- During the last 135 years,
De Beers has been one of the most successful companies
of the diamond industry
and of the jewelry industry.
BCG and De Beers have partnered together
on an in-depth report
on the future of the natural diamond industry.
I'm here at the De Beers offices,
and together with me is Al Cook, the CEO of De Beers.
It's been 18 months since you've started in the role,
how do you assess the state of the industry?
- What we've got in diamonds at the moment,
is this mix of technological change,
social change, macroeconomic change.
So technologically, we've got lab-grown diamonds coming in.
Socially, we've got engagement rates,
which plummeted during COVID and after COVID,
and macroeconomically, we've got China
struggling with its growth rates,
whereas India is booming at the moment.
So it's been great to work with BCG
on looking forward to the long term
on the underlying trends.
- One of the more recent shifts
was a renewed focus on natural,
after the industry has seen some headwinds in the last years
by lab-grown diamonds.
During the last five years,
retailers have seen an incentive to push lab-grown
because lab-grown has offered higher margins.
Now the absolute dollar margin is higher
for natural diamonds.
How are you looking at all of this?
- You are absolutely right about the retailers.
For the last few years,
you could buy wholesale lab-grown diamonds very cheaply
and sell them as an equivalent to natural.
Now we're seeing customers saying,
"Look, we see there's a total difference between these
very different price points,"
and that means that retailers
can no longer get the margin they got,
and they need to go back to natural.
- One other area we did dive deep in our work together
was the structure of demand.
And one of the things we found is that by 2026,
75% of demand will come from consumers,
who are either Millennials or members of Generation Z.
How does that change the way you approach the market?
- So if you look, twice as many Gen Zs
will be focused on buying brands as the Baby Boomers.
I think there's another difference
on a real care around sustainability,
wanting to examine the carbon footprint
of a natural diamond.
And then I think there's a third piece around provenance,
wanting to know where we buy,
where what we buy comes from.
- Diamonds are luxury goods,
and as such, they're facing very specific headwinds,
but they're also facing inflation,
the general economic climate
or lower demand in certain regions.
- It's a really good point.
In some ways, diamonds are a fantastic barometer
of what's actually happening in an economy
because they're something that people buy
when they've got a little bit of money.
In China, demand is coming down,
as people face challenges around their housing price,
their share price portfolio, it's really tough.
What we're seeing in India is the opposite.
The housing market is doing well,
the stock market is booming,
and the amount of growth we're seeing in diamonds
is double-digit growth.
- Are you leveraging innovative marketing techniques?
- Yes, so I think the first thing we've done,
is drawn insights as to why people want natural diamonds.
The average age of marriage is going up,
people are having more second marriages.
What we're doing beyond that
is we're working with some of the really great retailers,
in particular with Signet,
which is America's biggest jewelry company,
and we're working with them
to leverage their understanding of their customers.
The third thing we're doing,
is we're really moving towards social media,
and understanding that a lot of people,
particularly Gen Z, particularly Millennials,
get a vast amount of information
on what they're going to buy from social media.
- Knowing all this,
where are you looking to take the industry from here?
- I think it's really exciting.
So the first thing
is I can't find another industry anywhere
where one company has led that industry
for a period of more than a century.
So we have quite a responsibility in De Beers
to lead the diamond industry
to the right place going forward.
The key to what we're doing
is reigniting the desire for natural diamonds,
in the same way that De Beers did so well with
"A diamond is forever,"
and all the wonderful ethos we created in the 20th century.
The second thing we need to do
is to build our brands behind that,
and we think there's a really powerful way
of connecting our brands, the customer experience,
to the source
in a way that we never could before.
- Thank you for sharing your insights, Al, very inspiring.
- Thank you.
(gentle music)