De Beers suitor aims to win customers back to real diamonds

Detailed summary

With synthetic stones undercutting prices and Chinese demand still weak, reviving the natural diamond market will be no easy task.

The group in pole position to buy De Beers said it aims to bring customers back to real diamonds, and away from the synthetic gems that have deepened an industry crisis.

The Global Diamond Consortium, headed by former De Beers chief executive officer Gareth Penny, is in the closing stages of completing its purchase of the company after fending off rival bids. Crucially, the group won the support of Botswana, home of the diamond giant’s biggest mines.

Still, the GDC is poised to take over De Beers as the diamond industry slowly emerges from its deepest ever crisis. The gem market has been hammered by a slump in Chinese luxury spending, as well as the rising popularity of synthetic stones.

Synthetic – or lab-grown – diamonds are chemically identical to mined stones, yet an explosion in low-cost supply from China and India has seen prices plummet. That has put huge pressure on segments of the jewellery market where pinched consumers can buy synthetic gems for a fraction of the price. Now GDC wants to spur demand for natural diamonds.

Read: Richemont and Signet in talks to join bidder for De Beers Botswana vows spending caution as it seeks bigger De Beers stake

“The market is still experiencing challenges and they are all about consumer demand and finding a way to address synthetics,” a GDC representative said, in some of the group’s first public comments on its plans.

Ever since De Beers monopoly collapsed at the start of this century, the industry has grappled with how to promote diamonds and fight off challenges like synthetic stones. Multiple attempts at industry-wide marketing have failed to deliver, while De Beers own foray into lab-grown gems was quickly aborted.

“This is about effective marketing because this is a demand side problem,” according to the GDC representative. “We want to find new, innovative ways to create demand for diamonds and we believe we have a lot of good strategies for that.”

The GDC has built a consortium of some of the industry’s biggest players.

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