Lightbox: Under The Spotlight By Neil Ventura
Lightbox Jewelry will bring something entirely new to the laboratory-grown diamond sector—not only will it introduce a fashion jewellery brand with laboratory-grown diamonds, it will also have a heavy focus on coloured stones in its designs, as is very common in fashion jewellery.
Following the publication of Solitaire’s August cover story, ‘De Beers: Fire in the Hole’ by Chaim Even-Zohar with Pranay Narvekar, De Beers Group sought to clarify its position on the Lightbox issue. NEIL VENTURA, executive vice president of strategy and innovation, De Beers Group, states the company’s position on the new laboratory-grown diamond brand, what it means for the natural diamond industry, and what it means for the future of its business.
Since announcing the launch of Lightbox Jewelry at the end of May, there has understandably been a lot of interest and discussion across the diamond industry about this new business, where it sits in the broader jewellery sector and what it could mean for both laboratory-grown diamonds and natural diamonds. We’ve seen a fair amount of speculation from a number of different viewpoints about Lightbox and the impact it may have, so we felt it was worthwhile to take a closer look at three of the key questions that have repeatedly come up following the announcement of Lightbox Jewelry: 1. What will it mean for the future of the laboratory-grown diamond sector? 2. What will it mean for the future of the natural diamond sector? 3. What will it mean for the
future of De Beers Group? I’d like to touch on each of these in turn and give you a view, direct from the source, on how we at De Beers Group see the future of Lightbox.
What will it mean for the future of the laboratory-grown diamond sector?
Lightbox Jewelry will bring something entirely new to the laboratory-grown diamond sector—not only will it introduce a fashion jewellery brand with laboratory-grown diamonds, it
will also have a heavy focus on coloured stones in its designs, as is very common in fashion jewellery. But the key difference with Lightbox compared with other laboratory-grown diamond offerings will be its straightforward, linear price positioning.
Retailing on our e-commerce platform at $200 for a quarter carat, $400 for a half carat and $800 for a one carat, the price positioning for Lightbox laboratory-grown diamonds will reflect their cost of production, rather than being positioned at a discount to natural diamonds. We believe this is key for consumers, as the value of laboratory-grown diamonds – products that are mass-produced by a technological process – has no connection to the value of natural diamonds, which are valued based on their rarity and the fact that there is a finite and diminishing supply. As everyone in the diamond trade knows, a one-carat natural diamond has a higher priceper-carat than an equivalent half-carat natural diamond, as it is more rare and therefore more valuable. With laboratory-grown diamonds, this isn’t the case: producing a one-carat stone instead of a half-carat simply requires the stone to be left in the reactor for longer. It costs around twice as much to synthesise a one-carat stone as it does a halfcarat stone, so we have priced them accordingly.
Lightbox’s offering of fun, accessibly-priced fashion jewellery is an important evolution for the laboratorygrown diamond space, but it would perhaps be wrong to see it as a fundamental change to the sector’s development, as everything indicates that this was always the likely trajectory for laboratory-grown diamonds. It’s what consumers have told us what they want from laboratorygrown diamonds when asked open questions about how they saw such products in our extensive research, and in fact it reflects exactly what we’ve seen in the jewellery industry before.
If we look back at the example of synthetic emeralds, we saw a very similar situation. Initially there was great excitement about the ability to synthesise emeralds in a laboratory that had the same physical, optical and chemical properties as natural emeralds. The laboratory-grown products quickly became available in more jewellery products, but as with any technology-based product, it wasn’t long before more players entered the market, and with the greater supply came a rapid drop in the price of the laboratory-grown products. Nowadays, laboratorygrown emeralds sell for just a fraction of the price of natural emeralds, and gemmologists use verification equipment to test the origin of individual stones. The same situation has also been seen with synthetic sapphires and rubies, so the historical pattern of demand, supply and price positioning for such products is clear.
Importantly, the announcement of Lightbox is the culmination of research carried out by De Beers Group over an extended period to understand people’s attitudes and feelings about laboratorygrown diamonds. We spoke with thousands of people and one of
If we look back at the example of synthetic emeralds, we saw a very similar situation. Initially there was great excitement about the ability to synthesise emeralds in a laboratory that had the same physical, optical and chemical properties as natural emeralds.
the key themes that continually came through was that people saw a place for laboratory-grown diamonds in the jewellery sector, but they felt that place was in the fashion category at a significantly lower price than had previously been offered, reflective of products that are mass produced by technology.
The research also found there is widespread confusion among consumers about laboratorygrown diamonds – they don’t really understand what they are, how they are created or
what their value proposition is. Clearly, it benefits no one if consumers struggle to make informed choices about what they buy.
So, one of the key areas of focus for Lightbox will be to help address this confusion. Lightbox has a very clear and straightforward approach to its marketing, and does not pretend to be anything it is not. It is being marketed as a distinctly man-made, laboratory-grown diamond product. It does not seek to position its products as finite in the way that natural diamonds are, and will therefore not offer grading reports. It is being priced in a linear way, in line with cost of production. And it will not make erroneous claims about being ethically superior to natural diamonds. The entire brand proposition of Lightbox is about transparency – from the price positioning, to the messaging, to the marketing and even the product packaging (which will feature a clear window that enables the consumer to see the product they are buying in the box). Our view is simple, but is often lost in the debate surrounding the introduction of Lightbox – the more transparent we can be with consumers, and the more empowered they are to make informed purchasing decisions, the better it is for everyone; both the natural and laboratory-grown diamond industries.
While there have been some claims that consumers simply won’t care in the future whether diamonds are natural or laboratory-grown, it would be
very interesting to understand what evidence this view is based on. All our research and previous examples with other gemstones point to a different consumer response, where they see a clear difference and products are positioned accordingly.
The launch of Lightbox is part of an evolution in the laboratorygrown diamond sector, and will help to meet the consumer desire for more light-hearted and less expensive laboratorygrown jewellery, which is in line with what previous experience indicates would have happened over time anyway.
What will it mean for the future of the natural diamond sector?
By helping to address consumer confusion about laboratory-grown diamonds, Lightbox will also help reinforce the special symbolism of natural diamonds. It’s a misunderstanding of consumer need-states to think that physical, chemical and optical properties alone are what make people value natural diamonds as being the ideal symbols to represent life’s important milestones. There are other products that are pretty and that sparkle, but they aren’t valued in the same way.
When consumers are asked what it is that makes natural diamonds so special and valuable in their minds, they highlight the fact that they are finite, unique, billions of years old and from the Earth – it’s these attributes that make them inherently precious, and it’s the inherent preciousness that makes them worthy of representing our most important occasions and emotions. As Lightbox helps to bring greater clarity to consumers about laboratorygrown diamonds, the contrasting attributes of natural diamonds will be brought into sharper relief, and their role as symbols representing our most important moments and commitments will be reinforced.
However, there have also been questions posed as to whether Lightbox will negatively influence demand for lower-value diamond jewellery. In considering this question, it’s important to look at the volumes, the product offering and the marketing approach for Lightbox.
First, it should be noted that Lightbox volumes are not significant compared with natural diamond production. Lightbox Jewelry aims to produce around 100,000 unpolished carats in 2019, rising to around 500,000 unpolished carats in 2021 when the new production facility in Oregon is fully operational. By way of comparison, De Beers Group’s annual natural rough diamond production is around 34 million carats, and annual global natural rough diamond production is around 160 million carats. Annual global production of natural rough diamonds that produce melee (sub 10 point) polished is in the region of 100 million carats (of which melee of I quality and lower accounts for the vast majority of melee volume at approx. ⅔ of total volume).
Second, Lightbox will not sell loose polished material, but only finished jewellery. Lightbox Jewelry will focus on simple colour-based designs, with a maximum individual stone size of one carat. These designs will be more directly competitive with other non-diamond jewellery such as moissanite, semiprecious stones, low-end rubies, emeralds or tanzanite jewellery. By comparison, diamond melee jewellery is a very different looking product when compared with Lightbox Jewelry, and visual appearance is a key driver of product choice in this price range. In addition, small melee diamonds are used in jewellery across all price points, not just in the lowend category.
Third, Lightbox Jewelry will be clearly and transparently marketed as a distinct, man-made product and, to ensure consumers are not confused, it will not use the De Beers brand name in its advertising. It will be marketed as fun, fashion jewellery rather than anything more traditionally emotionally significant, as this is what consumers tell us they want
By comparison, diamond melee jewellery is a very different looking product when compared with Lightbox Jewelry, and visual appearance is a key driver of product choice in this price range. In addition, small melee diamonds are used in jewellery across all price points, not just in the low-end category.
from these products. Lightbox Jewelry will be positioned towards impulse self-purchase, and new, incremental occasions (where diamonds can mean too much).
With all this in mind, Lightbox is focused on providing a new and differentiated purchase opportunity. Consumers have told us they do not see laboratory-grown diamonds as the same as natural diamonds, and we certainly won’t be selling them as such. As previously noted, Lightbox will not offer grading reports because directly comparing the specifications of laboratory-grown diamonds to those of natural diamonds encourages further confusion, leading people to think that it’s a like-for-like comparison. We will be clear that these are two different product categories, and that using the language of the natural diamond industry, and its method for assessing rarity, is meaningless for laboratory-grown material that is produced to a particular recipe.
Ultimately, Lightbox is not a substitute for natural diamonds; it is an alternative to high-priced laboratory-grown diamonds that have a positioning that is out of step with consumers’ expectations.
What will it mean for the future of De Beers Group?
One theory that has been aired is that Lightbox marks a strategic change of direction for De Beers Group and that we see our future as being centred on laboratory-grown diamonds. While conspiracy theories make for entertaining reading, the truth is much more simple: De Beers Group has always been a natural diamond company, and it will remain a natural diamond company, with the pattern of our activities and investments providing clear evidence of this.
Narratives that have suggested De Beers Group will stop investing in its natural diamond future in favour of laboratorygrown diamonds seem to have glossed over the raft of evidence to the contrary. Not long after we announced Lightbox, we also announced that we have reached agreement to acquire the outstanding shares of Peregrine Diamonds – owner of an advanced stage diamond exploration property in Canada – for a sum almost as much as our investment in the new Lightbox facility in the US. But even more tellingly, we are also in the middle of a multibillion dollar production capacity expansion programme at our existing mines to sustain our natural diamond production volumes well into the future.
In South Africa, we have the $2 billion project to take Venetia mine underground – this is our biggest ever investment in the region, and the highest value mining project currently underway in the country. In Canada, aside from the aforementioned Peregrine bid, we recently opened Gahcho Kue mine – the largest new diamond mine in more than a decade. In Namibia, where we have the world’s leading offshore diamond mining business, we launched the world’s most sophisticated diamond sampling and exploration vessel last year, and are now working on plans for a new mining vessel. And in Botswana, we are in the process of undertaking the feasibility work on the latest cuts for Jwaneng and Orapa mines – two of the largest diamond deposits in the world. We are also piloting an initiative to help formalise the artisanal sector, helping to open up production from locations that have seen their share of global supply fall substantially in the last decade or so, and trialling new methods for increasing the supply of third party rough diamonds through our Auction Sales channel.
Overall, we are set to spend more than $10 billion over the next five to seven years on our natural diamond business to maintain existing production, explore for new supply, develop new capacity, and bring diamonds to market. While we are serious about our investment in Lightbox, it will be dwarfed by the much larger investments we will be making in our core business.
This is because we have great confidence in the future of diamonds.
With huge untapped demand potential in some of the world’s largest economies, with global demand for diamond jewellery at record high levels, and with young consumers buying diamonds in even greater amounts than their parents, we have much to look forward to.
So whatever speculation you might read about De Beers Group’s strategy, the truth is that although we believe that Lightbox will be at the heart of the laboratory-grown sector’s future, natural diamonds will continue to be our core business – just as they have been for more than 130 years.
A safety rep working in the mining section of Venetia diamond mine. Photograph by Philip Mostert © De Beers
A natural diamond at De Beers’ diamond sorting office. Photograph by Elaine Banister © Anglo American