【South Korea】[Yoon Sung-won’s Jewelry Insight] Lightbox’s Entry into the Wedding Ring Market and De Beers’ Questionable(?) Move

In June, Lightbox, the lab-grown diamond jewelry brand under the De Beers Group, announced its entry into the wedding ring market. This move directly contradicts its public statement at its 2018 launch that it would not touch the bridal market, traditionally the domain of natural diamonds. Moreover, Lightbox did not distribute any prior press releases about this. The wedding rings simply appeared one day on the Lightbox website. This news sent shockwaves through the diamond industry.

In September 2018, De Beers introduced Lightbox as ‘fashion jewelry to be enjoyed in everyday life.’ At the time, it clearly tried to avoid cannibalizing the bridal market by announcing an innovative price of $800 per carat, no grading, and online-only sales. De Beers’ partners breathed a sigh of relief at this news, while simultaneously, numerous natural diamond companies quickly entered the synthetic diamond market. From this point, consumer perception of synthetic diamonds began to change, and the market grew significantly alongside the sophisticated name ‘lab-grown diamonds.’ However, not everyone was surprised by Lightbox’s recent announcement. Some were shocked that it took five years, precisely because they recognized that De Beers is not a company that moves with short-term strategies. Indeed, when De Beers invested $94 million to build a lab-grown diamond factory in Oregon, USA, some questioned whether they would be satisfied with just fashion jewelry. In reality, after massive production investment and the chaotic pandemic situation, De Beers’ entry into the wedding ring market has become a reality.

Testing the Waters and Long-Term Goals

They limited the initial launch to three markets—Atlanta, Dallas, and New York—under the pretext of ‘gauging consumer response through a three-month test phase.’ But isn’t Lightbox strictly an online brand? This means wedding rings can be purchased from anywhere in the world via their website. Ultimately, it’s confirmed that fashion jewelry was not De Beers’ long-term goal, and they are pursuing a broader market entry.

The background to this includes the finite nature of diamond mining. De Beers currently owns diamond mines in Botswana, Namibia, South Africa, and Canada. According to the recently published 2022 production report, 70% of De Beers’ diamond production comes from the Jwaneng, Orapa, and Letlhakane mines in Botswana. While there is potential for extension, the Letlhakane mine, expected to last the longest, has a lifespan until 2043, and there are no major mines scheduled for development in the near future. Even if new mines are developed, there is a possibility that the host countries will demand higher profits, and various difficulties are expected due to climate change. Risk aversion in the face of such an uncertain and unstable future led them to adopt lab-grown diamond wedding rings as an alternative. Furthermore, with an annual production capacity of approximately 200,000 carats of synthetic diamonds, there was no reason to limit their domain or abandon the highly profitable wedding ring market. However, the problem lies in the fact that De Beers, as the patriarch of the diamond industry for the past 100 years, once monopolized most of the rough diamond market. This situation is even more perplexing for jewelers who still have doubts about lab-grown diamonds.

Over the past year, natural diamonds have gradually been losing market share, while lab-grown diamonds have seen prices plummet due to an imbalance between supply and demand. According to diamond industry analyst Paul Zimnisky, lab-grown diamond production in 2023 is expected to reach 15 million carats. Ultimately, anxiety is amplifying on both the natural and lab-grown fronts. Some lab-grown diamond sellers have announced plans to leave the fiercely competitive wedding ring market and switch to the fashion sector. At this juncture, Lightbox’s entry into the bridal market is exacerbating the problem. Furthermore, it’s noteworthy that Lightbox’s pricing model is more expensive than current market prices. This is interpreted as an exploration of premium value based on the De Beers brand reputation. If lab-grown diamonds have focused on separating from the existing diamond market until now, it seems De Beers is now trying to further fragment the market.

For today’s MZ generation, jewelry is another way to express individuality and an essential item to complete a fashion look. They perceive cost-effective lab-grown diamonds as a trendy choice and also show great interest in whether the brands they purchase pursue ethical values, sustainable social practices, and minimize carbon footprints. This is why the MZ generation, which wields strong influence through ‘mining-out’ consumption (purchasing products with special messages or social value to express one’s beliefs), chooses lab-grown diamonds. For them, luxury may lie in transparency and authenticity rather than exclusivity. Therefore, the competitor De Beers currently faces might actually be De Beers itself. The reason a large ship moves slower than a small one is that if it makes a mistake, the damage can be much greater.