Strong lab-grown sales in the bridal category should not overly worry the natural-diamond industry, De Beers cochair Bruce Cleaver argued at a conference in Israel this week.
Growth in demand for man-made diamonds in recent years has come alongside rising supply and a rapid decline in both prices and production costs, the executive explained Monday. In addition, the segment has a low base of comparison, while overall jewelry sales have also strengthened, he noted.
In light of this, the mined and synthetic diamond sectors will continue to diverge as lab-grown production increases, he predicted.
Cleaver was addressing an audience at the Israel Diamond Conference, which took place at the Israel Diamond Exchange (IDE) in Ramat Gan as part of International Diamond Week. He stepped into the cochair role last month after six years as the miner’s CEO, with Al Cook succeeding him.
“Clearly bridal has been affected, and [numbers are showing] significant [volumes of sales] being lab-grown,” Cleaver said in an on-stage interview at the event with diamond analyst Edahn Golan. “Firstly, this is in America only, which is not the only market. Secondly, although bridal is very important — and I am not for one minute indicating that it isn’t — it represents only about 26% or 27% of total jewelry demand.”
He contended that “by no means all sales of lab-grown engagement rings are cannibalizing,” and said the product could help attract new consumers to the broader jewelry sector.
“This might be a way of getting new entrants into the natural-diamond world who might trade up one day to natural,” he said. “We might never have had these people in the diamond industry.”
Cleaver compared lab-grown diamonds with flat-screen televisions, prices of which have plummeted as technology has improved. He also cited the case of Swiss luxury timepieces, which have managed to operate in tandem with smart watches and have enjoyed record growth.
Lab-grown stones are emerging as “a distinct and separate category, and one that has a totally different value proposition from natural diamonds,” he added. “With lab-grown supply forecast to increase by around 70% this year, building on a 100% increase seen over the past three years, this trajectory, and this bifurcation, can [be expected] to continue to accelerate.”
De Beers has produced synthetic diamonds for industrial applications for many years through its UK-based Element Six business. In 2018, it launched a line of lab-grown fashion jewelry under the Lightbox brand.
Cleaver insisted that neither of these units were hedges against falling supply of natural product. In fact, models suggest diamond mines will continue to produce significant volumes over the next 25 years, he asserted.
“We shouldn’t also forget that technology is at work as well in the mining world,” Cleaver pointed out. “There seems no doubt to me that, as we get better as diamond miners, there will be other ways of extracting diamonds from kimberlites that are currently not economic but will become economic.”
International Diamond Week continued with the Israel International Diamond Exhibition and the World Diamond Congress, both of which began on Tuesday and end on Thursday.
Image: Bruce Cleaver at the Israel Diamond Conference. (Three Photographers)