The goal of the new De Beers is to boost demand for diamonds, De Beers chairman Nicky Oppenheimer stressed in a rare North American appearance at the American Gem Society Conclave in Vancouver.
“We need to switch the emphasis from a supply driven to a demand-driven industry,” Oppenheimer told the overflow crowd. “We are working closely with our customers to increase advertising spend and stimulate demand further.”
For the last few years, the growth in demand for diamonds has lagged behind the growth of the Gross Domestic Product. Oppenheimer said De Beers’ goal is to double diamond advertising by 2004.
One of the ways the industry can stimulate demand, he said, is through brands. In the perfume industry, the top brands account for 80% of sales, while in the jewelry industry they account for only 15%, he noted.
Oppenheimer defended the company’s controversial decision to open a retail chain with new partner LVMH as a way to bring more consumers into the diamond industry.
“I believe people will see it for what it is-a promise to encourage competition, not impede it,” he said. “The new De Beers isn’t afraid of competition, and neither should anyone in the retail industry be.”
He added that De Beers’ core business remains marketing and mining diamonds and that the new chain was an independently owned and operated entity. “All that De Beers is loaning this new venture is its name, not its diamonds,” he said.
The first store in the new chain should open in London later this year, with others set to open next year.
Oppenheimer also made note of the numerous challenges to the image of diamonds in the market, including treatments. The De Beers “gem defense” program is developing devices to detect synthetic and high pressure, high temperature-treated stones, he added.
“The fifth C-confidence-must be paramount in an industry such as ours,” he said.
He also hailed the industry’s efforts to solve the problem of conflict diamonds.
“There can be no greater blemish on a diamond than the stain of war,” he said. “This is especially true of a product cherished around the world as a symbol of love. Fortunately, the percentage of the world production used for this purpose was always minimal-4% in the past, and we estimate less than 2% now. De Beers and the world diamond industry united in the World Diamond Council to fight this scourge. The World Diamond Council agreed to a system of warranties to ensure that conflict diamonds do not enter the trade. This double process of internal self-regulation and external certification is a singular achievement for our industry. I’m extremely proud of the pioneering role De Beers played. Through this chain of warranties, the consumer can be sure the diamonds they buy are free of the taint of war.”
But all this talk about “conflict” stones can’t obscure the fact that in numerous countries, diamonds play a positive role, he said.
“For Southern Africa and its people, the benefits that diamonds have bought really are forever,” he said. “In the 1990s, Botswana was the world’s fastest growing country. That wealth has not been squandered but has been used wisely and well in building schools and hospitals.”
The latest country to benefit from diamonds is Canada, he added, noting that De Beers had many promising finds in the Northwest Territories. He said its Snap Lake concession could be the region’s first underground mine.
The best thing about being in the diamond industry, he noted, was working with a symbol of love.
“Diamonds may not be necessary for the body, but they are necessary for our emotional well-being,” he said. “It may be the ultimate luxury product, but in a very real sense, it is not a luxury, but an essential.”