Is Diamond an Orphan Brand?

The Orphan Brand is a unique concept in the retail industry, describing those items that do not fully fit within others by the parent brand.

The diamond can be seen as an orphan brand. It has a distinguished history but a troubled family. In the last century, the diamond was like a child of DeBeers, a child that suffered through the process f divorced when the Oppenheimer Family sold its remaining  40 %stake to Anglo Americans in 2011.

Obviously, I don’t blame De Beers or Anglo American for all the problems of the diamond industry. Misinformation regarding the social effect of mining on Africa's diggers; neglect in branding strategies; price list which affected the downwards spiral of polished diamond prices; excess productions on borrowed money- all these were problems the diamond industry has been going through. Still, the diamond has proven that even as an orphan brand going through these struggles, it can grow and prosper. 

Recently I’ve been noticing a remarkable change and improvement in the diamond trade environment. Prices are edging up and the shortage and increased demand are visible. Traders have returned and want to purchase more for their stock but there is a shortage.

Sakura Diamond pink purple

Merely a few days ago the 15.81 carat Sakura Diamond was sold for 29.1 million USD at Christie’s and made a new auction record for any purple-pink diamond. This price was not a bargain but it could have done even better.

The 15.81 ct is a magnificent stone and there no Argyle diamond of this size. Still, the case of Vivid Purple Pink of 15 ct is different than Argyle Pink Diamond in terms of prices. Here a  similar outstanding Russian Gem from Alrosa.

 

The 14.83 ct Fancy Vivid Purple Pink was sold at 26.6 million in Geneva-Alrosa although it was expected to go for a higher price it was

similar to the 15.81 ct FVPP IF.

Auction houses have undermined and driven prices of all important diamonds down as they offered inferior stones in order to create a market for themselves and try to demonstrate how reasonable they are. Now they have to start the journey back to higher prices. Today, auction houses have started displaying some fine stones at a good price (for smaller sizes). 

The industry has been suffering from many self-inflicted injuries. Diamonds are not promoted as the most important part of luxurious apparel. Instead of promoting only natural diamonds, brands have been creating a stage for Labgrown diamonds, which are basically a cheap substitute for real diamonds.

 

Human Rights Abuses in the Marange Diamond Fields of Zimbabwe | HRW

 

Going back, It’s all started with the Blood diamond campaign that spoke of an ugly side of the industry and of diamonds as means to finance wars and revolutions (Although the wars happened before and continued regardless of the diamond minings). But are diamonds with a  Kimberley certificate the only ones that are free of blood? I have my doubts. About 60 % of all rough diamonds are coming from Africa and generate about 8.5 Billion in revenue.

Lab-grown diamonds are made now in fancy factories in California and China while claiming to be the natural and ethical option while using so much electricity to create Lab-grown diamonds. DeBeers owns Lab-grown diamond Brand Lightbox which is obviously cannibalizing its own rough sales is undermining the natural diamond brand. They’re more focused on Iron mining so they don’t mind it if diamond sales constantly decline.

Why are mega tickets not reaching full prices yet? When a gigantic ship starts to sail it is moving first very slow and only slowly reaches full speed. It is difficult to get top prices in tickets over 20 million USS after  a prolonged crisis

Sadly, the COVID pandemic helped to make a turnaround in diamond prices.- as Covid  epidemy hit Surat and Bombay hard- due to the huge number of infections- manufacturing is down by 50 %

I expect the trend to shift and that fine quality stones of up to 3 million USD will do well. There's a shortage of yellow and pink diamonds due to the recent pandemic and its effects on the market in India. So prices are up 

Prices of color diamonds are based on rarity, luster, and perceived value, not just a certificate. Argyle pink diamond sells very well especially when it comes to SI and I1 clarity. Keep in mind that over a year ago the Argyle mine has closed and the very last Tender will come this Summer. In June of this year, one last Tender will be offered- and then Argyle will be history.

465753-heart-fancy_intense-si2-pink-ded84.jpg

 1.66 carat, Fancy Intense Pink Diamond, 5P, Heart Shape, SI2 Clarity, GIA & ARGYLE, SKU 465753

 

Finally, money and love don’t go out of fashion so don’t let your heartbreak about the future of diamonds. As the prices are going higher the desire to own diamonds will only increase.