Natural Colored Diamonds: Full-spectrum Sales

The surest sign that natural colored diamonds have attained “in” status is the number of celebrities wearing them to high-profile events. Whoopi Goldberg, for example, wore yellow diamonds to the 1999 Academy Awards ceremony. This year, actress Heather Locklear wore pink diamonds to the Golden Globe awards. At the 2000 Academy Awards ceremony, Best Actress nominee Julianne Moore wore a 7.52-ct. fancy vivid yellow diamond ring and matching earrings. Oscar presenter Salma Hayek wore a 6.17-ct. fancy intense pink oval diamond ring, and pre-show host Tyra Banks wore an 81.62-ct. fancy intense yellow cushion-cut diamond set in a pendant. All these stars' colored diamond jewelry came from Harry Winston.

Sales of natural colored diamonds have been rising, say suppliers and jewelers. Although sales of the stones account for a fraction of total jewelry revenues (5%, by some estimates), many jewelers report double-digit sales increases in recent years. Figures from the Gemological Institute of America's Gem Trade Lab confirm these beliefs: Grading and origin identification of colored diamonds increased 25% in 1997, 20% in 1998, 38% in 1999, and an astonishing 79% in the first quarter of 2000, says Tom Yonelunas, GTL's chief executive officer.

Edward Goldman, vice president of Maurice Goldman & Sons Inc., a New York City supplier, says the company's sales of natural colored diamonds increased 300% over the past three years. He attributes the rise to heightened consumer awareness. David Kirschenbaum, co-owner of Diamond Pairs, a supplier in New York City, agrees. “You read about them in the New York Times and in Entertainment Weekly,” he says.

What's available. Yellows are the most popular natural colored diamonds. Radiant cuts, considered the best cut for yellows, are the most sought-after, especially in the 2-ct. to 5-ct. range.

Pink diamonds, rarer and more costly than yellows, rank second in popularity. In 1998, the Argyle Diamond Division of Ashton Mining Co. in Australia mined fewer than 10,000 cts. of pinks, or less than .001% of all diamonds produced by the company for the year. Demand continues to rise, according to company data, but suppliers and retailers such as Tom Meyer of Henry Meyer Co., a diamond dealer in New York City, say high cost (and, occasionally, poor quality) prevents his company from stocking an abundance of pinks. As a result, jewelers and suppliers sell what's available—which isn't much.

Natural blue diamonds are also rare and high-priced. Farsi Jewelry Manufacturing Co. in Los Angeles says its sales of blue diamonds have been rising because of the uniqueness of the product. But stones are so scarce that any increase is minimal. In the past three years, Farsi has sold an additional 1-ct. blue diamond each year.

Reds and greens are the rarest of all natural colored diamonds and remain well beyond the means of most consumers. In fact, Alan Bronstein, director of Aurora Gems in New York City, says he's never seen a “true red diamond.”

In the past five years, gemology has changed its expectations of reds, he says. “We're seeing a lot of saturated pink diamonds with brown or purple hues being graded as red based on current GIA nomenclature,” notes Bronstein.

GIA says it is conservative with the red grade, although GIA officials would not reveal how many their labs have graded in recent years. Tom Moses, vice president of identification services at GTL in New York City, suggests there may be a few more red diamonds in the marketplace, thanks to diamond craftsmen who have cleverly refaceted stones so the secondary color seems to disappear.

Bronstein notes that green diamonds are extremely rare, but more exist now than 10 years ago. “Cutters have improved their techniques and no longer cut away natural radiation stains, evidence of a natural colored green diamond,” he says. In addition, cutters stopped overheating green diamonds on the cutting wheel, which eliminates natural green tones.

Consumers are buying “cognac” and “champagne” diamonds—also known as browns and light browns. “People who have developed their own personal taste in diamonds aren't afraid to wear them,” says Bronstein. A .5-ct. cognac briolette from Maurice Goldman & Sons Inc. has a suggested retail price of $400.

Fancy colored diamonds usually wind up as fancy cut diamonds. “It's not that rounds are that rare, but a round cut loses its color more than a fancy,” explains Meyer. Radiants are the most popular cut, and ovals are runner-up. Because ovals have fewer facets than radiants, they showcase color better, says Jay Murawski of Joden Jewelers in Grove City, Pa. Pear shapes rank third in popularity. Heart shapes and marquises are the most rare and costly.

Pricing the stones. “Pricing these diamonds is just not as simple as pricing the white ones,” says Kirschenbaum. In fact, setting prices for natural colored diamonds is highly subjective and depends on individual perception of beauty as well as availability of goods. Suppliers evaluate color, shape, and size and compare their stones with other colored diamonds on the market.

Says Bronstein of markup on these stones: “Somebody's got to be competitive. But you'll lose customers if you abuse them with exorbitant markups.” Be sure you have multiple sources for stones, he advises. “You'll have a better indication of actual value if you shop around.”

Retail markups on colored diamonds vary considerably, ranging from 25% to more than keystone. Comparisons with colorless diamond prices don't provide a useful guide. For example, Harton Wolf, a diamond buyer for Schwarzschild Jewelers in Richmond, Va., has a 1.16-ct. radiant-cut fancy vivid yellow diamond comparable in size to a D-colorless stone, but the yellow's price is 75% higher than the price of the colorless diamond.

Selling colored diamonds. Smaller colored diamonds, including melee, are more economically attractive to most consumers, even when sold at keystone prices. The appeal of jewelry that uses small colored diamonds depends more on a piece's design than on the characteristics of individual stones. Large, beautiful stones—the rarest of all—are so expensive that a markup of more than 50% is unrealistic for most consumers. “This is why many of these [big colored diamonds] end up at Sotheby's,” Kirschenbaum says. Simple and classic lines are most suitable for jewelry that has a single colored diamond of a carat or more as its focal point—the stone's natural beauty requires little embellishment.

Colored diamonds are special, and selling colored diamond jewelry requires special attention. “Most stores aren't knowledgeable enough about these diamonds,” says Murawski. For example, it's a mistake to sell colored diamonds the way you sell colored gemstones. They're much more rare, and a sales presentation should focus on that rarity.

Jewelers must be sensitive to the uniqueness of colored diamonds, Wolf advises. “You must express your love of them to consumers to successfully sell them,” he says. Begin by asking your supplier for information and promotional materials as well as advice on how to increase consumers' affection for the stones. But the best way to learn to appreciate colored diamonds, of course, is through first-hand experience.