WEBVTT 00:00:00.210 --> 00:00:02.100 - During the last 135 years, 00:00:02.100 --> 00:00:04.980 De Beers has been one of the most successful companies 00:00:04.980 --> 00:00:06.450 of the diamond industry 00:00:06.450 --> 00:00:08.220 and of the jewelry industry. 00:00:08.220 --> 00:00:11.370 BCG and De Beers have partnered together 00:00:11.370 --> 00:00:13.050 on an in-depth report 00:00:13.050 --> 00:00:15.990 on the future of the natural diamond industry. 00:00:15.990 --> 00:00:18.450 I'm here at the De Beers offices, 00:00:18.450 --> 00:00:21.840 and together with me is Al Cook, the CEO of De Beers. 00:00:21.840 --> 00:00:25.320 It's been 18 months since you've started in the role, 00:00:25.320 --> 00:00:27.690 how do you assess the state of the industry? 00:00:27.690 --> 00:00:30.270 - What we've got in diamonds at the moment, 00:00:30.270 --> 00:00:33.150 is this mix of technological change, 00:00:33.150 --> 00:00:35.970 social change, macroeconomic change. 00:00:35.970 --> 00:00:38.940 So technologically, we've got lab-grown diamonds coming in. 00:00:38.940 --> 00:00:41.130 Socially, we've got engagement rates, 00:00:41.130 --> 00:00:46.130 which plummeted during COVID and after COVID, 00:00:46.140 --> 00:00:49.380 and macroeconomically, we've got China 00:00:49.380 --> 00:00:51.120 struggling with its growth rates, 00:00:51.120 --> 00:00:53.160 whereas India is booming at the moment. 00:00:53.160 --> 00:00:55.290 So it's been great to work with BCG 00:00:55.290 --> 00:00:57.090 on looking forward to the long term 00:00:57.090 --> 00:00:58.530 on the underlying trends. 00:00:58.530 --> 00:01:01.200 - One of the more recent shifts 00:01:01.200 --> 00:01:04.290 was a renewed focus on natural, 00:01:04.290 --> 00:01:08.130 after the industry has seen some headwinds in the last years 00:01:08.130 --> 00:01:10.260 by lab-grown diamonds. 00:01:10.260 --> 00:01:12.750 During the last five years, 00:01:12.750 --> 00:01:16.920 retailers have seen an incentive to push lab-grown 00:01:16.920 --> 00:01:19.530 because lab-grown has offered higher margins. 00:01:19.530 --> 00:01:21.870 Now the absolute dollar margin is higher 00:01:21.870 --> 00:01:23.730 for natural diamonds. 00:01:23.730 --> 00:01:25.590 How are you looking at all of this? 00:01:25.590 --> 00:01:27.510 - You are absolutely right about the retailers. 00:01:27.510 --> 00:01:28.620 For the last few years, 00:01:28.620 --> 00:01:32.250 you could buy wholesale lab-grown diamonds very cheaply 00:01:32.250 --> 00:01:34.320 and sell them as an equivalent to natural. 00:01:34.320 --> 00:01:35.647 Now we're seeing customers saying, 00:01:35.647 --> 00:01:38.130 "Look, we see there's a total difference between these 00:01:38.130 --> 00:01:39.930 very different price points," 00:01:39.930 --> 00:01:41.460 and that means that retailers 00:01:41.460 --> 00:01:43.920 can no longer get the margin they got, 00:01:43.920 --> 00:01:45.510 and they need to go back to natural. 00:01:45.510 --> 00:01:49.350 - One other area we did dive deep in our work together 00:01:49.350 --> 00:01:51.270 was the structure of demand. 00:01:51.270 --> 00:01:54.660 And one of the things we found is that by 2026, 00:01:54.660 --> 00:01:58.470 75% of demand will come from consumers, 00:01:58.470 --> 00:02:02.490 who are either Millennials or members of Generation Z. 00:02:02.490 --> 00:02:06.270 How does that change the way you approach the market? 00:02:06.270 --> 00:02:11.270 - So if you look, twice as many Gen Zs 00:02:11.640 --> 00:02:14.190 will be focused on buying brands as the Baby Boomers. 00:02:14.190 --> 00:02:15.450 I think there's another difference 00:02:15.450 --> 00:02:18.660 on a real care around sustainability, 00:02:18.660 --> 00:02:20.910 wanting to examine the carbon footprint 00:02:20.910 --> 00:02:22.290 of a natural diamond. 00:02:22.290 --> 00:02:25.230 And then I think there's a third piece around provenance, 00:02:25.230 --> 00:02:27.090 wanting to know where we buy, 00:02:27.090 --> 00:02:28.590 where what we buy comes from. 00:02:28.590 --> 00:02:30.540 - Diamonds are luxury goods, 00:02:30.540 --> 00:02:34.590 and as such, they're facing very specific headwinds, 00:02:34.590 --> 00:02:37.350 but they're also facing inflation, 00:02:37.350 --> 00:02:39.180 the general economic climate 00:02:39.180 --> 00:02:42.450 or lower demand in certain regions. 00:02:42.450 --> 00:02:43.290 - It's a really good point. 00:02:43.290 --> 00:02:45.570 In some ways, diamonds are a fantastic barometer 00:02:45.570 --> 00:02:47.250 of what's actually happening in an economy 00:02:47.250 --> 00:02:48.510 because they're something that people buy 00:02:48.510 --> 00:02:49.710 when they've got a little bit of money. 00:02:49.710 --> 00:02:51.900 In China, demand is coming down, 00:02:51.900 --> 00:02:54.750 as people face challenges around their housing price, 00:02:54.750 --> 00:02:57.330 their share price portfolio, it's really tough. 00:02:57.330 --> 00:02:58.890 What we're seeing in India is the opposite. 00:02:58.890 --> 00:03:00.930 The housing market is doing well, 00:03:00.930 --> 00:03:02.670 the stock market is booming, 00:03:02.670 --> 00:03:05.700 and the amount of growth we're seeing in diamonds 00:03:05.700 --> 00:03:07.320 is double-digit growth. 00:03:07.320 --> 00:03:10.380 - Are you leveraging innovative marketing techniques? 00:03:10.380 --> 00:03:13.170 - Yes, so I think the first thing we've done, 00:03:13.170 --> 00:03:16.920 is drawn insights as to why people want natural diamonds. 00:03:16.920 --> 00:03:19.530 The average age of marriage is going up, 00:03:19.530 --> 00:03:21.240 people are having more second marriages. 00:03:21.240 --> 00:03:22.470 What we're doing beyond that 00:03:22.470 --> 00:03:25.770 is we're working with some of the really great retailers, 00:03:25.770 --> 00:03:26.820 in particular with Signet, 00:03:26.820 --> 00:03:30.180 which is America's biggest jewelry company, 00:03:30.180 --> 00:03:31.890 and we're working with them 00:03:31.890 --> 00:03:34.200 to leverage their understanding of their customers. 00:03:34.200 --> 00:03:35.220 The third thing we're doing, 00:03:35.220 --> 00:03:37.560 is we're really moving towards social media, 00:03:37.560 --> 00:03:40.050 and understanding that a lot of people, 00:03:40.050 --> 00:03:41.760 particularly Gen Z, particularly Millennials, 00:03:41.760 --> 00:03:43.560 get a vast amount of information 00:03:43.560 --> 00:03:46.020 on what they're going to buy from social media. 00:03:46.020 --> 00:03:47.250 - Knowing all this, 00:03:47.250 --> 00:03:51.120 where are you looking to take the industry from here? 00:03:51.120 --> 00:03:52.110 - I think it's really exciting. 00:03:52.110 --> 00:03:53.370 So the first thing 00:03:53.370 --> 00:03:56.220 is I can't find another industry anywhere 00:03:56.220 --> 00:03:58.800 where one company has led that industry 00:03:58.800 --> 00:04:00.150 for a period of more than a century. 00:04:00.150 --> 00:04:02.610 So we have quite a responsibility in De Beers 00:04:02.610 --> 00:04:04.110 to lead the diamond industry 00:04:04.110 --> 00:04:06.240 to the right place going forward. 00:04:06.240 --> 00:04:08.070 The key to what we're doing 00:04:08.070 --> 00:04:12.300 is reigniting the desire for natural diamonds, 00:04:12.300 --> 00:04:14.197 in the same way that De Beers did so well with 00:04:14.197 --> 00:04:15.627 "A diamond is forever," 00:04:16.653 --> 00:04:19.980 and all the wonderful ethos we created in the 20th century. 00:04:19.980 --> 00:04:21.900 The second thing we need to do 00:04:21.900 --> 00:04:24.510 is to build our brands behind that, 00:04:24.510 --> 00:04:26.790 and we think there's a really powerful way 00:04:26.790 --> 00:04:29.460 of connecting our brands, the customer experience, 00:04:29.460 --> 00:04:30.293 to the source 00:04:30.293 --> 00:04:31.920 in a way that we never could before. 00:04:31.920 --> 00:04:35.820 - Thank you for sharing your insights, Al, very inspiring. 00:04:35.820 --> 00:04:36.930 - Thank you. 00:04:36.930 --> 00:04:39.513 (gentle music)