As global diamond sales continue to falter, Botswana and De Beers have unveiled a strategic marketing initiative aimed at reviving consumer interest in natural diamonds. This move comes at a crucial time, as the diamond industry faces a historic downturn, with natural diamond prices falling by 26% over the past two years and lab-grown diamonds experiencing an even steeper price decline of 74% since 2020.

In response to these market shifts, De Beers and the Government of Botswana—its long-term mining partner—have committed to co-investing in marketing efforts that emphasize the ethical and symbolic value of natural diamonds. These efforts, aimed at protecting the long-term value of natural diamonds, will include category marketing, promotional initiatives, and educational campaigns agreed upon annually. The financial responsibility for these initiatives will be shared by both parties, based on their respective ownership stakes in Debswana, the joint diamond mining company between De Beers and Botswana.

Industry Struggles Amid Market Pressures

The challenges facing the diamond industry have been underscored by De Beers’ recent sales figures, which indicate a troubling decline in demand. In 2024, De Beers’ sales of rough diamonds fell for the second time in the year, recording a provisional $315 million—a significant drop from $383 million in the previous cycle and a steep decline from $456 million during the same period in 2023.

While De Beers initially attributed this downturn to the traditionally slower summer trading period, industry analysts suggest that the market is facing deeper structural challenges. Consumer demand for natural diamonds has struggled to recover amid growing competition from lab-grown alternatives, economic uncertainties, and changing consumer preferences.

Lab-Grown Diamonds and Ethical Considerations

One of the key factors impacting the market for natural diamonds has been the rise of lab-grown diamonds, which have gained traction as a sustainable and cost-effective alternative to mined stones. These diamonds, produced in laboratories using advanced technology, are virtually identical to natural diamonds in terms of appearance and chemical composition.

Proponents of lab-grown diamonds argue that they offer a more ethical and environmentally friendly alternative, as they avoid the social and ecological issues associated with traditional diamond mining. However, this narrative has been met with resistance from industry giants like De Beers, which argue that natural diamonds hold unique rarity, emotional significance, and investment value that lab-grown diamonds cannot replicate.

Despite initial excitement around lab-grown diamonds, their plummeting prices suggest potential long-term challenges. Since 2020, prices for synthetic diamonds have declined by over 70%, due to an oversupply in the market and lower production costs. Industry experts note that while lab-grown diamonds appeal to budget-conscious consumers, their diminishing resale value and lack of rarity make them less attractive as a long-term investment.

Botswana’s Heavy Reliance on Diamond Revenues

Botswana has a vested interest in maintaining the strength of the natural diamond market, as diamonds account for more than 80% of the country’s export revenue and contribute significantly to its GDP and employment sector. The country has built its economic prosperity on diamond mining, with Debswana—its joint venture with De Beers—producing around 70% of De Beers’ rough diamonds annually.

Over the past decade, Botswana has sought to maximize its diamond revenue by negotiating stronger terms in its agreements with De Beers. In 2023, Botswana struck a landmark deal with De Beers, securing a 25-year sales agreement that granted the country a larger share of Debswana’s rough diamond production for independent sales. Under this agreement, Botswana’s state-owned Okavango Diamond Company will receive up to 50% of Debswana’s diamond output over time—a sharp increase from previous deals where Botswana had a smaller allocation.

Despite this progress, Botswana’s diamond-dependent economy is now facing significant risks due to declining global demand. If the downturn continues, job losses in the mining sector and reduced government revenues could impact public services, infrastructure projects, and national development goals. This vulnerability underscores the urgency behind Botswana and De Beers’ new marketing campaign to reignite demand for natural diamonds.

De Beers’ Shifting Strategy: From Mining to Marketing

For decades, De Beers dominated the diamond industry with its “A Diamond is Forever” campaign, which successfully ingrained the idea that diamonds symbolize love, commitment, and status. However, as competition has intensified, De Beers has been forced to adapt its business model, shifting focus from mining alone to branding and retail marketing.

In recent years, De Beers has invested heavily in branded diamond jewelry through its De Beers Forevermark and De Beers Jewellers divisions. These efforts aim to differentiate natural diamonds from lab-grown counterparts, emphasizing heritage, rarity, and authenticity as key selling points.

Additionally, De Beers has doubled down on transparency and sustainability initiatives to appeal to modern consumers who prioritize ethical sourcing and environmental responsibility. Through its Building Forever strategy, De Beers has committed to:

• Carbon neutrality across its operations by 2030
• Increased traceability through blockchain technology to track diamond origins
• Community investments in diamond-producing regions, including education, healthcare, and job creation

The Road Ahead: Can Marketing Efforts Reverse the Downtrend?

The success of Botswana and De Beers’ marketing campaign remains uncertain, as the global diamond industry faces multiple headwinds, including:

1. Economic Slowdowns – As high inflation and interest rates persist in key markets like the United States and China, luxury spending has softened. Diamonds, often considered a discretionary purchase, are particularly vulnerable to economic downturns.
2. Changing Consumer Preferences – Younger generations, particularly Millennials and Gen Z, are showing a preference for affordable and sustainable alternatives. Many consumers in this demographic view diamonds as non-essential luxury items and are more open to lab-grown options.
3. Competition from Other Luxury Sectors – The rise of high-end fashion, experiences, and technology-based luxury items (such as smartwatches) has diverted spending away from traditional jewelry.

To counteract these challenges, Botswana and De Beers’ marketing initiative will need to:

• Strengthen storytelling around the heritage and uniqueness of natural diamonds
• Educate consumers on the long-term value of natural diamonds versus lab-grown options
• Expand diamond accessibility through innovative designs and pricing strategies

Conclusion: A Pivotal Moment for the Diamond Industry

The diamond industry stands at a critical juncture, with Botswana and De Beers facing a formidable challenge in reviving demand for natural diamonds. While lab-grown diamonds have disrupted the market, the declining resale value and oversupply issues suggest that consumer perceptions may still evolve in favor of natural stones.

Botswana’s economy remains heavily reliant on diamond revenues, making this marketing push an essential strategy to preserve the industry’s long-term viability. Meanwhile, De Beers’ efforts to reinforce brand positioning, ethical sourcing, and sustainability commitments could determine its ability to maintain leadership in an increasingly competitive market.

As global economic conditions fluctuate and consumer attitudes continue to shift, only time will tell whether Botswana and De Beers’ ambitious marketing initiative will be enough to reverse the ongoing downturn and restore diamonds’ timeless allure in the eyes of the modern consumer.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

27th February, 2025