Cred Jewellery director, Alan Frampton, shares his thoughts on the announcement that the De Beers Group has now launched into lab-grown diamonds jewellery.
Words by Alan Frampton
After years investing in lab-grown diamond production De Beers have entered the market. They knew this was coming. In 2012 when the Oppenheimer family sold their interest in De Beers to Anglo American for $5.1 billion they kept the lab-grown interest. They knew where the future would be.
The Oppenheimers were masters at marketing and story telling. Diamonds have only been a mass market commodity since after the second world war. The product, however, has had problems especially regarding funding conflict and poor environmental credentials. The costs of mining and the associated problems have opened the door to product development. Unsuprisingly as the diamond world has singularly failed to get to grips with traceability and transparency in the way everyone trades within. Consumers want to know more about how the product they are buying was made.
The graph above shows the increase lately in sales and the projected forecast for the sales of lab-grown diamonds. Millennials especially, but also the average consumer, are attracted by being able to buy a diamond that is exactly the same, much cheaper but hasn’t caused any social or environmental issues. De Beers chief executive officer, Bruce Clever, in a desperate marketing ploy to maintain market share, is saying they are rare, but anyone in the industry should know they are not, they are actually available in every high street in every city in the world. The world market is worth $80 billion (£60.2bn).
At the end of the day its consumers who will decide what they want to wear and giving them choice is the default position. In every other retail outlet on the high street we experience product development and choice and the jewellery industry is no different.
The really interesting part of De Beers’ announcement is that they are offering cheap jewellery without certificates. This is a clear attempt to undermine lab-grown diamonds to protect the diamond market. However they are shutting the stable door after the horse has bolted. It’s clear that despite decades of brilliant propaganda they have been panicked into this latest announcement. They talk about launching a new product by spending $97 million on a new factory in the USA which will take two years to come to fruition, then it will only produce 500,000 carats a year. It looks like they have the same management team who have taken years to build the third runway at Heathrow… responding to a new market force in a knee jerk reaction.
We all know that these industry politics will not influence the final outcome. Its the consumer who will decide and too many companies are offering the consumer choice to stop it now. There are enough well funded companies out there producing lab-grown diamonds who are not worried about De Beers and there old cartel ways. This will not effect the cutters , the polishers , the wholesalers or the retailers. Sales of diamonds are approx 130 million carats a year of which lab-grown is currently about 4 million. The problem is that they are much cheaper and the huge emerging markets of the far east will challenge the status quo of this market like no other force we have experienced before.
Like them or loathe them, as a retailer this is not the time to bury your head in the sand.