De Beers doesn’t feel its new Lightbox lab-grown diamond line will hurt the market for the inexpensive diamonds commonly used in fashion jewelry, CEO Bruce Cleaver (pictured) tells JCK.
“I have heard that talk, largely out of India,” Cleaver says. “My view is, a large percentage of small goods go into all sorts of products, like watches. I don’t really see a one carat blue or pink really competing with melee. I see it competing with moissanite and lower-value ruby and emerald. So I don’t think there is a cannibalization there.”
Of course, Lightbox, which will sell its first jewelry pieces online in September, will offer whites as well, but Cleaver believes consumers will gravitate to the blues and pinks.
“Fashion is color, so we are focused on color,” he says. “When we did research we found that is what consumers want.”
He expects the company will eventually add other colors to the line, like greens and yellows.
“We can make anything, frankly,” he says.
Meanwhile, he expects De Beers will continue to engage with the trade about its plans for Lightbox, pointing to recent talks it gave in India and Belgium, and continuing discussions with stakeholder governments.
“So far the reaction has been a little better than I thought,” he says. “It takes a bit of explaining, but my feeling is that you can’t over-engage on this. We have spent a lot of time engaging and hope to spend more time.”
But he stresses that De Beers is committed to its natural diamond business, pointing to its recent $81 million purchase of Canadian miner Peregrine. He further notes that the Diamond Producers Association’s budget will be increasing this year and will expand its activities to India and China.
“We are a natural business, and we have spent large sums of money on that business and will continue to do so,” he says. “[Lightbox] will be a very small business for us.”
In other news, Cleaver says that the U.S. market saw healthy diamond demand in the first half of the year, and barring unforeseen political events, he expects that will continue. The Chinese market is also healthy, he says.
He is unsure, however, about the effect of all the talk of tariffs and trade wars.
“It looks like the tariffs will have limited impact on the diamond business. Not much is moved from China into the U.S. If the trade wars escalate to the point where they have an impact on macro issues and GDP growth, then it could have a bigger impact.”
In its first-half financial results, announced today, De Beers reported a slight uptick in revenue, to $3.2 billion, from last year’s $3.1 billion. Rough diamond sales came in flat at $2.9 billion, though overall rough prices rose 4 percent, due to a general price increase and an improvement in the sale mix.
(Image courtesy of De Beers)