The Diamond Producers Association, or DPA, was formed in 2015 via an alliance between seven diamond producers: Alrosa; De Beers; Dominion Diamond Mines; Gem Diamonds; Lucara Diamond Corp.; Murowa Diamonds (owned and operated by RZM); Petra Diamonds, and Rio Tinto.
From the launch, the DPA’s goal is to “maintain and enhance consumer demand for, and confidence in, diamonds,” which is a mission that association leadership said also includes a commitment to “best-in-class ethical and sustainable operations and transparent business practices.”
Here, Jean-Marc Lieberherr, chief executive officer of the Diamond Producers Association, explains what that mission entails as well as the challenges faced by the DPA in implementing it.
WWD: How would you describe the current state of the diamond production industry?
Jean-Marc Lieberherr: Following a strong 2017 and firm 2018, worldwide diamond jewelry market growth has been slowing down in 2019 mostly as a result of economic uncertainty and temporary market factors, especially in China and India. Research shows that diamond desirability among consumers is high in all key markets, and we expect China and India to be future growth engines as desirability translates into purchases beyond main cities.
This, combined with lower production levels of rough diamonds, will result in strong prices throughout the value chain. In the short term, economic uncertainty and relatively low confidence are weighing on the market, which is adapting by reducing output levels. This is a healthy business dynamic.
WWD: What were some of the challenges that the DPA faced since forming in 2016, and how has the association addressed it?
J-M.L.: The first challenge was to secure marketing budgets and build from scratch a global marketing organization that can impact the way consumers think about diamonds, especially younger consumers. Since mid-2017, we have secured a sizable budget for our activities and have opened offices in Mumbai and Shanghai, in addition to our New York office, which opened in 2016.
Our first goal was to develop a global communications platform that would resonate with consumers worldwide. “Real Is Rare, Real Is a Diamond” is built upon our insights that consumers seek authenticity in their life, their relationships and the products they buy and wear — and what is a better symbol of authenticity than a 3 billion-year-old diamond?
We are still at the beginning of the journey, but we are finding that this platform resonates very strongly with consumers. We will soon launch a new global campaign that tells this story in a very innovative and impactful manner.
Another challenge we face is the antiquated perceptions about the diamond industry and the impact of diamond mining. To correct this widespread misinformation we commissioned an independent research company, Trucost, part of S&P Global, to quantify the collective socioeconomic and environmental impact of diamond mines operated by DPA members, together representing 75 percent of world production.
We issued a report titled “Total Clarity” that corrects many of the myths and misconceptions about diamond mining, highlights our positive impact on local communities and clarifies the reality of our environmental footprint, also touching on that of laboratory-grown diamonds.
The report also identifies opportunities for continuous improvement which we are acting upon.
WWD: With the words “recession” and “global economic slowdown” being bantered about, is there concern in the DPA about a downturn? Or is the industry more resilient to recessions?
J-M.L.: The DPA’s work is long term in nature. Diamond miners make a long-term commitment to the diamond industry as it takes years of investment to develop a new diamond mine, and the DPA’s work is part of that long-term commitment. A potential economic slowdown does not impact our approach and if anything encourages us to increase our investment to be in a strong position when the economy picks up again.
The diamond industry is not immune to economic conditions, and continuing to build consumer confidence in the inherent, lasting value of a natural diamond is central to our work. Unlike laboratory-grown diamonds — which can be produced in unlimited quantities, have no base for value and are therefore bound to see their prices decline very significantly as extra capacity is brought on line and technology matures — natural diamonds are finite and inherently precious, which allows them to uphold value.
It makes diamonds relatively more resilient to a downturn than other products.