Gemfields has been making a lot of waves lately, with its late 2012 purchase of Fabergé and its CEO’s desire to become the “De Beers of colored stones.” (Of course, De Beers isn’t really De Beers these days. But that’s another story.) CEO Ian Harebottle stopped by JCK’s New York City office yesterday to talk about the company and his plans for the future:
JCK: What do you mean when you say that you want to be the “De Beers of colored stones”?
Ian Harebottle: I grew up in Johannesburg, not far from De Beers’ head office. I love color and I thought there was a massive opportunity. One of the reason De Beers was so successful is because they had 70 percent of the world’s supply. That was what I tried to do at TanzaniteOne. We had a lot of success but not the success we were imagining. So I joined Gemfields in 2009, and the results have been phenomenal.
We now have 25 percent of the world’s emerald supply, 40 percent of the amethyst supply, and hopefully we are on target to control 30 percent of the world’s ruby supply. That is nowhere near 70 percent, but it’s sufficiently dominant.
Our big focus now is to find a sapphire source, but it’s not easy. We do have in our portfolio sapphire licenses in Madagascar. So certainly sapphire is at the forefront of our thinking. It is important to have those—emerald, ruby, and sapphire—that traffic light. But it’s great to have amethyst, chrome tourmalines.
JCK: De Beers, of course, promoted its product a lot. Are you also doing that?
IH: At Gemfields, we see our focus as the mine and the market, or as we like to say, the mine and the mind. We don’t want to control the whole channel; it’s specifically mining and marketing.
Most of our marketing has been in India, Arab states, China, and a fair amount in Europe and South Africa. We haven’t done much in the U.S. for a bunch of reasons: For a while, your economy wasn’t too strong. But now we are starting to focus on the U.S. and will soon be signing up a young Hollywood starlet.
Now, what does the diamond industry spend on advertising? It’s hundreds of millions of dollars. Relative to diamonds, we’re spending a smaller amount. But it’s the most spent by any leader in the colored stone sector—ever. And we’ve found one you start the seed marketing, manufacturers follow.
JCK: We have written about more brides choosing alternative engagement rings, many with colored stones. Why do you think that is?
IH: The diamond industry is an industry without a leader. Each of the big players is giving a different message. De Beers says diamonds are for engagement rings. Other people say something else. There are many mixed messages, and no clear leadership. We intend to be that leader for colored stones.
We are seeing a very strong shift with people back to color. Diamonds have become more expensive and the margins aren’t there anymore. Color lets you display your individuality. Young people love the fact that all emeralds aren’t the same.
A few years ago, if you walked down [London’s] Bond Street, the jewelry store had 100 percent diamonds. Now it’s 50 percent color. There’s been an incredible move to color.
JCK: How do you sell your gemstones?
IH: We sometime use the term sightholders because that’s what the market knows. But we don’t have sights, we have auctions.
JCK: Do any of your clients also manufacture diamonds?
IH: Yes, quite a few. Many cutters in India got started in color. They ventured into diamonds because it gives them a regular supply, economies of scale, et cetera. But for a much lower output in terms of cash, with color, you can double your stake. And with colored stones, there are much better margins.
JCK: How does your purchase of Fabergé fit into this?
We saw a huge opportunity with Fabergé. It is a prestige luxury brand—the jewelers to kings and queens. Then Unilever bought it and it became cheap aftershave, et cetera.
Fabergé adds energy; it adds power to our product. If you think of the go-to for diamonds, you think Tiffany, Harry Winston, a few others. But what is the go-to for colored stones? There isn’t one at the moment. We would love to position Fabergé as the go-to for colored stones.
JCK: So will Fabergé concentrate on colored stones?
IH: It will be a big aspect. But it always was. It will be high-end hard luxury, with jewelry, watches, a big focus on color.
JCK: How much of your product will end up at Fabergé ?
IH: Less than 2 percent. Fabergé will target the very top-end and become the aspirational component. It will also buy product from the rest of the market.
JCK: How many stores do you plan to open?
IH: We will probably open two to three stores a year in the next few years. The idea is to have a few select stores in select places. Right now we only have six stores in places like Madison Avenue. The idea is not to compete with our customers.
JCK: Will you start a gemstone brand?
IH: No. We have Fabergé, but our gemstones will be more like Intel Inside. So our stores will be sold at Fabergé with Gemfields inside.
We like to talk about the fifth C—confidence. We can guarantee the ethical route to market. That’s becoming more and more important. Everybody is concerned about that, but particularly young people.
JCK: How do you feel about emerald becoming Pantone’s color of the year?
IH: That is so exciting. It’s like everything is aligning and the planet wants this to happen.