By Ben Janowski — JCK Online, November 1, 2009
Ads for the new De Beers program, using the brand name Everlon, broke in the consumer press in September. I suppose we must pay attention to any De Beers program, since their advertising and marketing budgets are the largest in the industry. But I don’t get this one.
De Beers’ programs have changed radically. At one time, De Beers would allocate $200 million or so each year for image-building promotions they developed. That was fine when De Beers controlled 75 percent or more of all rough output. As that declined, De Beers became determined that the benefits of the advertising accrued mostly to them and their clients. Even so, as programs were developed with specific product themes and characteristics, the market as a whole emulated the concepts.
These “beacons,” as De Beers calls them, enjoyed varying degrees of success. Many years ago, the Anniversary ring was successful, as were studs, the tennis bracelet, and the three-stone ring. Others were far less successful, but at least the ad programs got attention and provided something to pitch.
De Beers generally went with simple, generic pieces — the idea is to sell diamonds, not fancy jewelry — which made it easy for the trade to participate in or mimic.
But economic times have changed. De Beers is reluctant to back off from its programs entirely, even though other mining companies spend very sparingly on image advertising. A new plan is in the works, which has all major producers contributing to a global diamond campaign. It is as yet unimplemented, and the decline in diamond prices and production may impede the program. De Beers, however, is under unusual financial stress, with some $3 billion in debt maturing over the next year-and-a-half.
So this new “brand,” Everlon, is designed to meet two objectives: offer a line of jewelry available only at De Beers’ downstream stake-holders, and share the cost of the program among both sightholders and participating retailers. The central theme is a knot, a Herculean knot, of sorts.
On the plus side, the design is simple, easy to understand, and uses classic lines the public will probably accept. The pieces use a range of stone sizes (more or less fifths to 1.00 ct., in middle qualities) that De Beers has in excess supply. The design fits well with target customers, mostly chains.
But De Beers has burdened its clients with heavy participation costs. Sightholders work on thin margins when selling to chains, so the added costs for sightholders and retailers could make these basic pieces uncompetitive. De Beers counters, I’m sure, that the advertising and branding more than offset this aspect. But it takes years to build a real brand, and the public may not pick up on it in the four months that it will be promoted before Christmas. And can a brand be built on a long-used design? Does the design even warrant heavy promotion?
Other manufacturers and retailers will “emulate” the pieces. Even if some make straight knockoffs, I doubt any copyrights will stick (assuming De Beers copyrights the designs). This scenario looks like a price war, but with De Beers’ sightholders and their participating retailers on the short end. The retailers, who compete against each other in many markets, will face off with identical items that are branded–the very thing they have long avoided in diamond jewelry. And the competition will have a real price advantage.
As of now, only four sightholders are involved. At the London preview, De Beers refused to show the designs. I presume they feared knockoffs. It was suggested to me that it took some arm-twisting to get this far. Considering the product and the costs, it’s understandable that sightholders and retailers were reluctant. Some major retailers have said they won’t get into this program. Other comments I heard related to the essence of the product. People don’t believe larger diamonds will sell in such designs; some say it will quickly degrade to cheap, smaller diamonds; others say the ring won’t work because the diamond is off-center; nobody I spoke with was excited by the designs. The ads refer the reader to www.adiamondisforever.com to find participating retailers. I tried several times, on different days, and couldn’t get through.
If there was ever a time when innovative and cost-effective programs were needed, it’s now. But this program is a dud.
“If De Beers thinks that tying a knot in a noose that is already around their neck is going to get them out of their $3 billion mess, then I guess they have not met The Hangman, the consumer!” –Fred Cuellar