Will the campaign of Desert Diamond will lead De Beers out of the Desert ?

By Leibish Polnauer & Diana Jarrett

Don’t Say We Didn’t Predict This

If you’ve been a long time LEIBISHER, you’ll recall my grave warning in 2018 about the
Lab-grown diamond promotion that was part of De Beers then ill-thought-out marketing
plan.
Turns out, it was the kiss of death. But De Beers CEO at the time, Bruce Cleaver,
thought differently. He marketed the daylights out of De Beers' LIGHTBOX venture with all
the promotional fervor they could muster.

Cause and Effect

This immense backing by De Beers gave lab-grown diamonds its much-needed
legitimacy by insinuating they are similar to earth mined diamonds. The bold move of Mr
Bruce Cleaver was definitely not clever- and it set De Beers on an unfortunate downhill
trajectory resulting in enormous damage to its core value. Billions of dollars of damage
to be exact.
It was like letting an evil spirit out of the bottle which then took over nearly the entire
jewelry industry. Polished diamond prices collapsed and continued to tumble at
breakneck speed.
The irony of this whole story is that Mr. Cleaver is one of the bidders for De Beers now.

Here’s How it Played Out

In 2011 De Beers 40% stake was sold by the Oppenheimer family to Anglo American
PLC for an $11-B valuation at the time. Since then, Anglo American reduced the book
value of De Beers three times.
Now it’s on the block for bellow $4-B.
Is there any good news in all this? Whoever buys De Beers will get many undervalued
assets. The previously estimated market value at $11-B valuation has long been
forgotten.

Signs of an Upturn?

De Beers, however, is starting to show some positive signs of survival and perhaps
even a recovery. It’s all via their latest global message, the Desert Diamond Campaign.
It could turn out to be their most inspiring concept since De Beers now legendary
Diamonds are Forever campaign from post war 1947.

Recovery By the Numbers

The beauty of this campaign is multi-fold in my humble opinion.

40 - 50 % of the rough that De Beers is mining is off-color goods in a light brownish
yellowish mixture. In truth these are normally slow selling items. But the visually
intoxicating Desert Diamonds concept draws the consumer in with its exotic (and
truthful) appeal. De Beers drew its inspiration from the arid desert landscapes where
many diamonds are harvested.

A Concept that Customers Can Envision

Now the shopper reimagines natural diamonds as rare earth mined treasures in an
endless variety of nuanced earth tones. Every bride knows there will not be another
stone exactly like hers in shape, size and subtle hues. Brilliant. She’ll proudly boast of
her Desert Diamond. And the best part is she’s right. Many celebrities have embraced
the Desert Diamond narrative and are loving their special engagement rings.

The Way I See it

So currently this rough diamond category is selling well. On top of that, It’s also out of
the Rapaport price list grip.
At last, perhaps, the tide is turning for these natural wonders. And not a minute too
soon.