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BW Businessworld

Diamonds Are Forevermark

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At a high-profile launch in Mumbai and Bangalore in recent days, the $6-billion international diamond group De Beers opened sales of its diamond collection in India. The branded ‘Forevermark' stones will be retailed through high-end jewellery chains such as Tribhovandas Bhimji Zaveri — The Original, Giantti-Luxury Ensemble and Orra. Posing with actor Rani Mukherji and a pair of identical 35-carat, Steinmetz rocks priced at $18 million, Forevermark CEO Stephen Lussier said in Mumbai he hoped to have his branded diamonds selling out of 35 retail chains by the end of the year.

Beyond all the media hype, De Beers was actually announcing a major change in its international marketing strategy. In earlier decades, the company had created benchmarks in the generic advertising of diamonds. Who can forget the James Bond thriller Diamonds Are Forever? It was stolen from copywriter Frances Gerathy, who penned the tag line ‘A Diamond is Forever' that anchored De Beers' international campaign. A big success in advertising, it  made diamonds synonymous with love and affection, and as the attire of the rich and famous.

As De Beers' monopoly began to crack, the company started to question its strategy of generic advertising. "Over the years, our share of international diamond sales declined from two-thirds to around 40 per cent," says Lussier. "It was a deliberate change in business strategy. High competition and legal and ethical issues created supply constraints and made the holding of such a high market share unsustainable."

As a big trader of diamonds, De Beers' marketing and retail arm Diamond Trading Corp. sourced diamonds from mines that were not its own. It thus faced the risk of becoming a carrier of ‘conflict diamonds'. "The company, therefore, decided to build its business around our own production and ended buying from Russian and other sources," Lussier adds. More focused marketing of its own products was the corollary of this strategy. It started with the launch of De Beers Jewellers, a joint venture between De Beers and Louis Vuitton in 2003, as a chain of 35 high-end outlets in the fashion capitals of the world. Forevermark is the next stage of mass marketing diamonds with the De Beers tag. "It is a Tiffany-level retail effort," says marketing chief Dominic Brand.

The business model works as a fixed-royalty business for De Beers who neither cuts or polishes the roughs nor owns the final diamonds-for-sale. Around 31 diamantaires (units that cut and polish roughs) have been selected for making Forevermark diamonds. As many as 18 of these are Indian and include big names such as Rosy Blue, Diamexon and Eurostar. These diamantaires select the diamonds, cut and polish them and then send them to Antwerp where De Beers runs a laboratory check and certifies them by inscribing a unique number on each diamond. About 10 per cent of the diamonds are rejected in Antwerp, claims Lussier. The Forevermark-branded diamonds are then sold to a select group of retail chains. De Beers earns a fee for certifying and inscribing the diamonds.

For all the retail strategising, Forevermark has been slow to roll out. After some initial test marketing in 2005, the De Beers brand was launched in May 2008 first in China and then in Japan and some Caribbean markets. In the first two years, the branded diamonds have generated $300 million in revenue from 350 stores, with $200 million coming out of China. "We have focused on the Asian markets before we attack the US and Europe in 2012," says Brand. India is the new entrant in the learning curve, but it will be sometime before Forevermark becomes the equivalent of an Apple or a Nike.

(This story was published in Businessworld Issue Dated 18-04-2011)