De Beers – the latest company to pivot its business model due to thematic headwinds
De Beers is changing its tune on artificial or man-made diamonds. This is the latest company to pivot its business model in response to one of our investment themes, in this case it’s the Cash-strapped Consumer and the inability to pay the big bucks for actual diamonds as they contend with rising debt loads eating away at their disposable income.
As I’ve said for sometime, these thematic tailwinds and headwinds lead to a change in behavior at consumers and businesses that companies must respond to it they want to survive and thrive. If not, they run the risk of being dead on the vine. If consumers aren’t buying diamaonds because they can’t afford them, then the exiting business model at De Beers has to change. Simple. As. That.
De Beers launched a new jewelry brand on Tuesday that features synthetic diamonds, a major reversal for a company that had implored consumers to stick with “real” stones.
The brand, called Lightbox, will offer synthetic diamonds at a fraction of the price it charges for stones pulled out of the earth. De Beers framed the move as a response to consumer demands.
“Lightbox will transform the lab-grown diamond sector by offering consumers a lab-grown product they have told us they want but aren’t getting: affordable fashion jewelry that may not be forever, but is perfect for right now,” said De Beers CEO Bruce Cleaver.
Jewelry from the brand will go on sale in September. De Beers said prices will start at $200 for a quarter carat, and increase to $800 for a full carat stone. The company’s natural stones start at roughly 10 times that amount, depending on their clarity and other attributes.
