Whatever Became of Pegasus?

It’s the summer of 1999. The industry is in an uproar about the then-undetectable Pegasus process, and fury spills over at the companies behind it-General Electric and Lazare Kaplan. Jewelers worry that a television newsmagazine like PrimeTime Live will seize on the issue and give the industry a black eye.

Fast-forward a year and a half. A PrimeTime Live report does target the industry, but the controversy is over “conflict diamonds,” which pose a bigger public relations problem than Pegasus ever could. When the people behind Pegasus announce an ambitious campaign to market their product nationwide, industry leaders are too distracted to notice and probably wouldn’t care if they did.

For a product once seen as the bane of the industry, Pegasus-now known as Bellataire-has won a remarkable amount of acceptance. The high-pressure, high-temperature (HPHT) treated stones are sold by some of the most respected retailers in the country, many of whom don’t sell other treated diamonds.

It helps that industry fears about the product have mostly been allayed. A year of research has demonstrated that the vast majority of the diamonds are detectable, albeit by experienced scientists with expensive equipment. (See “GIA: Research Continues” on p. 145.) The product is no longer sold to wholesalers, but to consumers, reducing the chance that the identifying “GE POL” inscription will be polished off. (It’s been months since the Gemological Institute of America has found a stone without an inscription.) And, despite articles in the New York Post and elsewhere, the anticipated PR fiasco never materialized.

In retrospect, says GE scientist John Casey, the controversy over the company’s first foray into the jewelry industry was a learning experience. “It gave us insight into the trade,” he says. “It wasn’t something we necessarily liked, because there was a lot of negativity. But we are more than comfortable with the outcome.” The bad publicity may have even helped. Today, Bellataire doesn’t have to introduce its product to the market. Everyone already knows it.

Consumer campaign. The goal now is to let consumers know. Bellataire began limited advertising last year. This year, it plans an elaborate $2 million consumer print campaign, with ads in W, Town and Country, Departures, The Robb Report, Talk, and other upscale magazines. “We are going to be everywhere,” says newly appointed marketing director Michelle Kalina, who previously promoted The Vivid Collection.

Unlike other treated diamonds, Bellataires are being sold as a luxury product. They boast D to H color, VS and upwards clarity (the company does not buy included stones), and premium cutting by Lazare Kaplan. They are mostly fancy-cuts, since Type IIa rough-the material used for Bellataires-usually has an irregular shape.

Theoretically, the diamonds could be sold at a discount, since they’re offered to jewelers at below wholesale. But Bellataire expects most to be sold at standard retail and says jewelers can pocket the difference. “There’s no reason to discount them, particularly today, when the market is weak in 1- to 5-ct., D-F, VS-VVS, very fine cutting,” says Bellataire managing director Charles Meyer.

Although General Electric has helped develop Bellataire’s marketing program, the company’s name won’t be associated with the diamonds, even though it has name recognition jewelry companies can only dream about. “We want to build Bellataire as its own name,” explains Tonya Fratto, GE Gem Technologies president and CEO. “General Electric is a fabulous company and name, but not necessarily a name consumers associate with the romance of diamonds.”

While the new ads spotlight the diamonds’ beauty, they downplay the treatment aspect, although some note the diamonds are “restored by man.” The treatment is disclosed on the accompanying Gemological Institute of America grading report, which is being amended to include a comment about “high-pressure, high-temperature” treatment.

A limited market. Even with all the hoopla, the market for these diamonds will always be limited. That’s because “whitening” a stone requires brown Type IIa diamonds, which account for only 1% of world diamond production. The company is able to source only a few thousand per year. Supplies of the polished stones are so scarce that the company wants to sell them exclusively in 30 to 40 retailers nationwide.

Why would GE enter such a seemingly small business? While the volume may not be large, some of the stones are. The biggest so far is 27 cts. (and D Flawless to boot), and scientists don’t rule out finding a larger one. GE’s explanation for the large stones is simple but controversial: Nitrogen, which retards crystal growth, is not found in Type IIa diamonds. (See “Nitrogen or Not?” on p. 146)

There’s also profit in taking something not worth much (a brown stone) and transforming it into something valuable (a white one). Bellataire hopes eventually to sell $30 million to $40 million worth of the processed stones each year-a comedown from initial projections of $100 million a year, but nonetheless significant.

The process also produces yellow and green stones using a method similar to that employed by Provo, Utah-based Nova Diamond, which sells green stones over the Internet. The yellow and green diamonds are produced from Type I stones, which are more common than Type IIa and may prove to have a bigger market than the whites. It also has produced pink and blue diamonds, but these, too, are rare-especially the blues, which are produced from ultra-scarce Type IIb stones. The company is still deciding whether to market these diamonds under the “Bellataire” trade name.

Customers not scared. Currently, 20 jewelers nationwide sell Bellataire diamonds. Feedback from retailers generally is positive, particularly in regard to the diamond’s beauty. “These stones are absolutely gorgeous,” says Gary Rubel of Fredric H. Rubel, a three-store chain based in Mission Viejo, Calif. “Most fancy shapes aren’t cut half as nice as what LKI does. You go to a diamond cutter and ask to see a 5-ct. emerald cut, you see some weird stuff.” He’s found the treatment does not scare customers off. “They just want to make sure it’s permanent,” he says.

Another retailer, Alan Soyfer of Sidney Crandall, Troy, Mich., even finds the treatment a selling point for engineers, who make up a sizable portion of his customer base. “These are people who understand magnetic resonance and how ions go from one level to the next,” he says. “They love the idea of the enhancement, and this stone is about as pure and perfect as you can get. It’s for people who want something different, but it’s not a product for everybody.”