In the diamond industry, even the crooks are old-fashioned. The ringleaders jailed for a $20 million jewellery heist in London last year were in their 60s and 70s, so it’s no surprise they’d go after the gems. They’re old enough to remember when advertisers said diamonds were forever and Marilyn Monroe sang that they were a girl’s best friend.
Not any more. Diamonds are losing their allure for many consumers more interested in spending money on vacations, fancy handbags and high-tech gadgets.
Mine owners like De Beers — who helped dream up those successful marketing campaigns in years past — have been unable to prevent prices from dropping below where they were a decade ago, a sign the industry is failing to maintain the cachet of its brand.
“I’m not really a jewellery person,” said Catherine Weir, 32, who was window shopping last month with her fiance in Hatton Garden, London’s jewellery district, just yards from the site of the weekend heist. “It was always diamonds for an engagement ring, maybe for a wedding band and that’s it. IPads and things like that are much more accessible.”
Diamonds are now cheaper than they were in 2006, data from Polished Prices.com show. Over the same period, the price of luxury cars, shoes and fine foods have risen at above-inflation rates, according to a Forbes index.
Demand for luxury jewellrey rose just 1.9 per cent a year from 2004 to 2013, trailing high-end beauty products, tobacco and watches, according to De Beers’s 2014 Insight Report on industry trends.
Efforts by producers including De Beers and Alrosa to push prices higher in the past five years unravelled in 2015. Polishers who buy the raw gems and sell to wholesalers and retailers were unable to pass on the higher costs as consumers balked.
A threat to boycott auctions of rough gems by buyers in India, where 90 per cent of stones are cut, ended with De Beers lowering prices 15 per cent for the year and 7 per cent in January.
“Producers can’t simply increase rough prices and expect buyers to pay more for diamond jewellery,” said Anish Aggarwal, a partner at industry consultant Gemdax in Antwerp. “Consumer demand can’t be taken for granted, even in mature markets and especially with millennials.”
Earlier generations were easier to influence. De Beers’ in the 1940s created the slogan “A diamond is forever,” and the industry heavily promoted the gems for engagement rings. Jewellers loaned pieces to celebrities like Monroe to create a buzz around the product as a luxury item.
But the new millennium brought the end of DeBeers’ monopoly, meaning other suppliers were able to sell their gems piggybacking on De Beers’ advertising. The company cut its marketing budget in half to $100 million a year in the 2000s.
“The industry is a victim of its own history,” said Charles Wyndham, former sales director at De Beers and founder of WWW International Diamond Consultants. “Everyone had a pretty easy ride when De Beers had its monopoly. Everybody has to think how they can turn it around. It requires a huge cultural change.”
De Beers is getting the message. On top of its global advertising spending, the company ploughed tens of millions of dollars into a push to spur jewellery sales in US and Chinese markets in 2015.
Last year’s creation of the Diamond Producers Association, bringing De Beers and Alrosa together with Rio Tinto, Dominion Diamond, Lucara Diamond, Petra Diamonds and Gem Diamonds, seeks to revive the kind of industrywide advertising seen during the monopoly years.
In one early positive omen, De Beers managed to raise rough prices by as much as 2 per cent in a sale last week, the first increase in more than a year. But analysts remain sceptical that a price rebound can be sustained and feel that it might take at least another year to recover.