De Beers’ big Forevermark “kick-off” last week may turn out to be a seminal event in the history of the diamond industry.
De Beers is making it clear that it no longer wants to support the rest of the diamond market with its advertising. Instead, it’s putting considerable marketing muscle behind the Forevermark — basically its entire $200 million marketing budget, except for the U.S. The Forevermark is being looked at as not just a brand, but a possible profit center. The presentation said it will be comparable to the “Nike” and “Apple” brands.
“It is one of the most ambitious things they have ever attempted,” said one sightholder. “When such a powerful company says they are putting all their resources, imagination and influence behind something, you have to pay attention. They were very unequivocal about their commitment to it. It’s just like the De Beers stores didn’t work off the bat, but they didn’t fold up their tents and run away. They are going to stay with this.”
Still, there are skeptics. Most of the excitement seems around the prospect of a big ad campaign, rather than the product itself. The Forevermark will be backed up with considerable bells and whistles (including a grading lab.) But when you get right down to it, it really is nothing more than just a mark on a stone, and a microscopic one at that. And many feel that the Forevermark just steers people already in the market to ”Forever-marked” stones. It doesn’t expand the market, the way De Beers “beacons,” like the“three-stone ring” and “Journey,”did. (Certainly, when you look to the upcoming Vegas show, the trade could sure use a new “beacon” or two.)
One thing that would make sense if De Beers still created “beacons,” but made them proprietary brands tied in with the Forevermark. So instead of ads for “Journey,” the concept, you’ll see ads for JourneyTM, the brand — and look for a Forevermark. That could be the plan for the future.
De Beers told me last week it won’t charge the diamantaires to get their stones marked, but the retailers who will set up “Forevermark” displays in their stores. “We found most of the profits were at the retail end, so it makes sense that’s where we charged the royalty,” its spokeswoman explained. Sightholders should be happy about this; after all, between the VAS charge and the rest, they give De Beers enough money. But consider this …the diamond manufacturers are now, arguably, an extra step.
Think about it … De Beers will sell sightholders rough stones. The sightholders then manufacture them, and submit them to De Beers, which gives them a Forevermark. The sightholders will then sell those diamonds to the retailers. The retailers then pay the sightholders for the diamonds, and then also give money to De Beers for the right to promote them as Forevermarked stones. Lots of twists and turns there.
It makes more sense for De Beers to dig the stones up, manufacture and Forevermark them, and then sell them to, and get paid by, the retailers.
Perhaps legalities mean it can’t be that way. But as part of this process De Beers will be forming relationships with the world’s leading retailers. After all, they are now in business together. (Although, let’s not forget, De Beers also owns a competitor to the world’s major retailers. As Chaim notes, tracking Forevermarked diamonds will give them considerable insights into how diamonds move at retail. Another twist.)
For now, none of this applies to America, where, as De Beers’ spokespeople keep reminding me, it is “business as usual.” But the resolution of its legal problems almost certainly opens the door for a lot more leeway on the American side.
So while a lot remains muddled, it’s clear we are entering into very new territory here …
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