Blog DeBeers' Disruptive Diamond Decisions

[bcmacdonald]

Reckless? Or Genius? John Pollard asks: "What is DeBeers' lab-grown endgame?

John Pollard published a new blog post.

Did you know?​

The world's most famous natural diamond miner is also the world's largest lab-grown diamond manufacturer. Can you guess who?

Balanced Reporting​

One week ago I wrote about the <a...

Continue reading the Original Blog Post.

 

[Karl_K]

My opinion is DeBeers is doing it to protect their mined diamond engagement market.
It will be interesting to see if it raises anti-trust lawsuits in the future.

 

[Texas Leaguer]

Agree with Karl. Everything DeBeers has done with Lightbox has been designed to draw a clear distinction between two separate products- natural mined diamonds governed by limited supply and valuation based on quality/rarity, and a synthetic product that can and will be produced in ever greater quantities and follow a downward price trajectory until reaching a price marginally above the cost of mass production.

DeBeers quite skillfully managed to nip in the bud all the attempts by lab growers to tie prices of synthetic to the price of similar natural in the minds of consumers, including and especially using discounts off Rap.

DeBeers is no stranger to playing for keeps. There may be attempts to push back on them in court, as Karl mentions. After all, there are some other big money interests with a stake in the synthetic diamond business.

But I applaud DeBeers for taking initiative to prevent deceptive marketing. Of course it was in their interest to do so. But it was also in the interest of the entire global natural diamond industry. And I can't think of any other entity that could have brought such an effective and rational correction to the emerging market of synthetic diamonds.

 

[AprilBaby]

DeBeers has lied since day one. Initially they were only selling fashion jewelry in silver or vermeil. Then they went to 10 kt white gold. Now they sell 2cttw earrings in 14kt yg and wg. Next 2 ct rings in 18kt? Are they a threat? Oh yes! My friend who works you know where says they now sell more engagement rings in lab diamonds than mined by a lot. At that price if I were 21 again I would certainly buy a 2 ct in 18 kt yg instead of the .35 I got!

 

[diagem]

I prefer looking at the other side of the coin...

From the 40 years I have known Be Beers.., they have never done anything half fast.., sure not everything they cooked materialized nicely, but I have to give them credit as "the" disruptors of this industry since who knows when.

I believe De Beers is in the LG arena for the long haul..., they will eventually partly control this market, and besides..., I truly believe lab grown diamonds will change the course of jewelry in 5-10 years.

But first they must detach themselves from the natural industry bad habits and develop their own model identities in rough growth solutions, pricing (which De Beers is pioneering currently), and cutting capabilities & designs.

Once they master their own..., they'll be free to fly with no one able to stop them...

Think Tesla!!

 

[John Pollard]

I appreciate the comments offered so far. Good insights and diverse positions - albeit all experienced/informed.

By the way, if any of millennials or genZs wander into my article - the item in that first photo is a typewriter: ˈtīp-ˌrī-tər

 

[oncrutchesrightnow]

It’s pretty clear that for the price of earth diamonds not to be undercut by lab diamonds, there has to be a way for consumers to care about the difference. But everyone says that it’s nearly impossible to detect the difference with the naked eye on a diamond-by-diamond basis, at least with decent quality LGD. Is the “mind-clean” thing enough to keep earth diamond prices up especially when this generation of young people seems to accept LGD in engagement rings? The make-em-cheap strategy has not prevented people from switching to LGD so far. What do people think will keep earth diamond prices afloat?

 

[Karl_K]

What do people think will keep earth diamond prices afloat?

momentum for now...but the miners shot themselves in the foot and overran the market with price increases leaving them extremely open to being replaced.

 

[Mlh]

momentum for now...but the miners shot themselves in the foot and overran the market with price increases leaving them extremely open to being replaced.

Hi @Karl_K ! Do you mean they ran up the prices leaving them open to be replaced by lab diamonds?

 

[Karl_K]

Hi @Karl_K ! Do you mean they ran up the prices leaving them open to be replaced by lab diamonds?

That is one thing that could do it, just bands is another there are a lot of alternatives.
Let me explain:
In the US the most common e-ring budget has been for a long time and still is today around $5000 +/- a few %.
How ever what you can buy with that money is very much less than it was say 5 years ago even more so 10-15.
It reaches a point where people are not happy with what they can buy for that amount and they either, accept less, raise more money, or seek alternatives.

 

[Karl_K]

Before someone mentions cars yes they are more expensive than in the past but they are most commonly sold on payments and the terms have been greatly extended and there is a healthy used car market.
Did you know you can get a 10 year loan on some vehicles now?

 

[Mlh]

That is one thing that could do it, just bands is another there are a lot of alternatives.
Let me explain:
In the US the most common e-ring budget has been for a long time and still is today around $5000 +/- a few %.
How ever what you can buy with that money is very much less than it was say 5 years ago even more so 10-15.
It reaches a point where people are not happy with what they can buy for that amount and they either, accept less, raise

Got it! Thanks for explaining. From what I have been seeing, prices seem very high right now....especially the last 6 months or so.

 

[Karl_K]

Got it! Thanks for explaining. From what I have been seeing, prices seem very high right now....especially the last 6 months or so.

miners have been trying to push up prices even higher but have met resistance downstream, the events in the world allow them to raise prices nearly at will.
That they are further damaging themselves long term is an opinion they dont share I guess.

 

[Garry H (Cut Nut)]

My opinion is DeBeers is doing it to protect their mined diamond engagement market.
It will be interesting to see if it raises anti-trust lawsuits in the future.

De Beers US anti trust stuff was 99% industrial diamonds - a stoush that started in WWII.

 

[Garry H (Cut Nut)]

It’s pretty clear that for the price of earth diamonds not to be undercut by lab diamonds, there has to be a way for consumers to care about the difference. But everyone says that it’s nearly impossible to detect the difference with the naked eye on a diamond-by-diamond basis, at least with decent quality LGD. Is the “mind-clean” thing enough to keep earth diamond prices up especially when this generation of young people seems to accept LGD in engagement rings? The make-em-cheap strategy has not prevented people from switching to LGD so far. What do people think will keep earth diamond prices afloat?

LGD's will make natural diamonds rarer because the bottom of the market will be stripped and the Maul stores will stop selling tons of frozen spit.
Frozen spit - half mined value.
If miners dont make money there will be no more mines.
No more mines means the rich will pay even more for scarce diamonds.

 

[Garry H (Cut Nut)]

De Beers has had 3 lives and has changed a lot in each one.
It was a miner established by a gay guy who died before the first world war. He was a bad dude but very successful and did infact leave a positive lasting legacy of advanced education for many world leaders. A bit like the explosives developer, Mr N (but he was never a bad dude).
Then Mr O turned it into a marketing machine, one of the worlds most successful.
For the last 20 years it has been a partnership by one of the worlds biggest miners and Botswana and Namibia. The last O connection was severed 8 years ago.

De Beers know that USA has no commercial diamond mines and wants to promote hi tech industries and hates importing valuable commodities from other countries. Master stroke! Build a factory in USA where there is a huge supply of 365 days a year hydro power (so they don;t need to greenwash like all the other LGD companies) and employ their huge patent rich technology to make a market come to sense. Lab Grown diamond prices will settle somewhere near $300 to $400 per carat for plus 1/2ct to 4ct wholesale. So why not push the polluting cheaters to reality asap?

Bllomingdales frequently have half proced Lightbox sales. What do you think the real cost is???

 

[diagem]

miners have been trying to push up prices even higher but have met resistance downstream, the events in the world allow them to raise prices nearly at will.
That they are further damaging themselves long term is an opinion they dont share I guess.

Thats exactly the issue...., miners are pushing prices up while consumers are not running to pay more presently, why? because generic diamonds are plentiful and industry pro's got used to race sales prices to the bottom across the whole value chain from wholesale to retail.

On the other hand..., in a perfect world, diamonds should have appreciated parallelly to most other consumer products which manifolded in value across the last 2 decades (our personal feeling towards the cost of living in general).

On the wholesale level, there are quite a few segments (various natural diamond sizes and qualities) that we can still purchase at 30 year old values..., literally.

This is not normal, actually it is total senseless.

 

[caolsen]

De Beers has had 3 lives and has changed a lot in each one.
It was a miner established by a gay guy who died before the first world war. He was a bad dude but very successful and did infact leave a positive lasting legacy of advanced education for many world leaders. A bit like the explosives developer, Mr N (but he was never a bad dude).
Then Mr O turned it into a marketing machine, one of the worlds most successful.
For the last 20 years it has been a partnership by one of the worlds biggest miners and Botswana and Namibia. The last O connection was severed 8 years ago.

De Beers know that USA has no commercial diamond mines and wants to promote hi tech industries and hates importing valuable commodities from other countries. Master stroke! Build a factory in USA where there is a huge supply of 365 days a year hydro power (so they don;t need to greenwash like all the other LGD companies) and employ their huge patent rich technology to make a market come to sense. Lab Grown diamond prices will settle somewhere near $300 to $400 per carat for plus 1/2ct to 4ct wholesale. So why not push the polluting cheaters to reality asap?

Bllomingdales frequently have half proced Lightbox sales. What do you think the real cost is???

What does being gay have to do with anything?

 

[caolsen]

DeBeers must also be aware that it’s brand cache is not, nor I suspect never will be high, with Gen x, Millennials and those younger. Besides the economics of what they are doing here, there’s the brand buttress effect of LB on DeBeers.

Prop up a brand seen as unethical and environmental bad with a newer, hipper, thought of as more ecological brand…it’s Big Soda Pop buying a bottled water brand at the height of the sugar is bad‘ movement. In the same way that market moved to drink water, but have a pop as a treat, DB could move to have a man made for your fashion stuff and an earth mined for your special things, e.g. Engagement and Anniversary gifts.

 

[John Pollard]

But I applaud DeBeers for taking initiative to prevent deceptive marketing. Of course it was in their interest to do so. But it was also in the interest of the entire global natural diamond industry. And I can't think of any other entity that could have brought such an effective and rational correction to the emerging market of synthetic diamonds.

Me too. I also think they have a game plan they're running, step by step, which may have been put into motion in the 1990s in anticipation of today's "LGD rush." I'd also wager that decades-long game plan is fluid, with different next steps depending on how trends and perceptions evolve.

But first they must detach themselves from the natural industry bad habits and develop their own model identities in rough growth solutions, pricing (which De Beers is pioneering currently), and cutting capabilities & designs.

RE the first: Did you see my prior post covering their consistent philanthropy in natural diamond spaces - largely since the Opp dynasty ended but some before. Next up for them is traceability. There's breaking news there, I believe. The problem - for them, ALROSA and others - is no single solution which means downstream confusion... Just like no single solution from the labs for cut quality has led to downstream confusion.

On the wholesale level, there are quite a few segments (various natural diamond sizes and qualities) that we can still purchase at 30 year old values..., literally.

This is not normal, actually it is total senseless.

See @Karl_K 's comments, yes?

 

[John Pollard]

De Beers know that USA has no commercial diamond mines and wants to promote hi tech industries and hates importing valuable commodities from other countries. Master stroke! Build a factory in USA where there is a huge supply of 365 days a year hydro power (so they don;t need to greenwash like all the other LGD companies) and employ their huge patent rich technology to make a market come to sense.

It really was a master stroke.

Lab grown sellers: "Do you see us stealing your market share?"
DeBeers' (Lightbox): "Hold my beer."

 

[musicloveranthony]

De Beers...
It was a miner established by a gay guy...

I don't understand the relevance, nor your intent.

 

[John Pollard]

DeBeers must also be aware that it’s brand cache is not, nor I suspect never will be high, with Gen x, Millennials and those younger. Besides the economics of what they are doing here, there’s the brand buttress effect of LB on DeBeers.

They've been pretty intelligent with naming conventions. Their retail stores may be "DeBeers" - but the Forevermark brand is standalone in ND world, as Lightbox Jewelry is in the LGD world. The most recent of those is Lightbox of course.

Prop up a brand seen as unethical and environmental bad with a newer, hipper, thought of as more ecological brand…it’s Big Soda Pop buying a bottled water brand at the height of the sugar is bad‘ movement. In the same way that market moved to drink water, but have a pop as a treat, DB could move to have a man made for your fashion stuff and an earth mined for your special things, e.g. Engagement and Anniversary gifts.

I think that sound is you hitting the nail squarely on the head. See my prior post about decades-long game plan... This would be the logical (my 2 cents) endgame.

PS: "A pop." I used to order a pop when I lived in Washington State. Once I moved to Texas "I'll have a pop" was met with a record-scratch, angry stares and someone behind me saying 'get a rope..."

 

[Karl_K]

It really was a master stroke.

Lab grown sellers: "Do you see us stealing your market share?"
DeBeers' (Lightbox): "Hold my beer."

They were slowly stealing the dealer network which would be a huge problem for mined diamond producers.
GIA's handling of mmd is also suspect, it would be interesting discovery to see if they were related in my opinion.
Maybe I am just to cynical *grin*

 

[Garry H (Cut Nut)]

What does being gay have to do with anything?

I was pointing out some little know facts about De Beers and their heritage and history.
That Rhodes was gay does not seem to be commonly known. Does it change anything? As someone accused of amassing a private army and killing thousands of Africans and enslaving them, I would have thought that enquiring into his life might have resulted in more being known about him.
Personally I don't care one way or the other.
Although I am no fan of destroying monuments?
Should we stop discussing and studying Caesar because he killed thousands? Or Alexander the Great (who was also gay) (and I wear cuff links made with an image of Zuess made to look like him that were minted during his lifetime).

 

[Garry H (Cut Nut)]

Me too. I also think they have a game plan they're running, step by step, which may have been put into motion in the 1990s in anticipation of today's "LGD rush." I'd also wager that decades-long game plan is fluid, with different next steps depending on how trends and perceptions evolve.

My point about De Beers John is that they have been three seprate companies under vastly different leadership.
De Beers in 1990's were nothing like De Beers today.
I have friends who were involved in negotiations to sell Argyle rough with them - they were holding on to a dream that had outlived it's purpose.

And Diamonds Are Forever should have been shelved 30 years ago. The idea is nuts. It can be taken to mean that you only need one.

 

[John Pollard]

My point about De Beers John is that they have been three seprate companies under vastly different leadership.
De Beers in 1990's were nothing like De Beers today.

Oh I know. Did you read my prior post (shameless plug) and the end-questions regarding the lead-up to the esteemed Mr. Cleaver? #ch-ch-ch-changes

My comment about the 1990s - as potential genesis for a LGD master-plan - has to do with CVD breakthroughs which motivated portfolio expansion at the turn of the century. I feel the whole reason E6 was separately established was to run this LGD football forward - including acquisition of other assets under the E6 name - until they were ready to penetrate the jewelry sector in 2018. The lateral to Lightbox is part of that plan. I know DeBeers' "proper" has had wildly different leadership. But the long-terms plans for LGD - from the days of Ardent Research onward - may have lived as a separate ecosystem.

And Diamonds Are Forever should have been shelved 30 years ago. The idea is nuts. It can be taken to mean that you only need one.

I'm going to let you read what you wrote again... Then please Google "best marketing of all time."

 

[Garry H (Cut Nut)]

Well aware Sir John

But it was a marketing plan established before I was born!
It worked a treat under the Oppenheimer regime. I think it is outdated and negative today.
i do not think it resonates with today's society, especially those 1/3rd of my age.

 

[John Pollard]

i do not think it resonates with today's society, especially those 1/3rd of my age.

Honestly, I had not thought to think about it. "ADI Forever" 2-way symbolism appealed to me before I was ever in the trade... But I'm not in the demo you invoke and that piques my interest.

Possibly a poll?

Or, if any youngs are reading this thread - I hope you enjoyed the typewriter! - feel free to weigh in on the topic.

 

[Karl_K]

Honestly, I had not thought to think about it. "ADI Forever"

The first time I recall seeing the a diamond is forever commercial on tv I recall saying..ha I have a hammer.


Well maybe not, who knows.... but its a good story.