The year 2021 was one of the most successful years for the world's largest diamond manufacturer, DeBeers, whose revenue touched $5.6 billion as opposed to $3.4 billion in 2020. Rough diamond sales rose to $4.9 billion (as opposed to $2.8 billion in 2020). The year also saw a 35% growth in the company's branded jewellery business, which includes DeBeers Jewellers and De Beers Forevermark. "In 2021, the demand levels were higher than pre-crisis (Covid-19 pandemic). When you think of the magnitude of the crisis, it's a remarkable re-bounce," Marc Jacheet, CEO of De Beers Brands, says in an interview with Fortune India.
Though the turnaround of the diamond industry after the lockdown certainly has to do with consumers disposable income going up as their spends on travel and other outbound activities took a beating, Jacheet believes it is the resilience of the entire value chain of the industry that led to the resurgence of consumer demand. "The pandemic forced the industry to be a lot more focused. The resilience throughout the chain - from government partners to site owners and retailers, their resilience to adapt, to try, to course-correct with speed and agility has been incredibly rich. In many countries the only link with the end client was digital and our people adjusted in record times," explains Jacheet. "They responded to ambiguity with agility, their response to complexity was focus and their response to volatility was to take firm decisions to overcome the difficulties and being captain in the rough sea," he further adds.
Diamonds in a VUCA world
However, with life coming back to normal and travel opening up, will 2022 be as successful as the year that went by? Jacheet says that VUCA (volatility, uncertainty, complexity, ambiguity) is a way of life today. "The truth is it is hard to predict the way the future would be, given the context we operate in. The level of uncertainty is enormous…it began with the pandemic and now it's the Ukraine events. It has created dual effect on the industry - disturbance and de-stabilisation of the world balance and it is putting tension on raw materials. It has slowed down economies, there is re-launch of inflation and to fight inflation there is rise in interest rates. It is also contracting the wealth which could lead to potential risks. The war has impacted the diamond industry but the natural diamond industry has been incredibly resilient."
Jacheet's optimism also comes from the emotional value that a diamond carries. "It's not the first time we have faced crisis. There will always be men falling in love with women, there will always be women turning 40 or giving birth, there will always be achievements in life you will want to mark. There is a need in any human being to be believed, to be belonged and to be loved."
Business With Purpose
To do business in a VUCA environment, "purpose" becomes crucial, says Jacheet. "We tell our teams never to forget who we are and where we come from. Natural diamonds are absolute wonders and miracles of nature, it was created two billion years ago or more in conditions that are extremely rare now. Two billion years later, they get unearthed and they get sold. The way we process is unique, every single rough of diamond is unique and precious. Therefore, it is important to know what and why we do. Our purpose is to bring joy to the world through our exceptional products, exceptional gravity and preciousness. You need to move people with a sense of purpose and the why of the business, that's what I do everyday."
The diamond industry is rather infamous for its lacklustre employee practices at the mines. The De Beers head honcho claims their HR practices at the mine level are impeccable. "When we started operations in Botswana, the people were suffering. There was just 3 kms of road, AIDS everywhere. Today, there is 3,000 km of road, thousands of little girls going to school and hospital everywhere. We are cruising towards carbon neutrality by 2030. It's far from the image that is being perceived."
"We have a responsibility to the world and secondly what we do, we do it exceptionally well, with immense sense of ethics," he further adds.
The consumers are asking for purpose too. They are asking tough questions about whether the diamond they buy has been mined sustainably, whether the people working in the mines are being treated ethically. There is a lot of debate around conflict-free diamonds too. "Those are not tough questions, they are legitimate questions," says Jacheet.
The generation next, values purpose on top of value of the diamond. "Value is the intrinsic value found in a stone, values is the impact it has. The perception of status is changing, it comes not from vanity but generosity. We are seeing a much more attentive, generous and caring generation. It's not just millennials and Gen-X, but their mothers are also driven by purpose. They listen to their young kids. We see more appetite to know where the diamonds come from because if you care for quality, you want to know where it comes from, so provenance is the first sign of quality."
DeBeers operations, claims Jacheet are absolutely transparent and audited. "We have the best ethical practices you can ever imagine. Safety is an absolute priority at our mines. The amount of tech investment is high-tech. For instance, the in diamond recovery vessel we have in Namibia, 95% of people on that boat are high calibre engineers."
With conversations of purpose and sustainability taking centre-stage, there is a considerable consumer pull towards lab-grown diamonds and brands across the globe are offering jewellery collections made out of lab-grown diamonds (which is almost 3/4th the price of a natural diamond). De Beers itself has a lab grown diamond vertical, Lightbox. Jacheet says while there is a market for both lab-grown and natural diamonds, he doesn't agree that lab grown diamonds are more sustainable. "Over 80% of lab grown diamond is produced by non-renewable energy, those have carbon footprints higher than natural diamonds."
He goes on to compare the carbon-dioxide used in polishing natural diamonds with the carbon-dioxide emitted by an airplane that flies between Mumbai and New York. "You need about 150 kgs of carbon-dioxide per karat to polish a natural diamond, while Mumbai-New York plane will consume at a tonne of carbon-dioxide. You can polish 6 karats of diamond at the price of a Mumbai-New York flight," argues Jacheet.