The diamond industry must significantly increase its marketing spend to ensure the trade’s longevity. This need is highlighted by the difficult conditions the sector has endured over the past few years.
Recent challenges have led to a lack of confidence in the diamond trade that resulted in a seemingly endless stream of financial misconduct carried out by a minority of ill-intended merchants. Our trade representatives need to introduce stringent measures that will combat such misconduct.
More importantly, consumer appetite for our product has stagnated in this tough market, while the absence of marketing and innovation has had a further negative effect on demand. We must collectively work to restore the appeal of our product among consumers.
The diamond industry exists thanks to breakthrough marketing by De Beers, with its iconic “A Diamond is Forever” campaigns becoming entrenched in the consumer mindset.
It’s no coincidence that as De Beers’ marketing budget surged in the 1990s and early 2000s, spending on diamonds by US consumers tripled. Government data shows that net imports of diamonds to the US grew from $2.41 billion in 1990 to $7.15 billion in 2007, before De Beers shelved its generic marketing the following year. As the investment in category marketing declined, demand slowed and net imports to the US dropped to $3.96 billion in 2018.
At the same time, polished prices have been on a constant decline and our stock has devalued by some 20% in the last decade. The RapNet Diamond Index (RAPI™) for 1-carat diamonds is down 48% since its highs in mid-2011.
Of course, industry dynamics have changed. Increased competition in both the mining and retail ends of the supply chain has made it counterproductive for companies such as De Beers to invest heavily in generic marketing as it promotes its competitors’ product. Therefore, it is vital that all diamond industry participants contribute to category marketing as a collective.
We must reinvent the way the industry tackles marketing, and to do that we need to increase our budget radically. Raising the necessary funds on a continual basis is possible by taking a small contribution from all diamond exports that would be earmarked to promote the product. That would include:
By Shashin Choksi & Siddharth Choksi
About the authors: Shashin Choksi, director of Swati Gems bvba, is a second-generation diamond merchant from Antwerp, with over 40 years of experience in the industry. Shashin is also a dedicated husband and father of three.
Siddharth Choksi holds a degree in business administration degree from IE Business School and currently works at a venture capital fund in Amsterdam. Since a young age he has undertaken a number of internships within the diamond and jewelry industry, gaining exposure to the various stages of the trade’s supply chain.