How De Beers Created a Multi-Billion Dollar Industry From the Ground Up

How De Beers Created a Multi-Billion Dollar Industry From the Ground Up

Diamond ring is the symbol of love, wealth and commitment.

We know they’re overpriced, they lose value as soon as you walk out of the store, but we still go out of our way to get as big and expensive diamond as we can.

But it wasn’t always so. At one point huge diamond mines were discovered in South Africa, which meant that there’s plenty of supply. When there’s plenty of supply, then prices tend to plumment.

The financiers behind the South African mines realized this and created a plan to keep the prices where they are.

The plan was to monopolize diamond prices and stabilize the market.

They succeeded by creating De Beers Consolidated Mines, Ltd. and taking full ownership and control of the world diamond trade. While they stockpiled diamonds and sold them strategically to control price, De Beers Chairman Sir Ernest Oppenheimer cultivated a network of wholesalers all over the world.

The second part of the plan was executed together with an ad agency, as there was clear need to generate stable demand for diamonds. Diamonds were seen as something reserved only for the very wealthy.

Diamonds had to be tied to something that appeals to a wider audience.

So, how do they get more people to buy big diamonds in a bad economy? They needed to figure out a way to link diamonds with something emotional. And because diamonds weren’t worth much inherently, they also had to keep people from ever reselling them. What was emotional, socially valuable, and eternal? Love and marriage. Bingo.

This is an excellent article on the diamond industry and how smart marketing created the demand for a diamond ring.

Read more here. It’s a great read.

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