There seems to be a growing recognition that the Forevermark is really starting to make its—pardon the pun—mark in the American market.
This is mostly due to last year’s advertising blitz; it certainly doesn’t hurt when you are just about the only non-chain-store-affiliated diamond brand out there doing heavy advertising, particularly on TV.
The Forevermark has an unusual model: Revenue seems to comes from the lab, and the fees it charges suppliers and retailers—from retailers, $10,000 a store; from vendors, $25,000. (The $25,000 charge is new, but the brand says it is “consolidated” from other fees.) Given the money it’s pumping into advertising and marketing, writers like Chaim Even-Zohar have begun to question whether it will ever turn a profit.
Still, Forevermark does fulfill some De Beers corporate objectives:
- The brand gives (some) De Beers’ diamonds protection against reputational threats like synthetics/treatments and blood/conflict diamonds.
- It shortens the pipeline. De Beers has long frowned upon sightholders who just sell their boxes outright. Forevermark diamonds can only come from certain sources; you just can’t buy the rough on the open market. So while the approved sources are not limited to De Beers mines, certainly the easiest thing for De Beers sightholders to do is to just produce Forevemark diamonds from their sight boxes. Which is what many are doing.
- If it’s successful, it could increase overall for diamonds in general, and for its stones in particular. (Yes, it’s not limited to De Beers’ stones, but see above. And when the diamonds do come from non-De Beers-mines, De Beers makes money off them too.)
- It puts De Beers’ long-demonstrated marketing expertise to good use.
- It gives De Beers insight into the retail market, which helps it set rough prices.
- It gives sightholders another reason to be part of the De Beers “club.”
It will be interesting to see how the rest of the industry responds here. Not only does the Forevermark represent competition for just about every other diamond company, including De Beers’ own clients (though interestingly, Eurostar, the owner of rival Hearts On Fire, is also a Forevermark diamantaire), but also for the GIA and other labs. And while it’s possible consumers may react negatively to the idea of a brand grading its own stones, for now there is little evidence any care.
One question that has come up: De Beers owns a retail chain. It also owns a diamond brand. Wouldn’t it make sense for the retailer to sell the brand? I’ve even had De Beers employees wonder as much to me. When I asked Forevermark CEO Stephen Lussier about this last summer, he denied that was in the cards. He also said at the brand’s breakfast meeting in Vegas that it would never open up its own stores—though I should note that is something just about every successful jewelry brand has done at some point or another.
Still, at least one sightholder doesn’t think De Beers will ever integrate its stores with the brand, for two reasons. First, the stores have far less of a footprint, and it isn’t worth angering other retailers for the sake of a few doors. Plus, the De Beers retail chain is not considered a success. And Forevermark may just be turning into one.