Thread by @SahilBloom

De Beers literally created the global diamond industry.

It's a fascinating—and controversial—tale of psychological hacks, marketing campaigns, and market manipulation.

Here's a breakdown of the crazy story:

1/ For most of history, diamonds were not a particularly important gem.

Largely found in India and Brazil, they were rare, but had little intrinsic value.

Then in 1870, large diamond mines were discovered in South Africa—a discovery that would change the diamond world forever.

2/ The new South African mines would be producing enormous quantities of diamonds.

That presented a problem for their British investors.

In a free market, the glut of supply—and associated dent in the perception of scarcity—would send the price of diamonds into free fall.

3/ Given diamonds did not have any major industrial use cases to buoy demand, the perception of scarcity was critical to their price and desirability.

So in 1888, a British financier named Cecil Rhodes led a push to merge & consolidate the various South African mining companies.

4/ The new company—or cartel—was named De Beers Consolidated Mines, Ltd.

Its goal: to manage diamond production and continue to perpetuate the perception of scarcity and desirability that was so important to the price of the stones.

5/ In the 20th century, De Beers methodically expanded its influence over the entire diamond supply chain.

In addition to having control over diamond mining and production, it held direct or indirect control of the major diamond trading companies across Europe and Israel.

6/ With its far-reaching empire, it was able to control production and distribution of the stones.

But there are two sides to a market: supply and demand.

Many cartels have managed to manipulate supply—but demand is much more elusive beast.

De Beers had work to do...

7/ In 1938—with the U.S. recovering from the Great Depression—De Beers commissioned N.W. Ayer, a NYC advertising agency, to work on a diamond campaign.

At the time, diamonds were simply not a mainstay of the cultural zeitgeist.

The price was depressed due to lack of demand.

8/ Some men gifted diamond engagement rings, but it was far from standard practice.

Ayer set to work on two fronts:

(1) Convince men that diamonds were a show of love—and that the size/quality was proportional to the love.

(2) Convince women that engagement involved a diamond.

9/ A few of their tactics:

Movie stars were given diamonds to wear in public.

Publications were seeded with stories of the importance of diamonds to these stars.

Designers were paid to talk about the trend towards diamonds.

Lectures at high schools on the topic of diamonds.

10/ All of this was working, but the progress was slow.

They needed something big and splashy—something to move the needle.

That something arrived in the late 1940s, when De Beers and Ayer crafted a slogan that would change the diamond world...forever.

"A Diamond Is Forever"

11/ The slogan was perfect.

It elicits eternal love, which is surely a romantic notion that any soon-to-be engaged person wants to create.

It also limits the inclination to resell a diamond (if it is, in fact, forever). Limiting the resale market keeps prices steady.

12/ In a famous piece in The Atlantic, Ed Epstein commented:

“Even though diamonds can in fact be shattered, chipped, discolored, or incinerated to ash, the concept of eternity perfectly captured the magical qualities that the advertising agency wanted to attribute to diamonds.”

13/ Alongside the new flagship marketing campaign, De Beers quietly convinced men that the size and quality of the diamond was important.

The "one month salary rule”—that a man should spend one month's salary on a ring—was born (and inflated to three months over time).

14/ The marketing campaign was a smashing success.

Over the 40 years from 1939 to 1979, De Beers U.S. wholesale diamond sales skyrocketed from $23 million to $2.1 billion.

De Beers had successfully manipulated demand on a grand scale and had the numbers to prove it.

15/ They even replicated their success in Japan.

De Beers launched a campaign that positioned diamond engagement rings as tokens of modern Western values.

In 1967, only 5% of Japanese engagements involved a diamond engagement ring. By 1981, it was 60%.

🤯🤯🤯

16/ Today, De Beers is much less powerful than at its height in the mid-20th century, but its legacy remains extensive.

Broad-based cultural pushback against the dark side of the diamond industry has led to the rise of alternatives.

Maybe diamonds aren't forever after all?

17/ To be sure, diamond engagement rings are still the standard in most Western cultures, but the ground may be shifting.

And rest assured, De Beers is still doing what it can to maintain the allure of the diamond. Check out source on this chart shared in @bopinion!

😂😂😂

18/ For more on this story, I recommend checking out my sources below:

theatlantic.com/magazine/archi…

theatlantic.com/international/…

businessinsider.com/history-of-de-…

So that is the controversial story of De Beers and how they created the global diamond industry.

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