De Beers, the world’s largest diamond company, is the latest jeweler to offer synthetic gems as an alternative to more expensive mined diamonds.
A $200 diamond has a nice ring to it.
De Beers rocked the gem industry by announcing that it will start selling synthetic diamond jewelry for the first time in its 130-year history this fall, and the lab-grown gems will run just $200 to $800. That’s a steal compared to De Beers’ mined stones, which run upwards of 10 times that amount depending on clarity, color and other factors.
“There is a real opportunity in lab-grown diamonds to develop something that is fun, that is fashionable, and that is for the playful or casual occasion,” De Beers’ CFO Nimesh Patel told Moneyish.
— Lightbox Jewelry (@lightboxjewelry) May 29, 2018
So what’s the difference between “real” and “fake” diamonds? It takes billions of years for carbon buried hundreds of miles below the Earth’s surface to be transformed into natural diamonds by extreme heat and pressure, and the precious stones still have to be mined, cut and polished before they’re bling-worthy; hence the expense.
But synthetic diamonds, aka “lab-grown,” “cultured,” “created” or “man-made” stones, are produced in 300 to 500 hours by using advanced technology, and have the exact same chemical composition as natural diamonds. They cost 30% to 40% less than mined diamonds; they’re conflict-free; and they are often indistinguishable to the real thing from the naked eye — which is why synthetic diamond sales are expected to hit $1 billion by 2020.
While that’s still just 1% of the $14 billion global market of rough diamonds, according to Morgan Stanley, De Beers and other diamond companies have long criticized the synthetics encroaching on their turf. De Beers, which earns more than $6 billion annually in mining, selling and trading most of the world’s diamond supply, backed the 2016 “Real is Rare” campaign — the diamond industry’s first advertising campaign in five years — to court the millennials who weren’t buying as many engagement rings because they have been delaying marriage, paying down debt, or were more into spending their cash on experiences versus expensive gifts.
But now De Beers has taken a shine to the synthetic stones for jewelry, too. (It has produced lab-grown diamonds for industrial uses, such as cutting, grinding, drilling, mining, polishing, optics, semiconductors and sensors.) Its new Lightbox jewelry brand going on sale in September features lab-grown diamonds in millennial-friendly pastel pink, blue and white, which are being set in earrings and necklaces. The diamonds will run $200 for a quarter-carat, up to $800 for a full carat, with the jewelry pieces set to be “affordably priced,” according to De Beers. And each piece will be sold online and presented in a candy-colored cardboard gift box.
“We see moving into lab-grown diamonds as being very complementary to our core business,” explained Patel, who pictures younger women buying Lightbox jewelry for themselves. It’s for those “who want something they can wear day-to-day, and don’t want to worry about the fact that they are wearing something that is incredibly valuable and that is emotionally important to them,” he added. Losing a synthetic diamond necklace or pair of earrings worth a few hundred bucks at work or while on vacation is less traumatic than misplacing or damaging a natural diamond piece that cost four or five figures. “It’s not painless, but it hurts a lot less,” said Patel.
De Beers is a bit late to the party, however, as jewelers such as the Diamond Foundry backed by Leonardo DiCaprio (who starred in 2006’s “Blood Diamond,” which highlighted the conflict diamonds of Sierra Leone), as well as Spence Diamonds, Brilliant Earth, MiaDonna and Pure Grown Diamonds have been offering man-made gems alongside Earth-mined stones for years. “I’m proud to invest in Diamond Foundry Inc. — cultivating real diamonds in America without the human and environmental toll of mining,” DiCaprio said in a statement posted on the diamond maker’s site.
“I don’t think De Beers ever wanted to take part in this industry, but the recent progression of the lab-created industry put De Beers in a position where they had to make a strategic move like this in order to protect their natural diamond business,” Paul Zimnisky, an independent diamond analyst, told Moneyish. “I see this as a move by De Beers to stop the lab-created industry in its tracks, take control, and steer the industry in a way that clearly differentiates it from natural diamonds.”
Plus, while De Beers is hawking faux diamonds, it doesn’t intend to set them in engagement rings or anniversary jewelry, because it still firmly believes that “diamonds are forever.”
“Natural diamonds mark life’s greatest moments — an engagement, the birth of a first child — because they are incredibly rare, because they are three-and-a-half to four billion years old,” said Patel. “Lightbox jewelry is not for forever — but it’s fine for just now.”
“When you get married, you’re always gonna want to buy a natural diamond,” he added. “However, that doesn’t mean that you might not want a cheaper piece of jewelry for everyday use that matches your outfit.”
— Lightbox Jewelry (@lightboxjewelry) June 3, 2018
Zimnisky agreed. “Bridal will continue to drive natural diamond demand because of the emotional component of the purchase,” he said, “whereas a pair of stud earrings or pendant might be driven more by price, and this is where the lab-created alternative comes in.”
Yet people are willing to propose with man-made stones, as nearly 70% of millennials in a recent MVI Marketing report said they would consider a lab-grown diamond for an engagement ring center stone, a 13% increase from 2017. So De Beers may not want to stay too wedded to keeping Lightbox casual.
“[De Beers has] finally caught on to what we’ve already known from offering our customers the full array of choices for years … but they’re still doing it like a big corporate mined diamond company by trying to prevent consumers from considering a lab diamond for their engagement ring, and placing all sorts of other anti-consumer restrictions on the products they’re introducing,” Spence Executive Chairman Eric Lindberg told Moneyish. “The truth is that a huge number of consumers prefer created diamonds when they’re empowered to make the choice, and De Beers realizes that they’re going to get left behind.”
Spence Diamonds’ offers lets shoppers compare its “artisan created diamonds” with mined diamonds side-by-side, so that they can decide which stones they’d prefer in their jewelry. “A large number tell us that they think that the created diamonds are equal or superior to the beauty and quality of mined stones,” said Lindberg. “The vast majority love discovering that they can afford a much larger and equally or more beautifully-created diamond for their budget.”
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