DE-Economist 9 October 2016

A DIAMOND IS
FOREVER

Introduction

Although the tradition of exchange of rings at the time of wedding is centuries old, it was the De Beers
diamond cartel that made diamond rings the symbol of love. Spending thousands of dollars and buying a
diamond ring for your loved one has become a norm.

The truth is, the actual worth of the ring is less than half of what you paid for it the moment you leave the
jewellery shop. Shocked?! Yet, we still feel compelled to buy them anyway. This is how strong the impact
of marketing can get.

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DE-Economist 9 October 2016

How did De Beers achieve this?

Ernest Oppenheimer took over De Beers in 1927, after his company Anglo American became a majority
stakeholder. The company picked up pace as soon became one of the most successful diamond cartels on
the world.

What they did was, they restricted the supply of diamonds on the market to raise the price of diamonds way
more than what the actual price would be. They were able to do this as they were successful in convincing
all the diamond miners across the world to market almost all diamonds though the De Beers Central Selling
Organisation (CSO). They were smart enough to even purchase the illegally smuggled diamonds in order to
have complete control over the market. This cartel was very successful thanks to the South African
government who long ago decided to nationalise all diamond mines. Majority of the licenses were given to
De Beers (Classic example of corruption).

A DIAMOND IS FOREVER
The De Beers campaign made sure that the diamond rings were marketed as a timeless symbol of love.
Hence, they introduced the phrase”A diamond is forever” in 1947. Since then, it has been a part of every
advertisement. In 1939, around 10% of the engagement rings sold had diamonds and by the early 90’s this
percentage had reached 80. The value of diamonds has slowly continued to climb since the late 1980’s.

De Beers came up with the idea that a man should spend his annual income to buy a diamond
ring. Ridiculous isn't it? That’s why they reduced it to two months income by 1930’s, hence
Fun Fact:
coming up with the phrase “How else could two months’ salary last forever?”.
The lady behind the
slogan “A diamond is
forever” came up with it
a day before she had to
So Scam Or Genius? submit it during the next
morning’s meeting. She
thought is was “just
De Beers was able to manipulate the market from the start, changing the attitude of people OK” but still went
across the world and convincing them that marriage is incomplete without a diamond ring. ahead with the slogan.

Since then, this slogan

They knew that their product wasn't as valuable as other jewels, so instead of marketing their
has appeared in every
product, they restricted it’s supply and mastered the art of marketing to values. Nobody was advertisement of De
interested to buy diamonds but they somehow projected it as the most valuable symbol of Beers and has played a
major role in their
love.
success.

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DE-Economist 9 October 2016

According to Forbes, there is only one way to make money. It’s the difference between the companies who
find value, package it and deliver it to consumers, and the company which makes value out of nothing.

So it’s basically from which side you look at it. You could see it as a scam or ingenious marketing.
Regardless of which side you are on, De Beers is a great example to learn from!

-Garvit Arora