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Tuesday, July 8, 2014

De Beers CEO Talks Up Forevermark

Diamond drop earrings by Slane with 9.24 round brilliant "exceptional" diamond and 8.14 round brilliant "exceptional" diamond set in platinum.

Diamond brands are not new and in the past decade the number of brands has grown substantially. The effectiveness of diamond branding has been debated in the jewelry industry for just as long. As opposed to an LVMH handbag or Gucci shoes where the workmanship and logos are easy to see; a diamond’s attributes are extremely difficult to see with the naked eye.

The recent announcement that the Hearts on Fire diamond brand is being acquired by the Hong Kong-based retail giant, Chow Tai Fook, for $150 million, shows that at least some brands have real value. The “world’s largest pure-play jeweler” said it will sell the diamond brand through its retail network of more than 2,000 points-of-sale in the Hong Kong, Macau and Mainland China markets.

"Center of My Universe" fancy yellow diamond earrings by Premier Gem set in 18k white gold, 10.05 ctw.

Needless to say Philippe Mellier, De Beers Group CEO, is a believer in brands. Of course part of his job is to promote De Beers diamond brand, Forevermark. To do this he made a rare appearance in the US during Las Vegas jewelry week to help promote a new Forevermark marketing and advertising campaign for the US market.

“There is a demand for branded diamonds and discerning customers are looking for the very best with the name of De Beers behind it to certify that they are the shiniest, the best and what is very, very important is that they are responsibly sourced,” he said.

"PURE Collection" by Precision Set six prong solitaire ring set in platinum, 1.50 ctw.

Each Forevermark diamond has a unique identification number and the Forevermark icon inscribed on the diamond. The inscription is 1/5000th the depth of a human hair. Obviously it cannot be seen by the naked eye. All diamonds over a half-carat also comes with a Forevermark grading report.

“A discerning customer knows that the diamond he or she bought has been inscribed with the Forevermark and logo and the number that makes that diamond very unique and traceable,” he said.

All of the diamonds comes from nine De Beers mines (seven in southern Africa and two in Canada). De Beers’ hold over the diamond industry from mining to market isn’t what it used to be, but it still sells its diamonds through what are known as sights. Sightholders (diamond manufacturers and dealers) are approved by De Beers and are invited to buy diamond rough from its mines. The sightholders have the option of purchasing a box of rough without knowing what is inside based on a price set by De Beers.

"Center of My Universe" double cushion halo fancy yellow diamond ring by H.J. Namdar set in 18k white gold 4.27 ctw.

Among the sightholders are diamond companies that are approved to receive boxes with what Mellier described as containing the top five percent of rough diamonds from De Beers in terms of quality. The 30 diamond companies can do what they want with the rough, including the 5 percent gems. However, if they wish to sell them as Forevermark diamonds, either lose or in jewelry, they will need to return them to De Beers to have them inscribed.

“They are buying these boxes because they are suitable for Forevermark but they don’t always cut and polish them for Forevermark. They can do it for all of their applications,” he said. When they are cut and polished they send them to us for engraving and inscription and they all come with a Forevermark certificate.”

Diamond riviera necklace by Rahaminov set in platinum, 55.26 ctw.

The Forevermark brand was first launched in Hong Kong, China and Japan in 2008. It is now in 1,350 retail doors in 29 countries. Forevermark came to the US in 2011 and now is available at 400 doors. Mellier speaks with pride of the brand’s market reach and its recent milestone of inscribing its one millionth diamond. But sales are something that he didn’t discuss.

Mellier’s rare presence in the US was part of a big push by Forevermark during the annual tradeshows in Las Vegas. It included the first look of its latest US multi-media advertising campaign (“Promise”) that will launch in September and bringing in Waris Ahluwalia, a successful jewelry designer who is perhaps better known as an actor in Wes Anderson films. He designed a jewelry collection with Forevermark diamonds. In addition, throughout the Las Vegas jewelry trade fairs there were displays of Forevermark diamond jewelry created by the brand’s 30 or so diamond manufacturing partners. Mellier said Forevermark is looking for more partners.

Bridal jewelry will account for a little more than half of all Forevermark product, which I found surprising because De Beers pretty much invented the modern bridal jewelry industry in the US. Mellier said romance and emotion will continue to be the focus of the campaign and the jewelry but it will include milepost events throughout one’s life.

“We have all sorts of other jewelry because a lot of customers are repeats,” he said. “You only have one bridal but there are birthdays, wedding anniversaries and for this repeat purchase it’s obviously not bridal.”

The marketing and advertising campaign is designed to hit the target customer seven times, Mellier said. However, he admits that it will never be as prolific as its “A Diamond is Forever” campaign.

“We are unfortunately smaller than before,” he said. “At one time we had 80 percent of the world market. We are still by value the biggest company in the world with slightly more than a third of the world market so we spend according to our need and our volume. Forevermark is what we really want to focus on.”

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes website.

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