De Beers Looking To Alter Diamond Industry – Again

SMITH BRAIN TRUST – De Beers once swore it would never debase itself by selling stones that had been grown in a lab.

Well, that was then.

Now, the global diamond magnate has launched Lightbox, its own line of lab-grown diamonds. It’s pricing them at a fraction of the going rate, in a move that could crush its key rivals in the market for synthetic gems and position the company to once again reshape how the world views the diamond.

“It’s going to be very interesting to watch,” says Yajin Wang, assistant professor of marketing at the University of Maryland’s Robert H. Smith School of Business.

De Beers has been long heralded as a marketing genius, having changed forever the way the world thinks about jewelry, beginning in the 1930s. Its “Diamonds Are Forever” campaign is widely revered among the most successful marketing campaign of all time. “It is a milestone. Every marketing class talks about this,” Wang says.

It was more than a catchy slogan; it was a global marketing campaign across every available medium. It even had Hollywood’s leading men proposing to their leading ladies on screen with a breath-stealing diamond ring. “It established the diamond as this important symbol of love,” Wang says.

The campaign transformed wedding culture across much of the world. “Before that, there was no tradition in the United States or in Europe or in Asia to give a diamond ring as an engagement ring,” she says.

In the 1930s, fewer than 10 percent of men brought a diamond ring to their marriage proposals. By 1990, some 80 percent of engagement rings had a diamond strapped to them. “Now it is almost hard to imagine that you might ask someone to marry you without a diamond ring,” Wang says.

That’s not to say there haven’t been headwinds for diamond sellers. For much of this century, the industry has been associated with a conflict in Africa, a link that came into focus with the fictionalized 2006 Leonardo DiCaprio film “Blood Diamond.” Concerns about the industry’s ethical and environmental practices have given pause to some brides- and grooms-to-be and have influenced their choice of rings.

For those lovebirds, lab-grown diamonds, which have been around since the 1950s, might have seemed an attractive option. They have the same physical characteristics and chemical makeup as stones pulled from the earth, but they can be created in just a few weeks in a microwave chamber. Indeed, they are so similar to their mined counterparts that only a highly specialized machine can determine which is which.

De Beers has been casting shade on synthetic stones since they entered the market. As recently as 2016 it collaborated with partners in the Diamond Producers Association on the “real is rare” campaign, aimed specifically at diamond-shy millennial consumers.

At the time, lab-grown diamonds were gaining some share of the market, Wang says. It wasn’t a substantial share, but the threat was there. The stones were more affordable, costing on average about 20 percent less than a mined diamond, and with less ethical and environmental baggage, they seemed a perfect fit with that generalized millennial consumer profile.

De Beers created the notion that diamonds are rare, just as love is rare, brandishing them as the perfect symbol of love, Wang says. “Once you can create a diamond in the lab, the rarity or the limited availability of this product – which is what makes it a luxury item – that isn’t there any more,” she says.

The question whispered in curious circles was whether De Beers, marketing genius, could resist disruption when so many other industries and stalwarts have failed?

“If you looked at the price of the lab-created diamonds, they weren’t that cheap,” Wang says. But De Beers’ Lightbox line of lab-created diamonds are.

A one-carat Lightbox gem retails for about $800, about one-fifth of the price of the existing lab-created stones from rivals such as Chatham Created Gems or Diamond Foundry. Critics say they are selling them at a loss.

Wang says De Beers’ low price is sending a message – a loud one.

A glance at the Lightbox website reveals the company’s target audience, says Wang – younger, female consumers in their teens and 20s. “They don’t portray this as traditional gift-giving, like Tiffany’s or other traditional diamonds. It is portrayed as fun, fashionable – something young women would buy for themselves.”

There’s no sign of an engagement ring on the homepage, no signs of any weddings or anniversaries. It’s not a stone for your true love or for your mom.

“We’re for lighter moods and lighter moments,” the ad copy reads. “Like birthdays and beach days and just because days.”

For De Beers, it’s a “very brave but extremely smart strategy,” says Wang, creating its own Lightbox lab-created diamond, with a deeply discounted price point. “The low price is going to beat their competitors more than winning the market share for lab-created diamond. More importantly, with the pricing, De Beers is creating a perception about the quality difference between lab-created diamonds and ‘real’ diamonds, while the other lab-created diamond brands spend all the efforts to convince consumers there is no such difference.”