A Diamond is Forever is a marketing slogan that most people are familiar with. This iconic phrase was penned by a marketing agency for DeBeers in 1948 in response to slackening diamond sales in the United States. This statement became synonymous with marriage in our culture and helped keep one of the most powerful companies in the world on top of the diamond trade.
In his book Diamond: The History of a Cold-Blooded Love Affair, Matthew Hart includes a perspective on the origin of DeBeers and how they shaped the diamond market. This book provides the reader with an excellent overview of many areas of the diamond business and is a great start to learning more about the forces that shape the industry. I highlight some of the information specifically related to DeBeers below.
Formed in 1880 in South Africa, by 1900 DeBeers controlled 90% of the worlds rough diamond production. The history of the company is fascinating and Hart presents it with a lot of detail on the colorful, real life characters that formed the company. The short story is that DeBeers truly had a monopoly on the worlds diamond supply which kept prices artificially high for 100 years or more. They called their system “single channel marketing”, which meant they controlled rough diamonds from mine to market. DeBeers would take in rough diamonds from their own mines, as well as buy up production from other sources and consolidate all of the goods in London. The diamonds would only be sold to certain diamond cutters called “sightholders”. DeBeers would sort the rough into “boxes” and they would be sold to sightholders at a price determine by DeBeers. The sightholder wouldn’t even know what was in the box! The process of becoming a sightholder was very competitive and elusive. If at anytime demand for diamonds was slowing down, DeBeers would simply reduce supply and offer less material to sightholders.
By the late 1990’s DeBeers was facing increased rough diamond competition from Canadian and Russian mining operations and they were forced to rethink their position in the diamond market. They made the shift into retail, selling their own jewelry direct to the consumer. The early 2000’s saw them reducing much of their diamond stockpile and enjoying record profits. They put the resources that created “A Diamond is Forever” into advertising for their own retail stores and branded Forevermark diamonds.
DeBeers is still very involved in many facets of the diamond industry, but their monopoly over supply has come to an end. It’s almost hard to believe the level of absolute control they once held over the market. Mathew Hart does an excellent job of presenting their history as part of his book, and I highly recommend you give it a read. Please send us your questions or comments here, and subscribe below to be kept up to date on new content.
