Setting the context for the session on “Marketing Diamonds as a Category – Industry Perspective” renowned diamond writer and analyst  Chaim Even-Zohar pointed out that “From 1970 to 2014, the added value of the industry (at this stage) has remained in the same range somewhere between US$ 5-7 billion, while jewellery sales  are growing at a sharper pace.” He opined that the margins at the manufacturing level were getting squeezed, caught as this segment is between the miners and the retailers on either end. He felt that margins in this segment needed to improve for a healthier industry.

Calling the India-Rio Tinto relations “A Formidable Partnership”, Jean-Marc Lieberherr said Rio Tinto’s was a collaborative approach to marketing.  “Our partnership with the Indian diamond industry is a 30-year journey that covers everything from diamond manufacturing technology, to unique market development initiatives and the first diamond discovery in India in decades.

“Development of our Bunder diamond project in Madhya Pradesh is a natural continuation of the partnership model and would put India among the top 10 diamond producing countries in the world.”

The project would also significantly benefit India both economically and in terms of employment generation. However, the Bunder project is still awaiting clearances and Lieberherr hoped that with the new climate in India, they would be able to get the necessary clearances soon.

Lieberherr said that 80% of Rio Tinto’s clients are Indian, and that the company had delivered 800 mn carats to the Indian diamond manufacturing industry since the Argyle mine went onstream. Work to go underground at Argyle had already begun and the mine would go into full production next year.  This would lead to an increased supply to the India centre from Rio Tinto. 

Touching upon the topic of generic marketing, Lieberherr said that the earlier efforts on category marketing had got “hijacked” by politics and egos. If all this could be put aside and the industry could work together without thought of individual credit, then  it would be possible to move ahead he felt.

“Diamond is the most extraordinary brand,” he concluded. “And we need to nurture and take care of our brand.”

Stephen Lussier CEO of Forevermark and executive vice president of marketing for the De Beers Group of Companies, lauded the Indian diamond industry saying, “As demonstrated by conferences like this one, India is a leading diamond country and its innovation and energy underpin the success of a global industry.”

Explaining his position on marketing, Lussier iterated at the outset, “Different solutions are required for the future from those in the past.”

Lussier gave a brief insight from De Beers’ most recent Consumer Diamond Purchasing Survey in India, which looked at the purchasing behaviour of 40,000 middle-class consumers across all regions of India in tier 1-4 cities. Though they were still analysing the data, which Lussier would shortly be shared with the rest of the industry, he said the top-line results are very encouraging. “In 2002, De Beers estimated that the acquisition rate of diamond jewellery among the Indian middle class was around 2%. The results of our new study show that the acquisition rate has jumped to 9% in 2014,  nearly 5 times – representing exceptionally strong growth over the past decade” Lussier informed the audience.

When looking at the variety of possible scenarios that the diamond industry may encounter in the years ahead, Lussier said, recent research by McKinsey suggests real positive growth in even the most pessimistic scenario. The McKinsey scenario deemed the most likely, sees what they call the ‘double cylinder effect’ of continued economic recovery in the US, and the ongoing escalation of demand in China and India, delivering strong and sustained growth in global consumer demand for diamonds.

 

But, he cautioned, the world is changing very quickly and other industries are investing and progressing.

“Retailers, Rio Tinto, De Beers are all investing in marketing,” Lussier said. “But not as much as other industries are. We must not only increase our spend but also make what we are spending much more effective. And we need to understand consumer mindsets; we need to understand what the opportunities are.”

Outlining the De Beers position, Lussier put forward the following three points:

1. While De Beers remains the world’s leading diamond producer by value, we no longer sell the majority of the world’s diamonds and need to seek marketing solutions that, while they help to maintain the dream, also help to drive demand for the diamonds we mine. This doesn’t mean there aren’t opportunities for collective effort but it’s not our priority.

2. The retailers need margin. Margin erosion in the retail sector is a significant risk to long term Demand for Diamonds. Retailers increasingly require a differentiated product upon which they can make a fair margin in order to fund the marketing, inventory, and retail environments necessary to compete against other luxury goods categories.
3.  Lastly, the consumer is demanding a higher degree of confidence in purchasing. Confidence around the ethical nature of the product from mining to manufacturing and certainly the naturalness and thus true value of the product.

The answer he felt is lies in branding to differentiate as well as to create enhanced value; and the other is the digital world.
 

“That is why De Beers has invested so heavily in Forevermark,” Lussier said.

Though Lussier did not discount participation by De Beers in a collective marketing effort, when pressed on the issue, he was clear that it was not a priority for the company.