De Beers: Why We’re Going Into Lab-Grown Diamonds

De Beers is jumping on the lab-grown diamond bandwagon with its own line of lab-grown diamonds, called Lightbox Jewelry.

While De Beers has long produced synthetic diamonds through its Element Six subsidiary, this is the first time it’s manufactured them for gem purposes.

In an interview, De Beers executives say that the new lab-grown brand, part of a new stand-alone company, will be marketed very differently than other man-made gems on the market:

– Lightbox will feature pink, white, and blue diamonds.

– All three colors will be sold for $800 per ct., with sizes starting at 0.25 ct. and topping off at 1 ct. That means a 0.25 ct. stone will sell for $200. That is, executives note, as much as 75 percent less than its man-made competitors. “We don’t think synthetics should be priced as inherently rare or precious things,” says David Prager, De Beers executive vice president, corporate affairs.

– The diamonds will be sold only as jewelry, not loose.

– The company is specifically not targeting the engagement market. In fact, its initial product line doesn’t include rings, only earrings and pendant necklaces, though it’s possible rings will be added eventually.

– The diamonds will not be graded, as De Beers does not feel that a lab-grown product deserves grades, since it is manufactured and replicable. However, the stones will be “at the top end of the scale,” says De Beers director of strategic communications David Johnson.

– All the diamonds from 0.2 ct. up will marked by a newly developed permanent inscription that can’t be polished off.

– For now the diamonds will be sold online at the Lightbox site only, though it plans to  have brick-and-mortar distribution eventually.

De Beers is investing $94 million in a new production facility in Portland, Ore., that will eventually produce as much as 500,000 cts. of lab-grown diamonds a year, which will translate to 200,000 cts. of polished. The stones will be polished by a “third party,” a non-sightholder in India.

Lightbox will be headed by Steve Coe, who previously served as executive director of Element Six. Sally Morrison, also a De Beers veteran, will head up marketing.

Morrison says the brand was launched because De Beers saw an opportunity in the market, based on extensive consumer research.

“When we talked to various [focus] groups, it was clear they wanted [lab-grown diamonds] to be for less serious occasions, more fashion, more fun,” she says. “Lightbox is for people who want to have an accessible fun piece of jewelry. It takes its cue from cosmetics and fragrances. It eschews the theater of the velvet box.”

Morrison didn’t see the new line as competition for natural diamonds, noting that the company sees that market as something different.

“It fits a different space, a different consumer need,” she says. “We believe that this brand is different. That’s not unfavorable. It is just something else.”

Lightbox

From Lightbox Jewelry, De Beers’ venture into lab-grown diamonds

De Beers’ name will not appear in Lightbox’s advertising, says Prager. In addition, the new brand will not be marketed as conflict-free or eco-friendly, as “we don’t agree with that positioning,” he adds.

In interviews, De Beers executives, as they have in the past, routinely disparaged lab-grown diamonds as “less precious” than naturals, leading some to detect a lack of enthusiasm in the project.

But while Prager says that “De Beers will always be a natural diamond company,” he adds, “you don’t invest $94 million in a project if you are not enthusiastic about it.”

In the past, there have been reports that De Beers would have to give the government of Botswana 25 percent ownership of any lab-grown diamond product.

Prager declined to comment on any deal De Beers has with Botswana, but noted that the country has 15 percent ownership of the product through its shareholding in De Beers.

“We have had a lot of engagement with governments about this, at the highest level,” he says. “They have been incredibly supportive.”

When asked if De Beers wants to join the International Grown Diamond Association, Morrison answered, “Why not?”

Meanwhile, the Diamond Producers Association (DPA), the industry group that has taken an increasingly antagonistic line toward lab-grown diamonds, weighed in with a measured endorsement of De Beers’ proposal. De Beers is a founding member of the DPA.

DPA CEO Jean-Marc Lieberherr said in a statement: “The DPA has always been clear that more fair and transparent practices need to be adopted by synthetic diamond producers.… It is clear from the Lightbox positioning that they will market synthetic diamonds for what they are, low-cost pretty stones, and not for what they are not—real diamonds, rare, precious, and inherently valuable.”

(Images top and above courtesy of Lightbox Jewelry)

JCK News Director

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