It’s Over for Lab-Grown Diamonds as De Beers Ditches Man-Made Stones
De Beers has unveiled a comprehensive five-year strategy to reposition itself as the top luxury jewellery group.
While the company already sells diamond jewellery through its global network of boutiques, CEO Al Cook plans to significantly expand the number of retail outlets to compete with luxury brands like Tiffany and Cartier.
“If I look at the future of diamonds, it is way beyond mining,” Cook was quoted by the Financial Times. “I’m really excited by the idea that we can really deploy our full strategy all the way to creating the world’s greatest jewelry maison [house], which would not be a natural part of a mining company.”
De Beers, known for driving demand for mined diamonds, aims to capture the interest of a new generation with its “Origins” strategy. This plan focuses on revitalizing marketing efforts to boost interest in natural diamonds and employing innovative methods to maximize reach and impact.
In a significant move, De Beers is phasing out its lab-grown diamond operations. This marks the end of a six-year experiment selling lab-grown diamond jewellery under its Lightbox brand, launched in 2018. Although the company will continue selling its existing Lightbox inventory for about a year, it will then reconsider the unit’s future.
Collaboration with retailers is crucial to De Beers’ new approach. The successful “Seize the Day” pilot campaign, launched in September 2023, demonstrated the potential of such collaborations, receiving support from over 22,000 retail stores. De Beers plans to build on this by developing strategic partnerships with major retailers, including Signet Jewelers in the United States and Chow Tai Fook in China.
De Beers already owns the Forevermark diamond brand, available in more than 2,400 jewellery retail stores. The company has also opened dedicated stores in 16 different markets, including prominent locations like Madison Avenue in New York City and the Houston Galleria, alongside its De Beers Jewellers website.
The move away from lab-grown diamonds comes as the diamond industry faces challenges from increasing consumer preference for cheaper alternatives and global economic instability. Last year, consumer demand for diamonds declined in both China and the US, which together account for about half of the global diamond jewelry market.
In response, De Beers made significant price cuts in January, lowering diamond prices by about 10% to revive sales. The company also revised its full-year production forecast down to 26 million-29 million carats from the previously guided 29 million-32 million. It increased expected average costs to $90 per carat, from $80, and announced a $1.6 billion writedown.
Despite these challenges, De Beers is targeting annual core profits of $1.5 billion by 2028. Last year, the company made just $72 million, although its traditional profit range has been between $500 million and $1.5 billion.
As De Beers prepares for its future, it seems ready to operate independently once again, as it did for most of its 136-year history. Anglo American acquired an 85% stake in De Beers in 2011, with the remaining shares held by the government of Botswana.