Invisible But Brilliant Branding – Diamonds Are Forever But Monopolies Don’t Last
Powerful, emotional and consistent branding helped to create the De Beers diamond monopoly. When it was threatened in the 1990s by conflict diamonds and producers such as Russia distributing diamonds outside the De Beers-controlled channel, De Beers again turned to branding to save the day. They repositioned themselves in a market they no longer control and are now more profitable with a 40% market share than when they had an 80% market share in the 1990s. Let me bring you into the picture.
De Beers engages in exploration for diamonds, diamond mining, diamond trading and industrial diamond manufacture. Mining takes place in Botswana and Namibia (through its joint-venture partnerships with the respective governments), as well as South Africa and Canada, in every category of industrial diamond mining: open-pit, underground, large-scale alluvial, coastal and deep-sea. The Diamond Trading Company, the rough-diamond sales and distribution arm of the De Beers Group, sorted, valued and sold about 80% of the world’s rough diamonds by value until the early 1990s.
These diamonds were then sold to the Diamond Trading Company Sightholders whose representatives travelled to London several times a year for the sale or Sight as it was called. Today Sightholders (now numbering only 79) are required to comply with the De Beers’ best practice diamond shape principles, which set out various objective standards of conduct in three main areas: business, social and environmental responsibilities. (I designed brandmarks for two of the Sightholders at the turn of the century and no mention was made of these noble standards; Mr $ and his rare appearances were the only standard I was reminded about.)
Get the picture? De Beers is big – very, very big! It is well known for its monopolistic practices throughout the previous century, when the company used its dominant position to manipulate the international diamond market by persuading independent producers to join its single-channel monopoly and then flooding the market with diamonds similar to those of producers who refused to join.
The company purchased and stockpiled the diamonds produced by other manufacturers in order to control prices through supply. Ernest Oppenheimer stated: “Commonsense tells us that the only way to increase the value of diamonds is to make them scarce, that is to reduce production.” Now all that was left for the monopoly to become fully fledged was to increase consumer demand.
A diamond is a girl’s best friend
Consider this: a diamond – the rarest and hardest natural mineral known – is worth no more that half its retail value. There is no hard-and-fast rule for the pricing of polished diamonds, but professionals in the polished-diamond industry use a worldwide market price list, the Rapaport, based on the four Cs, which are carat, cut, colour and clarity, as a general guideline for evaluating polished diamond prices. And a jeweller usually adds a 100% mark-up to the Rapaport quoted price. Apart from industrial applications, diamonds have no other value except when polished for their perceived beauty, which we all know is in the eye of the beholder. This brings us to another aspect: the power of emotion.