Following the May 31 unveiling of the new Forevermark product, the “Center of My Universe,” at the Four Seasons Hotel in Las Vegas, Forevermark CEO Stephen Lussier talked with JCK about the future of the proprietary De Beers brand, the impact of the end of the De Beers antitrust settlement, and why you won’t see Forevermark go retail. This is the first part of a two-part interview; the second part covers De Beers corporate issues and can be seen here.
Will the final settlement of the De Beers antitrust class action suit have any impact on your business?
It is obvious that we really want this settled. We did take the view a couple of years ago that Forevermark could operate in the U.S. in any event. This does free us up to continue to develop the commercial side of the business in the U.S. I think it is good for De Beers, good for Forevermark, and good for our jeweler partners.
Do you see any other changes, such as a De Beers office?
We will be here more often and more importantly we can visit our customers and partners. And then we’ll see where the future takes us.
I noticed that you mentioned in your breakfast speech that Forevermark is “not a retailer.”
I mentioned that really to be quite specific about that. I understand the retailer’s hesitation getting fully committed behind a brand if they think that brand will be a competitor of theirs.
So you will never have a retail store.
We have a retail brand, it’s called De Beers. It’s a joint venture with LVMH. That is our play in that sector. Forvermark is a diamond brand. A diamond brand can’t open a store. A diamond jewelry brand can open stores. For us this is a wholesale project. We are trying to support the diamonds that we mine.
But wouldn’t it make sense at some point for De Beers Diamond Jewellers to carry the Forevermark?
I don’t think so. I don’t want to create any confusion in the minds of our partners. The Forevermark jewelers should see very clearly that the Forevermark requires them to be successful for us to be successful. That partnership is our entire focus on the Forevermark side. We want to keep De Beers Diamond Jewellers very separate.
There have been complaints over the past couple of years that De Beers didn’t provide extended support to its products, like Everlon and Journey. How do jewelers know that De Beers is committed to this one?
Because De Beers has no plan B. Forevermark is not an activity. It is not a promotion. It is a strategic leg of De Beers’ future development as a company—a company that is single-mindedly focused on one product, the diamond. Strong demand and maintenance of the diamond dream is an essential part of our business. Without that, we have no business in the long term. Forevermark is the tool through which we can ensure that we have a diamond dream and that consumers will continue to love diamonds. For us, it’s plan A, and not plan B.
There was a lot of talk at this breakfast about the Forevermark being “responsibly sourced.” In the past, De Beers has been reluctant to bring up that point for fear that it’s bringing up a negative.
Yes, but we feel [responsible sourcing] is going to be increasingly important. The research that I see and among the younger generations shows that these issues are growing in importance and in part this comes from the inquisitiveness and transparency on the Internet. We think it’s a competitive advantage and it is something to be proud of and it will be a positive point of differentiation for future generations.
What percentage of De Beers goods will ultimately go to the Forevermark?
I think it’s always going to be limited. We are focused on higher qualities and the larger sizes and that will never be the majority of diamonds we mine. We think it could be a significant part of our total production by value. One of the things that is very positive about America is that American independents are into very significant sizes.
The “Center of My Universe” seems similar to the DTC’s “beacons.”
It brings a lot of the things that we used to do with the beacons. Two keys are identifying a classic product that already has consumer interest, and injecting it with an emotional positioning. Those two things are quite similar. But the whole concept of Forevermark, which we keep coming back to, is that we don’t feel we have full responsibility for the creativity. This idea of partnership is quite real. We want to inspire our jewelry manufacturers and our retailers to interpret the core designs, to create more differentiation store by store. So the qualities will be different and the price points will be different depending on the individual jewelers. We are not delivering a single answer to them. We are a delivering a platform or a foundation.
What response are you getting?
I can feel momentum building. We are getting a lot of people that want to become new retailers. The challenge with any new brand is you have to build brand awareness and you can’t do that overnight. It will take a few years to get there. In China, we found that in year three, we had the real take-off. But people seem enthusiastic and positive. I’ve had people say that, “This is the old De Beers magic we would like to see back.”
In the second part, we discuss the current state of the diamond industry and of De Beers, including just how close the company came to going bankrupt three years ago.