Anglo American’s 85%-owned De Beers may have pulled off a strategic coup by unveiling plans to launch a new brand of synthetic diamonds.
These are the stones that are ‘grown’ in a laboratory and against which the diamond giant has long fought a marketing campaign.
In fact, the group spent some $140m in 2017 alone promoting naturally occurring diamonds, which it says truly represent the profound emotions that inspire wedding bands and other anniversary gifts.
Now, however, De Beers has performed an about-turn by unveiling its Lightbox range of synthetics.
What could it portend?
According to analysts, this is not really the acknowledgement of diamond synthetics that it appears (although De Beers has a line of synthetic diamonds that is used primarily for industrial purposes).
Instead, it’s a clever commercial ploy aimed at better controlling the proliferation of lab-grown diamonds by other producers.
By establishing a much lower price point for synthetic diamonds – the Lightbox range will retail at between $200 and $800 apiece – the company is aiming to force down prices in the existing synthetic market and drive open an even greater discount to naturally occurring diamonds.
“By strengthening the appeal of natural stones to the consumer, while simultaneously flooding the synthetics market, De Beers will effectively address two of its most crucial strategic challenges with one stone,” said a bank that is not permitted to speak to the media.
This will be achieved by “creating and maintaining demand for its premium luxury products and reducing the single largest threat to its future profitability, the synthetic diamond market. We expect depressed prices will negatively affect the margins of competitive producers who will find it difficult to compete should they not be able to match De Beers’ scale,” it said.
Said ABN AMRO, a Dutch bank that has an extensive affiliation with the diamond sector: “De Beers is known to be ahead of the game and brilliant in its marketing campaigns.
This strategic move shows how serious the laboratory-grown diamonds threat is to the natural diamond industry.”
So far, the response has been mixed. While some see it as De Beers finally tackling the threat posed by synthetic diamonds, others fear it will blur the lines between naturally occurring diamonds and fabricated pieces yet further.
“By launching Lightbox, De Beers has blurred the idea of real diamonds,” said Ya’akov Almor, a diamond consultant, in an article published by The Business Times, a UK publication. “When a consumer walks up to a Lightbox salesman and asks whether the diamonds are ‘real’, what will the answer be?
The salesman will honestly say they are real diamonds but they are manufactured in a factory. They are, however, exactly the same as the product from a mine.
“If synthetics can take over the emotional significance messaging that the natural diamond industry has so painstakingly built up over decades, the bottom could well fall out of the market,” said Almor in the publication.
ABN AMRO said that while it “isn’t in the De Beers boardroom”, it feels the ultimate beneficiaries of De Beers’ Lightbox range will be the consumer.
“In the end, the consumer is the winner because there will be affordable laboratory-grown diamonds on the market that have the same beauty as a natural diamond. The main question is if a consumer will in the end go for the beautiful, affordable and the more sustainable option, or the beautiful, rare, less affordable option.
“This will be a personal decision,” it concluded.