De Beers, one of the most famous names in the world of diamonds, has a history that intertwines with the very story of diamond mining, marketing, and global trade. Here’s how this brand started and grew:
- Discovery of Diamonds in South Africa (1860s): The story of De Beers begins in the latter half of the 19th century when diamonds were discovered in South Africa. The discovery triggered a diamond rush, attracting prospectors and fortune-seekers.
- Cecil Rhodes (1871): Cecil Rhodes, a British businessman and imperialist, arrived in South Africa and started renting water pumps to miners. By 1873, he had saved enough to buy a claim in the burgeoning diamond fields.
Formation of De Beers
- Consolidation (1880s): Rhodes and his partner, Charles Rudd, formed De Beers Mining Company in 1888. The name came from the De Beer brothers, who owned a farm where significant diamond deposits were found. Rhodes and Rudd bought out many claims and established a monopoly over the South African diamond industry.
- Ernest Oppenheimer: In the early 20th century, Ernest Oppenheimer, a German diamond merchant, established mining in South Africa and formed the Anglo American Corporation in 1917. He later became the mayor of Kimberley for a period.
Growth and Dominance
- Global Monopoly: By the early 20th century, De Beers controlled about 90% of the world’s production and distribution of diamonds. They achieved this through a combination of owning the mines and establishing powerful sales alliances.
- The Diamond Invention: Perhaps De Beers’ most significant contribution was creating the market for diamond engagement rings. Their marketing campaign, beginning in 1939 with the slogan “A Diamond is Forever,” successfully established the idea that diamonds were synonymous with romance and the only acceptable gem for engagement rings.
- Control of the Market: Throughout the 20th century, De Beers managed diamond prices by controlling supply. They stockpiled diamonds in times of surplus and released them during shortages, effectively maintaining high prices and demand.
Challenges and Changes
- Antitrust Issues: De Beers faced numerous legal challenges regarding their business practices, particularly from the U.S. government.
- New Discoveries and Competitors: In the late 20th century, new diamond discoveries in Russia, Canada, and Australia challenged De Beers’ monopoly, as these sources often circumvented the De Beers-controlled diamond pipeline.
- Shift in Business Model: In response to these challenges, De Beers transitioned from its focus on market control to emphasizing brand, ethics, and sustainability. This shift was marked by the launch of the “Forevermark” diamond in 2008.
- Synthetic Diamonds and Ethical Concerns: De Beers also ventured into synthetic diamonds with Lightbox Jewelry and faced the need to address ethical concerns regarding “blood diamonds” and the environmental impact of mining.
De Beers is no longer the all-powerful monopoly it once was, but it remains a giant in the diamond industry, known for its legacy, brand power, and attempts to position itself as a leader in ethical and sustainable diamond mining and trade.
The De Beers story is one of ambition, market manipulation, incredible marketing savvy, and eventual adaptation to a changing world – both in the diamond market and in broader social and ethical expectations.