De Beers and Synthetic Diamonds

Jeff Gordon
Aug 9, 2018

Unless you were on a cruise to Antarctica over the past few weeks, by now you are well aware that De Beers has announced its foray into synthetic diamond jewelry. They won’t sell loose, man-made stones and will only position goods under a carat in relatively inexpensive jewelry. At least for now.

The story that broke at the recent Vegas shows has had the industry reeling with reactions that range from horror and disgust to confidence and appreciation for their new venture. In truth, this seems to me like a well-thought-out and well-planned move that should not surprise anyone who thinks this process through.

If anyone really believes that De Beers wants to do anything that will negatively affect its natural diamond business, you probably should exit the jewelry industry right now. De Beers has done what De Beers always does. It is trying to secure and even bolster its $5 billion natural diamond business by controlling the message about synthetic diamonds, rather than leave the propaganda to synthetic diamond producers and distributors. Although many were caught off guard by the announcement, you might liken it to a mother bear protecting its cubs. No company has a more vested interest in the stability and strength of the mined diamond market than De Beers and its partnering countries.

De Beers is planning to drop the price of synthetic diamonds significantly (something that many observers would say will happen anyway over time), and pour tens of millions of dollars into both the production of synthetics and the messaging of synthetics to diamond consumers. In some sense, this bold move shows the impact that lab-grown synthetic diamonds have had on the marketplace, particularly in the past couple years.

How all this will play out over the coming decade will be interesting to watch. Will De Beers cannibalize itself through its controversial move? Is this just a De Beers step in the direction of covering itself with the inevitable decline of natural diamond production in the years ahead? Only time will tell. If there is anything we have learned in past decade, it is that the pace of change today is significant and that a disrupter of markets can have a devastating effect on businesses of every kind. Buckle up and stay tuned as we enter yet another era in the diamond and jewelry world.

One final note. My background is in the diamond and manufacturing industry with GIA, Lazare Kaplan, and Jade Trau. Our president Ira Bergman was a long-time manufacturer at Mercury and President of the Fabricant finished jewelry division, and our CEO Jeff Gordon is a true marketing and sales expert. We work hard to help you in your high-end retail jewelry business. Feel free to contact any of us for advice and counsel on your direction forward.

Sincerely,

Barry Lustig G.G., C.G.