Top jewellery CEOs say lab-grown diamonds are fashion, not luxury
The chief executives of Van Cleef & Arpels, De Beers and Tiffany & Co see strong growth prospects for lab-grown diamonds as fashion accessories but warned that they should not be called luxury items or compared with natural diamonds in terms of value and uniqueness, with Van Cleef & Arpels and Tiffany vowing never to adopt them.
Synthetic diamonds have grown in popularity in recent years as a cheaper and arguably more ethical alternative to natural diamonds. Even De Beers, the world’s largest diamond company, entered the synthetic diamond market in 2018 after having pledged for years never to sell man-made diamonds.
Lab-grown diamonds possess the same chemical composition and physical characteristics as natural diamonds but unlike mined diamonds, limitless quantities can be produced. A tiny piece of carbon is put into a plasma reactor at very high heat and gradually the tiny crystal grows. After several hundreds of hours, it is big enough to be cut into a polished stone.
“For me, synthetic diamonds have little to do with the world of luxury,” Tiffany boss Alessandro Bogliolo said in an interview at the Conde Nast International luxury conference in Cape Town, South Africa. “Luxury is all about exceptional rarity and something like an artificial diamond that can be manufactured by the dozen, by the hundreds, by the millions, by definition is the opposite of rarity. So, I think it will be successful but it is a completely different market.”
Nicolas Bos, chief executive of Van Cleef & Arpels, one of the biggest success stories in jewellery in the past 10 years, said his teams were rigorously controlling that synthetic diamonds never found their way into the supply chain, which he said was “quite secured.” Bos said about lab-grown diamonds: “It is definitely not an option that we would consider for our jewellery. We do not use synthetic stones.”
De Beers last year launched its own lab-grown diamond called Lightbox. It costs $400 for half a carat and $800 a carat - a fraction of the thousands of dollars natural diamonds cost.
“There is a perfectly legitimate market for lab-grown diamonds but it is fashion, not luxury,” De Beers Chief Executive Bruce Cleaver said in an interview on the sidelines of the Conde Nast conference. He said the company was currently producing them in Ascot, England, not far from the famous racing court and the company was even building a much bigger production facility in Oregon, United States. He said De Beers planned to invest 100 million dollars over the next four years on lab-grown diamonds, a sum that paled in comparison to the 10 billion dollars it planned to invest in mining, marketing and development of natural diamonds over the next five to seven years.
“It should be sold for what consumers want them to be which is a fashion product, an accessory you can wear on the tube. It is technology and technology allows us to that,” Cleaver said.
De Beers, which is owned by Anglo American Plc, competes with the likes of Diamond Foundry, one of the biggest producers based in a California, backed by actor Leonardo DiCaprio and Future Technology Fund, an investment vehicle set up by the Russian fashion star Miroslava Duma.
Cleaver said consumers were asking more and more questions about the sourcing of diamonds and the company was going to “enormous length to ensure the ethical sourcing of diamonds.”
“We have made people and our sub-contractors sign documents applying pretty rigorous sets of standard, which also include the welfare of workers,” Cleaver said. “I think sourcing will increasingly become an issue and there will be more and more communication about it.”
But for Nicolas Bos of Van Cleef & Arpels brands are going a little overboard about communicating on the issue. “I do not know what ethical jewellery means,” Bos explained. “It is a whole marketing thing for companies that are here to develop their business. I wish them well. There is room for everybody. But I get a bit annoyed when they are not able to promote themselves by other means than by criticizing the rest of the industry.”
Bos said Van Cleef & Arpels was very open to customers about the sourcing of its stones. For example, it only used recycled gold from electronic appliances and computers but it chose not to communicate on that. It preferred instead to talk about its creativity and the stories around its jewels and watches. The jeweller is also part of the Responsible Jewellery Council.
“I think we have clients who expect that we will go for the highest possible standards,” Bos said. “We have the best level of certification.” He said tremendous progress had been made to improve the transparency and traceability of diamonds and now much work was also being done colour stones. “I am quite confident that there will be total traceability of stones in a few years from now,” Bos said. And blockchain – giving an ID to the stone traceable from the rough to the cut and polished stage could be one option and DNA research could be another.
De Beers, Tiffany & Co and Van Cleef all said they were affected by the yellow vest protests in Paris, which unfortunately took place on Saturdays when most people went shopping. For example, Tiffany said that it had suffered “quite a substantial double-digit drop” in sales in France.
“Knowing the Chinese consumer, they are very concerned about security. So when there are situations that are not safe, they typically avoid that market,” Bogliolo said. “So I hope that this situation will be solved soon otherwise it could have a lasting impact on the appeal of a beautiful city like Paris.”
De Beers said it had seen a small slowdown in China and by Chinese travelers in the second half of 2018 but there had been some early signs of recovery in the first three months of the year while Van Cleef said it had not seen much of a slowdown in Chinese demand but rather its business in China continued to grow nicely. Bos said there remained opportunities to open boutiques in some cities in China – as there were also in the United States – but generally the company was not planning on opening many new shops in the near future, but rather on extending or refurbishing existing addresses.
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