The De Beers announcement that the company would offer a low-priced line of synthetic diamond jewelry, called Lightbox, set off a torrent of commentary at the JCK show in Las Vegas – some positive, some negative.
The announcement, made two days before the show, said the De Beers company would sell lab-grown diamonds for $800 per carat or the total weight set in earrings and pendants – $200 for a quarter carat, $400 for half carat and $800 for a one-carat, plus the cost of the settings. Each lab grown diamond will have a laser identification mark inside that can’t be polished off. De Beers also said it is producing pink and blue fancy colors offered at the same prices.
The company, which is keeping the De Beers name off the Lightbox line, kept this project under tight secrecy during its 18-month development. It is building its own production facility near Portland, Oregon, which will begin full operation in 2020 and will manufacture up to 500,000 carats yearly. Lightbox will have a separate management team, much like De Beers’ retail division.
Retailers had mixed reactions. Some thought it would ruin their diamond business, while others saw a new opportunity for lower price-point jewelry. No one was pleased that the initial offerings would be online only. De Beers said it would make the line available to retailers within two years.
Diamond dealers, particularly those specializing in lower-priced goods, were unhappy with the De Beers’ announcement, saying the Lightbox line would kill the market for cheaper, lower quality natural stones because the prices were 20% to 30% of comparable weight goods in that category. Dealers of higher-end diamonds complained that De Beers was “throwing its weight around” and “no longer cared” about the diamond industry.
Surprisingly, most of the 30 synthetic diamond companies exhibiting at the show were in favor of De Beers’ new line. They offered three reasons:
- De Beers’ entry into this market “legitimizes” their product
- the resulting publicity will also drive demand for their products
- the pricing is not a threat because they are marketing their products differently
They said the De Beers’ announcement drove many potential customers to the lab-grown diamond section of the show.
At a standing room-only presentation, David Prager, De Beers vice president for corporate affairs, said the pricing and the market positioning all came out of extensive consumer research in the U.S.
“Consumers want fun and fashion from lab-grown diamonds,” he said. “They also want transparent, accessible pricing. And we found that women would buy a lab-grown diamond for themselves,” even if they did not want it as a gift from a spouse or partner.
Prager stressed that De Beers is pegging prices of its products to the cost of production, not as a percentage discount from natural diamonds, as many other synthetic diamond producers do.
The marketing will be geared toward “lighter emotional moments” said Sally Morrison, who is heading that department, “and priced for women to be able to treat themselves.”
All of the executives stressed the “light emotional occasion” to draw a distinct line from De Beers’ traditional marketing of giving natural diamonds for engagements, anniversaries and other very significant life occasions.