and merchant – with the notable exception of the ten sight-holders in the Millennium Diamond program – there is an understandable apprehension that the branded diamonds will make their diamonds look lesser, somehow ordinary. Many diamond dealers are concerned that, as diamonds are already very expensive compare to other luxuries, a premium for a branded diamond will make them even more so. Indeed, one of the sight-holders has already given The DRB a quote of almost 50% above a “generic” diamond of the same quality and size. The example: a De Beers branded one-carat, H V.S.1 will sell for $8,200 where a non-branded stone of the same quality would cost an average of $4,800. The concern: Will the consumer be willing to pay such a high price for the very same diamond because it, under a special viewer (which the consumer will not own), shows the De Beers stamp?
At a time when competing luxuries such as electronics and computers are going down in price, diamonds are perceived as expensive. Now, a medium quality 1-carat diamond costs about the same as 3 weeks vacation. Will De Beers be able to ask for 3 months salary for an engagement ring? Of course there will always be a minority of the wealthy who will purchase diamonds no matter what they cost, in fact the more expensive the better. But if one puts standard solitaire diamonds out of the reach of the average buyer, one cuts of the majority of sales possible. Or so says the con argument. And possible even more dangerous to the individual jeweler and thereby to the consumer directly, will those consumers who have purchased before the branded diamonds become available, listen to De Beers “A diamond is forever” and become concerned that their diamonds do not carry the stamp of approval from De Beers and are therefore not forever?
The Pros: For the De Beers Brand
Despite these pessimistic fears, we see many advantages – even for the trade – which may have been overlooked in examining De Beers’ experiment.
First, perhaps the De Beers’ Millennium will create a new class of buyers, the Diamond Collectors, a cousin of the so-called “Diamond Investors” of the 1970s. These are people buying diamonds not to be worn as jewelry but for possible appreciation of value. They are a completely new group of diamond buyers.
Second, the branded Millennium Diamonds will create a new awareness of loose diamonds in the public consciousness and, thereby, the purchase of loose diamonds, always the smartest way to purchase a diamond. This will benefit the diamond industry by focussing on the “steak” not on the “ketchup” as The DRB has advocated for many years at De Beers’ Carat Club meetings.
Third, De Beers branding will weaken the grip of diamond price lists and laboratories on establishing fixed diamond prices. People who buy a De Beers diamond, or for that matter a Tiffany or Cartier diamond, do not emphasize the 4Cs or check price lists. As part of the package, they are purchasing the assurance and prestige of the signature. And the signature is a grand enough guarantee.
And finally, others feel that the brand-consciousness that the De Beers’ brand will help to promote will also promote their own brand. For one of these, see page 7, Harry Winston & Co.
The last word will, of course, be with the consumer. Those who are willing to pay more for brand-names – Hilfiger, Gucci, Calvin Klein, Prada – will simply be willing to pay more. Period. But a consumer making decisions on the basis of quality of goods, workmanship and intrinsic value of the item, will still prefer to look at the 4Cs and the beauty of the stone.
In short, the branding of De Beers diamonds may well create a distinct break in consumer types. Where we now have diamond buyers, we may soon have the Quality Shopper and the Brand Shopper. Each will buy, each will spend money, each will appreciate the diamonds sold to them. But each type will have its own criteria as to what makes their purchase valuable.