Russia

In December, Alrosa launched “She Said Yes,” a generic advertising campaign for the domestic market that aims to promote diamond jewelry as a symbol of love and lasting emotions — something the company has never done before. The campaign’s main theme, a romantic proposal with a diamond engagement ring, is novel for Russian consumers. While the tradition has been part of Western culture for a long time, reinforced by decades of De Beers marketing efforts, Russia only became familiar with it after the fall of the Iron Curtain.
   “Our people have been exposed to it for the past 25 years, through watching Western movies and TV shows,” Alexander Kurgansky, founder and CEO of the Brilliant24.ru online diamond store network, explained to Rapaport Magazine. “And today, the younger generation is beginning to try and make it part of their life.”
   However, while classic solitaire diamond rings constitute up to 90% of his company’s sales, it is still hard to determine what proportion are for engagements, as rings with this design are also a traditional gift for birthdays and anniversaries in Russia, he pointed out.

Large demand, small stones
Eduard Utkin, CEO of the Russian Jewelers Guild Association, confirmed that Russia had no official statistics regarding the sale of engagement rings compared to other types of rings, but he said the trend had become noticeable in the past three or four years.
   Smolensk Diamonds, manufacturer Kristall Smolensk’s jewelry branch, estimated that engagement rings made up 3% to 5% of its total sales, while Estet Jewelry House, a major Moscow-based jeweler, said they accounted for up to 40% of its sales. Estet offers more than 100 solitaire diamond ring designs suitable for engagements, according to its marketing director, Elena Neretina.
   Nikita Poklad, president of the Russian Online Jewelry Association, said his organization had registered a stable 20% year-on-year growth in online engagement ring sales over the past few years. Meanwhile, premium diamond-jewelry label Gevorkyan has developed an entire collection of engagement rings and strongly believes demand will grow, reported brand director Laura Petrichenko.
   However, all the jewelers who spoke to Rapaport Magazine said the main complication was the size of the most sought-after gems. As the Russian population’s spending capacity shrinks, most customers are settling on rings featuring a stone under 0.25 carats. This, according to Utkin, presents a serious challenge to the Alrosa campaign.
   “Diamonds of this weight are not produced in Russia,” he explained. “They mostly come from India, so while the campaign may boost the demand for diamond jewelry on the whole — which is a good thing — it may fail to promote Russian-cut diamonds on the domestic market.”

Competing with technology
Utkin believes the rapidly developing global synthetic-diamond industry might also harm the campaign. “Time-wise, demand for engagement rings in Russia began to grow just as lab-grown diamond jewelry started seriously competing on the market. As a result, we also see many young people buying rings with synthetic stones, tempted by lower prices,” he commented.
   Alrosa said that after finishing the initial stage of its campaign on February 14, it would process the results and possibly determine further marketing strategies. The miner is considering developing a sports theme in cooperation with its partner organizations, which include the Russian Federation of Dance Sport and Acrobatic Rock’n’Roll, the Russian Wrestling Federation and the Russian Martial Arts Confederation.

Article from the Rapaport Magazine - February 2018. To subscribe click here.