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"A Diamond is Forever" - or so the slogan goes. This famous slogan was coined by De Beers in 1947 and perfectly embodied their objective at the time. They controlled a significant portion of the world's supply due to their stakes in diamond mines in Africa. But there was a small problem. Diamonds were plentiful, extremely so. Tonnes were being pulled out of the earth every year. So what if people had started selling diamonds onward and trading with each other? A booming second hand market would have been disastrous for De Beers. Enter the now famous slogan which implied a diamond should never be sold on.
Fast forward to June 2018 and the 130-year-old diamond company founded by Cecil Rhodes with funding from the Rothschild family, is to start selling diamonds “grown” in a laboratory. What????
"De Beers' focus is on natural diamonds," Simon Lawson, the current head of research and development at De Beers, told Bloomberg in 2015. "We would not do anything that would cannibalize that industry."
But in a volte face that has left people scratching their heads, the company has launched a line of jewellery with lab grown stones under the seriously unsexy brandname 'Lightbox'. So what happened?
Is De Beers really that nervous of losing sales to price conscious millennials who want to purchase sustainable, ethical alternatives to traditional mined diamonds?
As the technology has improved, multiple companies have sprung up in recent years appealing to customers looking for value and impeccable sustainability credentials.
Or does De Beers now see this as an extension of its offering that it size allows it to sell at a lower price than competitors?
Their current CEO said "Our extensive research tells us this is how consumers regard lab-grown diamonds — as a fun, pretty product that shouldn't cost that much — so we see an opportunity here that's been missed by lab-grown diamond producers".
De Beers has the technology, having manufactured synthetic diamonds for industrial purposes for years under the Element Six brand (It has a base in Shannon, Ireland too!).
Opinions differ, but I believe it highly credible that De Beers is looking to crush the competition and kill this market. Why?
1. De Beers has entered the market aggressively and is massively undercutting the competition putting many lab grown producers at risk.
"I think it completely changes the current lab-created industry," said Paul Zimnisky, an independent diamond analyst in New York. "With De Beers’ steep price undercutting and marketing influence, it will be very difficult for the existing players to continue without a very strong brand, or special jewellery design."
2. They don't appear to hold their new offering in high regard.
“We’re not pretending they’re unique or rare,” De Beers CFO Nimesh Patel said. “If you lose it, it’s not going to hurt as much as if you lost the real thing. It is not for those great moments in life you want something inherently precious."
3. De Beers has form. It is a classic move to exert its influence to move the market, rather than let market forces impact on De Beers - just like 1947's "A diamond is forever" campaign.
Let me know what you think. Is it a chance for them to have a share in a growing market? Or a deliberate step to control and devalue the lab-grown players to make real diamonds seem more appealing than ever? Where do you stand on the real vs lab-grown debate?
Photo: Ascot Diamonds.com
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