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Do Consumers Care About Diamond Origin?

Panelists at RapNet event highlight provenance challenges.

June 20, 2024  |  Joshua Freedman
Student analysing polished diamond with loupe and tweezers in GSS Diamond Academy, Botswana image

One of the ongoing questions in the diamond industry is whether shoppers care about the source of the stones they buy. For Olivia Landau, CEO of online natural-diamond retailer The Clear Cut, the problem is more fundamental. 

“Everyone just assumes that natural diamonds come from one place, and it’s Africa, and Africa’s one country, and it is a blood diamond,” Landau said in a RapNet panel discussion at the recent JCK Las Vegas show. “We are starting from square one.” 

This means the first stage for jewelers is to educate consumers about where diamonds come from, the benefits they bring to producer countries, and why origin matters, she argued.  

“Without that education and that storytelling, consumers have no idea they should be even asking for it,” Landau continued. “If you ask the average US consumer, they don’t even know diamonds come from Canada, they can’t point Botswana out on a map, and they probably have no idea diamonds come from Russia either.” 

The Clear Cut has used social media to educate, said Landau. For example, the company invited influencers and celebrities to an event in which it guided every participant through stations representing sections of the supply chain. This resulted in 50 unique pieces of social-media content, she said. 

“It’s important for retailers [and] companies to create this kind of buzz marketing to educate from the bottom,” Landau recalled.  

Practical advice 

In light of Western sanctions on Russia, diamond origin was a central topic at the JCK show, which ran from May 31 to June 3. Four panelists zeroed in on the provenance topic during the June 2 RapNet panel, titled “Diamond Origin: Practical Advice for Informed Purchasing,” which RapNet CEO Saville Stern moderated. 

RapNet panel discussion JCK 2024 image
Image (left to right): Saville Stern, Wesley Tucker, Olivia Landau, David Block and Johanna Levy at the RapNet panel discussion. (Rapaport News)

The panelists discussed the technical aspects of traceability, and acknowledged, as Landau did, that consumer awareness is limited. 

However, small pieces of information can spark further interest for consumers, said David Block, CEO at Sarine Technologies, which supplies diamond planning, manufacturing and traceability solutions to the industry. 

“The consumer doesn’t walk into the store asking where the diamond comes from, at least not yet,” Block commented. “But when you start going into that story of the diamond, there’s an underlying layer of today’s consumer that really connects to it.” 

Aspects of this story include how a rough diamond looks, how they travel through the supply chain, and their impact on the producer countries and the environment, Block elaborated. 

This means there is an opportunity to develop a sales angle in anticipation of consumers’ preferences, Block explained. He compared this to another notable industry innovation. 

“Many years ago, customers didn’t ask for a princess cut before it was invented,” Block recalled. “We as an industry invented something new that we thought had value, or assume had value, and we brought it to the consumer and found that it does add value.” 

On the offensive? 

This begs the question: Should the industry be engineering demand for provenance information or merely responding to what consumers want? The reality appears to be something in between. 

“There is the defensive part and there is the opportunistic part,” said panelist Wesley Tucker, CEO of De Beers’ blockchain platform, Tracr

The defensive part, he said, is reacting to the fact that synthetic-diamond sellers use origin to their benefit, for example by marketing their stones as American. 

The other route is proactively creating ways of positioning diamonds at the downstream level with an origin story, as De Beers and Rio Tinto have attempted to do. “As the technology is evolving, you will see more of that,” Tucker said.  

Block at Sarine has noticed a change in the way diamond miners are viewing the origin issue in the past year or two. “They are making efforts slowly but surely in order to contribute in their way to the consumer being able to know where the product comes from,” he continued. “They are taking a stand, and [are not just saying,] ‘We don’t care, and it’s the retailer’s job.’” 

Aligning criteria 

On a practical level, the existence of many different methods available for tracing diamonds — Tracr, Sarine’s Diamond Journey, the Gemological Institute of America (GIA) Diamond Origin Report, and more — risks creating confusion for consumers.  

Johanna Levy, vice president for environmental, social and governance (ESG) programs at the GIA, said discussions about different traceability solutions were for the industry to have. Jewelers need not burden consumers with information about the wide range of tracing methods and should focus on creating some consistency. 

“With the multiplicity of solutions, what we have to be sure is that we’re working toward a standard,” Levy said. 

The industry will align on criteria for diamond provenance over time, just as it has united on grading definitions, according to Tucker, who emphasized that origin was only one element of provenance. 

However, this will likely materialize in a three-part way. The top brands and jewelers will insist on higher standards, as they have the most to lose from any impact on their reputation, said Tucker. These companies will drag their diamond suppliers with them. (The top brands won’t place Tracr branding in their store, but use it for their own comfort, he noted.) 

Others are willing to accept a lower, more accessible benchmark but still want a degree of certainty. Some are not interested at all. 

“One of the things you’ve got to decide is what is your standard and how certain do you want to be, because it is you as the retailer or you as the manufacturer that is putting the promise forward to your customer,” Tucker asserted. “If you put a promise forward to a customer on the back of something that is not reliable, that’s putting reputational risk to your business.”  

The industry is “starting to create…transparency on the standard, with a degree of choice,” Tucker said. “Our belief is that line is going to move further and further up, and the standard is going to get higher and higher over time.” 

Due to the “fragmented” nature of the segment, The Clear Cut — which has a partnership with Tracr — uses traceability more as a post-purchase add-on, Landau told the audience. The company works with suppliers to provide customers with information such as the Tracr ID and the origin of the diamond. 

“It’s a little difficult to do it presale, because not all of our suppliers are on the platforms, and we can’t devalue certain goods and promote others,” Landau explained. 

While source certification must be the natural diamond’s method for differentiating its products, “there needs to be a better connection…from the producer to the midstream to the end consumer,” Landau continued. 

Swirls and boxes 

Distinctive features of the diamond industry complicate matters. These include aggregation of goods, mixed-origin parcels, and the roundabout journeys stones make from mine to consumer. 

Diamonds flow in “swirls,” not straight lines, said Tucker. Tracr has had to tackle two important “swirls”: the polished market and the rough market. 

Tracr has managed to use blockchain technology to tackle the polished side, keeping the provenance journey intact even if the stone changes hands many times, Tucker explained.  

On the rough side, a large number of De Beers boxes — the batches of goods sightholders buy from the miner — are traded on the market. To help the industry maintain traceability for these stones, Tracr now allows manufacturers to transfer digital ownership of boxes — which, Tucker acknowledges, is ironic given that De Beers is not a fan of sightholders “flipping” boxes. 

“We’re building up that dam of availability,” he continued. “We’re definitely in this pivotal moment, but what has changed is the midstream is far more technologically advanced. They understand what needs to be done.” 

De Beers’ aggregation model — in which rough diamonds from Botswana, South Africa, Namibia and Canada are mixed and sold together — enables consistency in boxes, which benefits manufacturers, Tucker said, noting that he was speaking on Tracr’s behalf and not De Beers’. This gives De Beers boxes value on the market. This model is not unique to De Beers, he emphasized. 

“The intention is definitely there [at De Beers] to go down to [enabling] single-country [origin], because…there is a richer story when telling a single-country story,” Tucker said. “Manufacturers, retailers, they want to know individual single country of origin.” 

Miner scale 

To this end, Tracr has spent the last 12 months testing “digital disaggregation.” This entails scanning the diamond’s digital twin at the mine and again when it is sold in a box. The single country of origin can be “unlocked” further down the supply chain. 

“That means we can keep the intrinsic value of aggregation, which supports producer countries,” Tucker said, “but it means we can then digitally disaggregate and push those diamonds downstream.” 

Sarine’s Block agreed that scanning at the source was key. (The company does this for its Sarine Journey product.) 

“The technology exists, and the ability to follow the diamond from the mine as it reaches the manufacturer through the convoluted trading process also exists,” Block said. “It’s more a matter of scale than capabilities.” 

Main image: A student analyzing a polished diamond with a loupe and tweezers at De Beers’ diamond academy in Gaborone, Botswana. (De Beers)

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Student analysing polished diamond with loupe and tweezers in GSS Diamond Academy, Botswana image Do Consumers Care About Diamond Origin?

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