Latest news with #PaulZimnisky
Yahoo
10-05-2025
- Business
- Yahoo
Lab-grown alternatives crush world's only diamond economy
When Botswana last year unveiled the second-largest diamond ever excavated, the country's now former president was quick to pose with the fist-sized gem. Mokgweetsi Masisi no doubt hoped some sparkle from the 2,492-carat stone would rub off on his beleaguered administration and the mining industry that keeps Botswana afloat. The small southern African nation is more dependent than any other country on diamonds, which make up a third of revenue and the majority of exports. Botswana has been particularly badly hit by a dramatic slump in demand, which has blown a hole in the finances of one of Africa's richest and most stable countries. Slowing business in China and the hangover from a pandemic spending splurge have both knocked prices, but worrying diamond miners more than anything else has seen the dramatic rise of laboratory-grown stones. These artificially made gems are chemically identical to natural diamonds, and can only be told apart by expert testing. Yet they are grown in a matter of days in laboratories, rather than formed over geological ages deep in the earth. As a result, they are a fraction of the price, allowing consumers to buy diamond jewellery for less, or get a much bigger stone for the same money. Advocates also argue they are more ethical, because they avoid the environmental and human rights issues that have at times haunted the mining industry. While natural stones still command a higher price, the cost of each one has tumbled and laboratory-made stones have taken a big chunk of the last year, as many as 45 per cent of engagement rings sold in America were set with lab-grown diamonds. The US retail price of a one-carat natural diamond has fallen by 32 per cent to £3,480 ($4,618) since the peak in May 2022, according to Tenoris, which tracks prices. The retail price of a similar lab-grown diamond has fallen 75 per cent since the start of 2020, to £625 ($828). Paul Zimnisky, an expert on the market, said: 'I wager there have been three major factors that have subdued the diamond market over the last three years. The more widespread distribution of man-made diamonds is one of them. 'The other two are: a severe luxury recession in China and an overall global hangover from boom years in 2021 and 2022, where people bought enough diamonds for a while.' All this has put pressure on Botswana, and the impact of the slump spurred voters to oust Mr Masisi's government in October 2024. Ndaba Gaolathe, the new vice president and finance minister, has now warned of deep spending cuts and said the government is preparing to make 'drastic' fiscal adjustments to stay afloat. 'The first thing we need to do, obviously, is to live within our means,' he said late last month. 'That means cutting spending — doing away with what we believe is some of the fat.' Botswana has tried to diversify its economy so it is less reliant on diamonds, but has a long way to go. Zoë McCathie, a country risk analyst at Signal Risk, said: 'Botswana's economic position will remain subdued for as long as the diamond slump continues. 'Dependence on diamonds will also be a longer-term economic headwind for the country.' 'Going forwards, the new government's ability to diversify the economy and facilitate recovery in the diamond sector will be essential for retaining popular favour.' Amid the downturn, mining giant Anglo-American is seeking to off-load its De Beers diamond arm, which is partly owned by Botswana. De Beers, the world's largest diamond producer, is meanwhile trying to revive demand by using marketing muscle to persuade consumers of the natural stones' worth. Botswana and De Beers recently signed a 10-year deal to fund global marketing efforts. The industry has been built on some of the most successful marketing campaigns in history, including the idea that a diamond is forever. Producers are now hoping they can regain that magic and persuade shoppers that lab-made diamonds are no substitute for a natural sparkler. The Natural Diamond Council, set up by producers, insists that 'the immense time and geological forces behind every natural diamond make them some of the rarest treasures on Earth, adding to their value and significance'. It is also trying to correct what it says are inaccuracies, and employing celebrities like the actress Lily James as ambassadors for their stones. Producers say high energy costs mean lab-made stones are not as environmentally sensitive as they claim, and insist that natural stones will still hold their value better. Mr Zimnisky said: 'Diamonds are a luxury product. For consumers, it's an emotional purchase. Thus marketing is key. The diamond industry is famous for its marketing campaigns. Stakeholders in the industry cannot forget this.' Broaden your horizons with award-winning British journalism. 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New York Times
05-03-2025
- Business
- New York Times
A Rocky Patch for Lab-Grown Diamonds
The luster of lab-grown diamonds has continued to spread slowly in the midrange luxury watch market, with brands such as Breitling and Oris doubling down on their initial embrace of the synthetic gems. But as a capital venture investment, the synthetic gems have been a lot less successful, with millions of euros lost — and plunging prices for lab-grown diamonds, which the industry refers to as L.G.D. 'We're seeing a small handful of very large producers in China and India ramping up production with faster, better processes, and every time they do that, the per unit cost becomes lower and lower,' said Paul Zimnisky, a New York diamond analyst. 'From January 2015 through January 2025, L.G.D. prices have dropped by 85 percent,' he said. 'Today, you can get a nice one-carat ideal round lab-grown diamond for $900. The natural equivalent would be about $5,000. A three-carat synthetic would cost about $4,000, and for the natural, you're looking at $50,000 to $60,000. So they're now running about 90 percent less than natural.' To protect both their brand integrity and their core business, retailers and brands that sell high-end natural diamond jewelry or high jewelry watches have a vested interest in defending natural diamonds — so observers agree it is unlikely that houses such as Bulgari, Cartier and Chopard would ever use synthetic gems in their watches. As Stéphanie Sivrière, the creative director of jewelry and watches at Piaget, said in a recent interview, 'It wouldn't be authentic to the DNA of our maison.' But when it comes to midrange or entry-level luxury timepieces, lab-grown diamonds, used in small quantities for dial markers or accents on bezels, seem to make sense. 'The products we have that feature lab-grown diamonds are performing excellently in the market,' said Aurelia Figueroa, Breitling's head of sustainability, 'and even above our expectations.' And Oris' chief executive of the Americas, VJ Geronimo, echoed the comment for his brand's synthetic-set lines in the region. Lingering View The watch sector was far behind jewelry makers in embracing lab-grown diamonds, with Citizen first adding them to its L Ambiluna collection in 2020. As Marc-André Deschoux, founder of the online channel WatchesTV, said in a 2021 interview with The New York Times: 'This is still a taboo subject in Switzerland because of a lingering negative view of man-made diamonds.' But in 2022, Breitling introduced them in its Chronomat line, announcing that lab-grown stones eventually would replace natural diamonds in all its collections (the brand says it is now 43 percent of the way to that goal). That year TAG Heuer came out with a limited-edition Carrera Date Plasma Diamant D'Avant-Garde watch set with lab-grown diamonds and Oris incorporated them into its Aquis line; both brands have used them in more recent introductions, too. And last year, Raymond Weil dipped into the sector, setting synthetic diamonds into the lugs of its Millesime model. Oris and Breitling said these watches had been well received by consumers, noting that lab-grown diamonds can have a much smaller environmental footprint than mined ones, depending on production methods, and that the synthetic gems have the same optical, physical and chemical properties and emit the same sparkle as mined ones. Not in Nature As a capital investment, however, lab-grown diamonds have not fared well, something experts say is the result of oversupply and consolidation. In 2022, for example, LVMH Luxury Ventures, the private equity division of the luxury giant Moët Hennessy Louis Vuitton, and its partners invested $90 million in Lusix, a lab-grown diamond manufacturer in Israel. But the business struggled financially, and it was sold for $4 million in November to two other producers, Fenix Diamonds and Dholakia Lab-Grown Diamond. The failure of LVMH's investment 'has absolutely nothing to do with the strategy of individual brands' when it comes to using lab-grown diamonds, said Antoine Pin, TAG Heuer's chief executive. 'I see them as an opportunity to use diamonds in new ways,' he said, 'with one full diamond carved out to serve as the crown, for example, or a large solid piece carved as a bezel. 'We are thinking, what can we provide that is unique, different. We want to use them in a way that does not exist in nature. That's what we're looking at, rather than just duplicating the way natural diamonds are already used in watches. So although we don't have any new pieces at the moment, one interesting direction would be colored diamonds or special cuts, shapes and large sizes. So we're working on this.' Among other failures, Mirabaud Lifestyle Impact and Innovation, an investment fund run by David Wertheimer, a Chanel heir, was one of several firms that invested millions of euros in Diam Concept, a French synthetic diamond maker. It was the main supplier to Courbet, a synthetic-only jeweler also funded by Mirabaud that was founded in 2017 and had a showroom on Place Vendôme in Paris, the heart of the high jewelry industry. Diam Concept dissolved in June 2024; Courbet entered court-ordered receivership in December. Even Lightbox, the lab-grown gem subsidiary of the diamond giant De Beers, has faltered. After announcing in May 2024 that it would reduce prices by more than a third, it announced in June that it would transition to synthetic diamonds exclusively for industrial applications. In Retail The bankruptcies exposed the strange disconnect between the vaunted popularity of lab-grown diamonds with some consumers and their failure as a capital venture vehicle. In 2024, according to the diamond industry analyst Edahn Golan, 45.3 percent of the diamond engagement rings sold in the United States had lab-grown diamonds, and overall the gems were present in 14.3 percent of all diamond jewelry sold in the country. 'The average age of people getting married in the United States is 28 — broadly speaking it's 25 to 35 — so that tells us that young people are embracing lab-growns,' said Mr. Golan, who is the managing partner of Tenoris, a jewelry and diamond retail trend company that collects data each month from 2,500 retail jewelers in the United States. Despite the consumer interest in lab-grown diamonds, some retailers are wary of selling synthetics, mainly because of the overall impact on their traditional watch and jewelry business. Mr. Geronimo of Oris acknowledged that some retailers had been resistant: 'Their store policy is that they don't deal with lab-growns, period, and that's it. But we have others that totally embrace it. They don't care, even though they have a good customer base in natural diamonds.' Raymond Weil declined to answer questions for this article, with its public relations agency sending a message: 'I regret to inform you that Raymond Weil has decided not to participate in this matter. The C.E.O. mentioned that it is a sensitive topic in the U.S., and they are concerned about potential negative feedback.' Mr. Zimnisky, the diamond analyst, noted that the steep decline in synthetic diamond prices might hurt the credibility of some retailers. 'If I had a jewelry store and I sold a consumer a three-carat lab diamond for $20,000 in 2018, and now I'm selling it for $1,500, I'd be nervous that consumers are going to come back and say, 'You ripped me off.'' The consolidation occurring among lab-grown diamond manufacturers could stabilize the market eventually, experts say, and if the surviving producers adopt the right practices, it could strengthen the sector's sustainability credentials. Breitling is one of a growing number of companies tracing its supply chain, something that the European Union's Corporate Sustainability Reporting Directive will require many larger businesses to do, starting this year. 'The origin of our decision to use lab-growns is based completely in traceability and sustainability,' Ms. Figueroa said. 'We surveyed the market, and we understood that for us to go forward with true traceability, we weren't going to be able to achieve that with mined diamonds. We made the decision to switch to lab-grown. 'Then, we very carefully selected only a handful of suppliers: ABD Diamonds and Fenix Diamonds, both based in western India. Fenix is using already 100 percent renewable energy, and ABC is, so far, using 25 percent — we actually cofinanced the solar PV panels that they have on site, and they're working on finalizing their plan to source 100 percent renewable energy right now.' All of that effort notwithstanding, Mr. Zimnisky is among those who say that price trumps sustainability when it comes to watch and jewelry purchases. Ultimately, 'environment doesn't matter,' he said. 'Consumers don't care about that as much as the media talks about it. Consumers are buying lab diamonds because they're so cheap. It's all about the price.'
