Why Are Diamonds So Expensive?

In the modern world, diamonds have become a ubiquitous symbol of love and commitment in almost every culture around the globe—however, this wasn’t always the case. Before the 20th century, diamond wasn’t a common choice for engagement rings.

The secret to the rise of diamonds and how the gemstone became a staple in almost every culture is due to the South African-British mining company, De Beers. Through strategic advertising and market manipulation, they were able to elevate the status of diamonds.

This marketing campaign was one of the contributing factors to diamonds becoming an expensive gemstone. While it is still possible to source affordable good-quality wholesale gemstones, diamonds are in their own league with their elite price point.

Statistics show that the average cost of a round diamond solitaire engagement ring in Victoria and South Australia ranges from $12,500 to $17,000. Whether you’re looking to buy an engagement ring or you’re interested in why diamonds are so expensive—this article will cover everything you need to know, including the influence De Beers had.

What is De Beers?

De Beers S.A. is a South African company that is the world’s largest diamond producer and distributor. The company participates in almost every facet of the diamond industry through its various subsidiaries and brands.

While De Beers no longer has control of the diamond industry, they have historically had a monopoly on the diamond market, controlling prices. As of 2023, the company only controlled about 29% of the global diamond production market share.

Although De Beers’ control of the diamond market has loosened in the 21st century, they were the driving force behind the rise of diamonds and their popularity as a gemstone for jewellery.

A bejewelled discovery

Throughout history, diamonds have always been seen as a symbol of wealth, status, and power. For example, in medieval times it was common for diamonds to be incorporated into crowns, sceptres and other regal objects.

However, the De Beers corporation took it even further, making it a mainstay in modern romance culture. Now, almost everyone proposes with a diamond engagement ring, and the “two-month salary” rule has become popular as a guideline for how much to spend.

The corporation is named after the De Beers brothers, Diederik Arnoldus de Beer and Johannes Nicolaas de Beer, two Dutch settlers who owned a farm in South Africa. The two brothers ended up finding diamonds on their land, which caught the British government’s interest.

The British government eventually forced the brothers to sell their farm after the discovery in 1871 to a merchant Alfred Johnson Ebden. The farm would also then become the site of the Big Hole and the De Beers mine, two extremely successful diamond mines.

Eventually, this led to the creation of the De Beers corporation—which from its inception in 1888 until the start of the 21st century—controlled 80% to 85% of rough diamond distribution and was considered a monopoly.

 

The De Beers marketing strategy

Before the 1930s, diamond rings were rarely used as engagement rings. Other gemstones, like opals, sapphires, and rubies were seen as more exotic and were more commonly used as a symbol of one’s love during a proposal.

The major turning point for diamonds was an advertising campaign that is considered one of the most successful in history. De Beers launched a simple slogan in 1947, “A Diamond is Forever”, which is still in use today.

This slogan was part of a strategic, multi-faceted marketing campaign launched by N.W. Ayer & Son. The goal was to create an emotional and aspirational link between diamonds and romance, which succeeded.

Not only is the De Beers marketing campaign one of the most successful, but it’s also one of the longest-running of all time. The campaign was also backed with Hollywood integration, celebrity endorsements, and cultural integration—contributing to its success.

The campaign was designed to promote the idea that diamonds were the ultimate symbol of everlasting love and commitment—which still resonates deeply with audiences today. In the United States, around 80% of engagement rings feature a diamond.

 

The real reason why diamonds are expensive

There are multiple factors as to why diamonds are so expensive. While diamonds were always highly sought-after gemstones, De Beers played a massive role in inflating the prices of diamonds.

For decades, De Beers had almost exclusive control over diamond production and distribution, allowing them to charge premium prices. De Beers’ marketing campaigns also further branded diamonds as a luxury product, which has significantly inflated their prices.

Beyond the prestige and marketing, other factors can impact the price of a diamond. Not all diamonds are created equal, with four main factors deciding their worth:

• Clarity: This refers to the diamond’s freedom from internal and external clarity characteristics. The more “internally flawless” the better.
• Colour: The colour of a diamond evaluates how colourless, near-colourless, or yellow-brown tinted the diamond is on a scale of D-Z. D is colourless, while N-R describes a light colour.
• Cut: The cut of a diamond refers to the craftsmanship and quality of light behaviour. A high-quality diamond should have excellent light return, making it look more sparkly.
• Carat: The carat refers to the weight of a diamond. One carat is equal to 200 milligrams (0.2 grams).

The better these “four Cs (4Cs)” are, the more expensive the diamond is going to be. They can be the difference between a diamond that sells for a few thousand dollars and one that sells for millions.

The mine-to-market process

Another factor in why diamonds are expensive is the mine-to-market process. The journey from a diamond coming from a mine to a retail store (market) is a long and expensive process, which also drives up the cost of the diamond.

Diamonds need to be mined, cut, polished, and certified before a customer can even contemplate buying them. The mine-to-market process inflating prices is also why lab-grown diamonds and alternatives like moissanite are growing popular.

Lab-grown diamonds and alternatives like moissanite cut out a majority of the mine-to-market process. They also aren’t as costly and better for the environment. The diamond mining process is damaging to the environment, and in most cases unethical, employing child labour.

All of these factors; the mine-to-market process, the 4Cs, and De Beers’ control over the diamond industry have contributed to why diamonds are so expensive. Some diamonds have even sold for millions of dollars, like the ones listed below.

• The Blue Moon diamond, which was 12.03 carat, sold for $48.4 million in 2015.
• The Pink Star diamond was a 59.60-carat pink diamond. It sold for $71.2 million in 2017.
• The Graff Pink diamond sold in November 2010 for $46 million. It is a 24.78-carat emerald-cut diamond set in a platinum ring.

The largest diamond ever sold was a 118.28-carat oval-cut diamond. It holds the record for being the largest diamond and the most expensive colourless diamond to ever be auctioned, sold for $30.8 million.