70 Years On, Why "A Diamond Is Forever" No Longer Works

Consumers have changed and new rivals have arrived. The natural diamond industry needs a new story.

"A diamond is forever."

Even if you know nothing about the history of diamonds, you have heard this line, which AdAge named "Slogan of the Century" in 1999. It asks you to believe that a small, glittering stone is the ultimate symbol of love and marriage. To this day, true love and commitment are still the theme of engagement-ring ads from jewelry brands like Tiffany, Signet, Blue Nile and I Do.

But early last month, at the JCK trade show in Las Vegas, the Diamond Producers Association announced that the line would change to "Real is Rare. Real is Diamond." The association's CEO, Jean-Marc Lieberherr, said that although the old line sounded fine, it "is no longer suited to today's situation. For the new generation, the old diamond dream needs new symbols and new emotional meaning injected into it if it is to keep its place in people's lives."

Given that the line had held its power for 70 years, the verdict felt abrupt.

A Story Invented to Sell Diamonds

"A diamond is forever" came from the British diamond producer De Beers in the early 20th century. In fact, diamonds had stopped being rare once large deposits were found in South Africa in 1870. The British financiers who mined them realized that unless they did something, the diamond market would soon be saturated. So in 1888 they founded De Beers Consolidated Mines, Ltd. and took over the entire global diamond trade. Over the years that followed, the company's chairman, Sir Ernest Oppenheimer, built up a network of wholesalers around the world and released the stockpiled diamonds a little at a time, at a pace he set.

That still wasn't enough. Besides controlling supply, these British capitalists wanted to control demand, and they were in a hurry to find the market with the most potential. In the early 20th century Europe was busy fighting wars and its economies were in poor shape. The only place that looked reasonably stable was the new continent, America — even though demand for diamonds there had shrunk by 50% after the First World War.

With the target market chosen, De Beers went in 1938 to N.W. Ayer, an advertising firm in Philadelphia. The firm was said to be able to find out, through wide-ranging research, what Americans wanted from diamonds, and then change their attitudes through marketing. The research that came back said this: in the slump of the 1930s, Americans saw diamonds as a luxury reserved for the very rich and preferred to spend their money on cars and electrical goods. If De Beers wanted buyers at every income level, the best way was to tie diamonds to something people already felt strongly about.

What would do that? N.W. Ayer's answer was true love and marriage. Their proposal put it this way: "We want to create a situation where people feel that a diamond engagement ring is a must when they propose."

Diamond engagement rings had existed since the Middle Ages, but they were far from common, and before the Second World War only 10% of proposal rings held a diamond. In the first stage of this century-long campaign, N.W. Ayer used the oldest tools it had: celebrities and planted stories. Across all kinds of publications it wrote up the tale of a star proposing with a diamond ring, down to the stone's type, size and value. The point was always the same — the diamond brought a flood of happiness and made both people feel deeply loved. The stories came with tips headed "How to Buy a Diamond."

Four years of this raised diamond sales in the United States by 55%. The one thing still missing was a short, hard line that would fix the bond between marriage and diamonds for good.

Blame Frances Gerety. The story goes that one night in 1943, just before bed, she remembered she had a meeting the next day to pitch a proposal, so she scribbled down a line that felt good enough: "Diamond is forever." Her boss showed no excitement about it. Gerety went on writing copy for De Beers for 25 years, and for more than 70 years her line has shaped the men and women walking toward marriage.

Now, as Lieberherr says, "things have changed."

People No Longer Chase Natural Diamonds

Millennials, who buy most of the wedding rings, do not want diamonds as badly as their elders did.

They are starting families later. According to a Pew Research report, millennial women marry at 27 on average and men at 29. Merrill Lynch analyst Ashley Wallace also noted, in a research report last month, that millennials' attitudes toward diamonds have shifted. They dislike being told what to buy for their own marriage, and they "put more weight on value for money and care more about the environment and ethical production. Rather than mass-produced, standardized goods, they prefer unique, personalized products and experiences."

Softer demand has been showing up in the market for a while, above all in the United States and China, the world's two largest diamond markets. From 2004 to 2014, American spending on luxury electronics grew as fast as 14% a year, and spending on wine and champagne 11%, while diamonds rose just 1.9%.

China once gave jewelers high hopes. In the five years from 2009 to 2014, diamond demand there climbed 16% a year; from 2009 to 2011 rough-stone prices rose an average of 20% a year for three years running, and retailers like Chow Tai Fook opened thousands of stores in that stretch. But according to a Bain & Company report, the market turned turbulent between 2014 and the first half of 2015. Measured from May 2014, prices for polished stones fell 12% and prices for rough stones 23%.

Across the global market in 2015, diamond prices dropped by nearly 25%.

Weak demand set off a chain reaction: producers cut output. Some background helps here. Four producers control 65% of the world's diamond supply: Britain's De Beers (85% owned by the mining giant Anglo American, 15% by Botswana, in south-central Africa), Russia's Alrosa (mostly state-owned), Rio Tinto Diamonds (a subsidiary of another mining giant, Rio Tinto), and the Canadian listed company Dominion Diamond Corporation.

These four largely decide the prices at which the remaining small producers sell, because they sell rough stones to a small, hand-picked group of clients at prices that cannot be negotiated, and dealers in the secondary market do business on the pricing set in this "primary market."

Last year alone, De Beers cut its production forecast three times; output ended 15% lower, at 29 million carats, down from 32.6 million the year before. In the third quarter of the same year Alrosa sold only half of what it dug up, and Rio Tinto likewise cut its output target by 15%. A quarter of the world's supply of rough stones simply evaporated.

Worse is what the drop in supply did to the processing industry downstream and to the wholesalers and dealers. Rough stones usually leave Russia, Canada, Australia and African countries such as Botswana, Zimbabwe and South Africa, are cut and polished in India and Africa, and finally reach the jewelry dealers of Belgium.

The Indian state of Gujarat once cut and polished 90% of the world's natural rough diamonds, because costs there were a tenth of Europe's. Now countless processing plants have closed. At Godhani Gems, a factory that shut recently, 1,200 workers lost their jobs, and according to local reports several of them took their own lives.

In Botswana, where diamonds account for 20% of national income, four processing plants closed in 2015 alone and more than 1,000 people lost work.

In Belgium, exports of processed diamonds fell 4.5% year on year this January, and the more than 8,000 people working in Antwerp's diamond district grew anxious. Because the district leans heavily on bank loans to buy rough stones, Antwerp Diamond Bank, which made 10% of that lending, was forced to close.

By now you can probably see why people in the diamond business are in such a hurry. The Diamond Producers Association mentioned at the top of this piece was set up only last year, by three of the big producers: De Beers, Rio Tinto and Alrosa. As they did 70 years ago, they want another round of marketing to turn things around and create lasting new demand.

Over the next three years, $18 million will go toward promoting the new line, "Real is rare. Real is Diamond" — and the first target is very likely you, reading this.

A Threat From Lab-Grown Diamonds?

Look closely at the slogan and one detail stands out: the word "Real" appears twice. Besides pressing the case for the rarity of natural diamonds, the rival they are aiming at is no longer cars and electronics, as it was 70 years ago, but lab-grown stones.

Bloomberg, citing an industry report, noted that many young people no longer insist on a natural diamond when choosing an engagement ring. Some buy gemstone rings; plenty prefer lab-grown diamonds, which cost 30% less than mined ones.

Ever since Antoine Lavoisier worked out in the 18th century that a natural diamond is crystallized carbon, scientists have tried to cook one up. For 200 years they got nowhere.

The first man-made diamond came from General Electric. In 1954 the physical chemist H. Tracy Hall joined GE's Project Superpressure; after four years of experiments, the team heated carbon to 5,000 degrees Fahrenheit under enormous hydraulic pressure and produced a batch of tiny, glittering diamonds. The method came to be known as HPHT.

The stones were brown and fit only for industrial work, but they were hard, acid-resistant and good conductors of heat, so they went into drilling, grinding and cutting. GE filed for a patent in 1958, and annual output reached 750,000 carats.

These industrial uses looked like a business opportunity to a wave of countries. Germany, France, Sweden and the Soviet Union all began developing synthetic diamonds, and De Beers itself opened a laboratory in Johannesburg — it had no intention of watching Americans take all the money in man-made stones.

In 1971 the first synthetic diamond pure enough to wear as jewelry finally appeared. The inventor was GE again. The one problem was the price: no commercial case for it at all.

Only four years ago did the quality and commercial viability of synthetic diamonds begin to match the natural kind. In 2012 a company called Gemensis produced Type IIa diamonds. Just 2% of the world's natural diamonds reach that grade; Queen Elizabeth and Elizabeth Taylor are among the few who own one. The company renamed itself Pure Grown Diamonds in 2014 and sold its stones through more than 350 shops across the United States, at 20% to 30% below diamonds of the same grade.

Once the technology caught up, the market kept growing. According to Transparency Market Research, a firm that studies the diamond market, the global synthetic diamond market was worth $15.7 billion in 2014, with 360,000 carats produced; by 2023 the figure will reach $28.8 billion. Two months ago several synthetic diamond companies formed a trade group called the International Grown Diamond Association, aimed squarely at natural diamonds.

The irony is that the world's largest synthetic diamond plant belongs to Element Six, a unit of De Beers, the world's biggest natural diamond brand. It sits in London, and Element Six has plants in China, Ireland, Germany, Sweden, the United States and South Africa as well.

Fashion jewelry brands have started selling synthetic diamonds too. On Pandora's website, in the index of materials used in its products, you will find a stone called zirconia — a synthetic diamond. Swarovski launched a new line, Diama, this May, every piece made of synthetic diamonds, though for now it sells only online, to test how shoppers react. Daniel Cohen, who runs it, said: "Our audience is women who follow fashion and have their own money to spend. There is still a lot of potential in this market."

Even so, synthetic diamonds hold less than 1% of the diamond industry, and they have not reached the wedding-ring business that natural diamond producers mean to defend to the last.

"Synthetic diamonds are still more of a fashion accessory than something seen as a luxury good," says the Israeli diamond analyst Edahn Golan. "The engagement ring has become a convention, and the diamond is already an inseparable part of it. Brides-to-be still keep the two things quite separate."

Seen that way, what De Beers and its peers are doing looks like a show of nerves.

Nobody can say whether synthetic diamonds will take the place of natural ones in the minds of a new generation of buyers. The only sure thing is that whether or not the new slogan sinks in as deeply as the last, none of these changes has anything to do with true love.

Cover and inline images from charukesi.com, mentalfloss.com, jewelryfinds