Rapaport Magazine - January 2019

VOL. 42 NO. 1 JANUARY 2019

PRICING POINTS MAPPING THE CONSTELLATION OF DIAMOND PRICES OVER THE LAST 40 YEARS

AUCTIONS

STYLE

DESIGNER

PREDICTIONS

A PEARL AND A PINK DIAMOND TOP CHRISTIE’S AND SOTHEBY’S IN GENEVA

BIG, BOLD AND COLORFUL ARE THE TRENDS TO WATCH THIS YEAR

JEREMY MORRIS ON HELMING BOND STREET JEWELER DAVID MORRIS

FUTURIST ERICA ORANGE SHARES HER FORECAST FOR 2019 AND BEYOND

Note from the publisher

IMAGE: BEN KELMER

F

OUTSHINING SYNTHETICS

or those who have ever questioned whether change is the new normal in our industry, 2018 should truly have been a wake-up call. Technology, transparency and demographics are rapidly transforming the fundamental way the diamond and jewelry trade operates. Omni-channel retail, synthetics, blockchain, financial regulation, millennials and Gen Z are at the center of a swirl of wider disruption forcing players within our industry to adapt.

This new topsy-turvy reality was underlined when De Beers launched Lightbox, its own brand of synthetic diamonds.

Indeed, “A Year of Synthetics” is how Rapaport Senior News Reporter Joshua Freedman branded 2018 in a story he wrote for Diamonds.net. He believes De Beers’ Lightbox launch was one of the defining events of the past 12 months, alongside the US Federal Trade Commission’s decision to relax its rules for describing lab-grown diamonds, and the likes of Macy’s and JCPenney selling synthetics for the holiday season.

However, synthetics are a sideshow. It is the naturaldiamond sector’s deficiencies that have allowed lab-grown diamonds to make an impact. Synthetics cannot match the story, significance and awe factor of a natural diamond. But

over the past two decades, financial scandals, the lack of sourcing transparency, and a reluctance to embrace the benefits of technology have hampered our industry’s ability to win over a new generation of consumers.

The future, however, can be far brighter. The drive toward transparency received a major boost when De Beers reversed its position on source disclosure. The miner is currently planning to loosen its disclosure restrictions for sightholders, a story Rapaport News broke in December.

This decision should help propel us toward an era of openness that will resonate with consumers worried about their diamonds’ provenance.

Also expect to see technology become an even more dominant force this year, with further blockchain and omnichannel initiatives at the forefront.

So let’s hope 2019 is a defining year for our industry, and one that builds on a highly positive holiday season.

Wishing you a prosperous new year.

John Costello PUBLISHER john.costello@diamonds.net DIAMONDS.NET

JANUARY 2019 13

CO N T E N TS

50 Page

43 Page

26 Interview Brett O’Connor of Bonhams talks about the return of auction classics and the opportunities opening up in Asia.

28 Auction report Christie’s and Sotheby’s Geneva sales: The trends, highlights and results.

RETAIL 36 Retail profile Honesty and integrity are the guiding tenets for Welling & Co. in West Chester, Ohio.

38 Retail insight Futurist consultant Erica Orange offers her predictions on how the jewelry world will evolve.

41 RetailRap Has there been an increase in clients asking for lab-grown diamonds?

STYLE & DESIGN 43 Jewelry Connoisseur Celestial-themed jewels twinkle in more ways than one.

IN-DEPTH

IMAGES: DAVID MORRIS; ROGER DUBUIS

16 News

44 Style Bold statement pieces, angular shapes and colored stones are on track to be hot in 2019.

2018 review: The game changers.

Industry: De Beers rethinks sourcing rules.

Retail: Signet refreshes for holiday season.

Mining: Zimbabwe raising the stakes.

46 Designer

22 News analysis

Three experts at leading smaller auction houses share which 2018 trends they expect to continue into the next year.

Some large miners are moving into manufacturing and retail, but how will that affect smaller businesses?

24 Profile Le Vian has positioned itself as a key trendsetter for the industry.

Jeremy Morris embraces his role as scion of London luxury brand David Morris.

48 Legacy

50 Colored gemstone Tanzania’s Mahenge region is a celebrated source of vivid spinels and garnets.

MARKETS & PRICING 52 Diamond Price Statistics Annual Report 2018 Diamond market ahead by slim margin

73 Trade report 75 USA 80 India 83 Israel 85 Antwerp 86 Hong Kong 88 Diamond data 93 Price List 105 RapNet price list 110 Directory 114 Calendar 116 The final cut

DIAMONDS.NET

JANUARY 2019 7

N EWS | 2 01 8 REVIEW

THE GAME CHANGERS We look at the personalities, deals and diamonds that made 2018 one of the most dramatic years in recent memory, and revisit our most popular posts on social media

PERSON OF THE YEAR

T

BY AVI KRAWITZ

he room buzzed with curiosity and anger as the De Beers executives ascended the stage. A few days earlier, on the eve of the JCK Las Vegas show, the company had announced its entry into the lab-growndiamond jewelry arena with its Lightbox brand. This was its chance to explain the move.

Setting a standard $800 per-carat price for a lab-grown stone would help differentiate the product from natural diamonds, the Lightbox team stated. Labgrown diamonds, they explained, had their place as a fashion-focused and fun gift, while natural diamonds were for special occasions. But others in the room — mainly jewelers, diamantaires and the trade press — saw the De Beers move as an endorsement that would help stimulate demand for synthetic diamonds.

The debate will likely continue for years. Is it good for the industry that De Beers is in synthetics? Are lab-grown and natural diamonds the same, as the Federal Trade Commission (FTC) implied in July when it changed its definition of a diamond?

These questions will evolve as the synthetics market grows. For its part, De Beers can hardly be blamed for the move. It is, after all, a commercial entity that must position itself for growth. But the company cannot escape the fact that with the announcement, it marked 2018 as the year in which lab-grown diamonds gained credibility.

For that reason, we recognize the company’s CEO, Bruce Cleaver, as our person who exerted the most influence on the market in 2018.

There were other strong candidates for the “person of the year” title. Disgraced jeweler Nirav Modi could certainly stake a claim, as his alleged $2 billion defrauding of an Indian bank led to greater caution among lenders.

Swatch CEO Nick Hayek’s bold withdrawal from Baselworld also made him a worthy candidate, given the industry’s trade-show fatigue and general dissatisfaction with the Swiss-based event.

US President Donald Trump was a contender as well; the US-China trade war injected caution into the diamond market in the second half of the year.

But none of these developments or personalities will have as much of a lasting impact as Lightbox.

It will take some time to assess whether the move is a positive differentiator or the endorsement the synthetics players were craving. It’s probably both — which is brilliant and disconcerting at the same time. No other story stirred as much emotion in 2018 as Lightbox. And no other industry De Beers CEO development is likely to garner as much interest in Bruce Cleaver the years to come.

16 JANUARY 2019

DIAMONDS.NET

Deal of the year The auction circuit once again wowed us with some impressive treasures, intriguing stories and incredible prices, but none more than the natural-pearl and diamond pendant that once belonged to Marie Antoinette. The piece sold for $36.2 million to an unnamed buyer at the Sotheby’s Noble Jewels auction in Geneva — more than 18 times its high presale estimate of $2 million.

HONORABLE MENTIONS Two mergers signaled that consolidation in the midstream was set to continue. Niru Group took over EZ Diamonds’ business for goods below 0.70 carats (see Page 18), and Rosy Blue bought a minority stake in Leo Schachter Diamonds.

TOP INSTAGRAM POST

Diamond of the year A rectangular-cut, 18.96-carat, fancyvivid-pink diamond previously owned by the Oppenheimer family caused quite a buzz when it came up for auction at Christie’s Magnificent Jewels sale in Geneva. And it didn’t disappoint. Harry Winston snapped up the jewel for $50.4 million, or $2.7 million per carat – a record average price for a pink diamond at auction. The company renamed it the Winston Pink Legacy.

Our @rapaportmagazine Instagram account grew from 6,776 followers at the beginning of the year to 29,927 — and counting — at press time on December 30. Our mostliked post was this exquisitely crafted ring by Avakian. Set with a marquise-cut, 6.25-carat Ceylon sapphire and graduating hues of blue-sapphire and white-diamond pavé, it playfully sports a dangling briolette on each end.

TOP TWEETS Rapaport @rapaport

De Beers’ decision to sell synthetic diamond jewelry raises important issues for the rest of the industry, says Martin Rapaport.

IMAGES: DE BEERS; SOTHEBY’S; AVAKIAN; CHRISTIE’S IMAGES LTD 2018

Rapaport @rapaport

The GIA received a diamond for grading that had broken in two and been stuck together.

Rapaport @rapaport

The Federal Trade Commission has dropped the word “natural” from its definition of a diamond.

HONORABLE MENTIONS Of the 14 rough diamonds larger than 100 carats that Gem Diamonds recovered at its Letšeng mine in 2018, the most impressive was the 910-carat, D-color, type IIa Lesotho Legend, which the miner said ranked as the fifth-largest gem-quality diamond ever found. The stone sold to Samir Gems for $40 million.

Dominion Diamond Mines, meanwhile, unveiled a 553-carat yellow diamond it had unearthed at the Diavik mine. The company claims the chicken-egg-sized stone is the largest known gem-quality rough diamond found in North America.

DIAMONDS.NET

JANUARY 2019 17

P ROFIL E

FASHION FORWARD Jewelry trendsetter Le Vian sees its forecasting role as vital to the industry’s survival. By Avi Krawitz

E Eddie Levian, CEO of Le Vian.

Above: Signature ring featuring Nude and Chocolate diamonds in 14-karat Strawberry gold.

24 JANUARY 2019

DIAMONDS.NET

ddie Levian has an air of confidence as he navigates Le Vian’s large and loud booth at the JCK Luxury show in Las Vegas.

With music blaring in the background, he stops mid-sentence during our interview about the jewelry brand’s latest collection to focus on his retail partners.

“If everyone could send a happy birthday message to my brother, who couldn’t be with us at the show this year,” he announces with an awkward ease and his famously assuring smile. The room full of mainly independent retailers responds warmly, eager to fuel the sense of family the Levians consciously champion.

The independents, after all, are generally family-owned businesses and therefore have the same mentality as Le Vian, the company CEO says. “They embrace us because we treat them as part of the family. It’s a different way of looking at business.”

That message provided reassurance over the years as Le Vian grew and started distributing to the multi-store chains. For a

time, the independents were concerned they couldn’t compete with the larger companies if they carried the same brand, Levian recalls. Creating exclusive collections and marketing for the independents helped alleviate those fears — and it was no small task, given that Le Vian is available today at some 3,800 stores across the US.

GOING BY THE BOOK

“[INDEPENDENTS] EMBRACE US BECAUSE WE TREAT THEM AS PART OF THE FAMILY”

Levian understands his job is to innovate. The company presents approximately 40,000 new designs each year, aiming to supply different collections to a wide variety of customers.

Much of that product development is organized into the brand’s annual trend book, which is unveiled each year at its glitzy Le Vian Red Carpet Revue during the Las Vegas show in early June. The event offers core retail vendors a first glimpse of the 2019 collection so they can have the pieces in store when Le Vian rolls out its marketing program to the public.

The trend book is then translated into individual pieces to fit each retailer’s needs, Levian says.

But there’s a greater purpose as well: Levian sees the annual forecast as an important tool for positioning the company as a trendsetter in the jewelry market.

“It’s not just a fashion show,” he stresses.

“It’s a driving force for the industry, because other jewelers are motivated by the trends we bring.”

the company’s choice of Nude diamonds as its diamond of the year and the “Nude Palette” as its color trend for 2019. Levian observes that women shop for jewelry the same way they do for makeup, lingerie or general fashion.

“The collection is a range of skin tones, from nude to chocolate diamonds,” he notes. “Matching colors to skin tone is the way beauty is sold today.”

He emphasizes that jewelry needs to be viewed as part of the fashion world, especially as it shifts its marketing focus toward women rather than selling engagement rings to men. The dynamic of the man being the core consumer while women are the collectors needs to change, as women are more financially independent today, he argues. After all, the genders experience the world in different ways, and that plays out in the jewelry market.

For instance, he explains, men want to be the hero who buys a beautiful piece for the woman, so they’ll typically go for a classic solitaire diamond that she’ll wear for the next 20 or 50 years. Meanwhile, women are immersed in a world of Stack of bolo bracelets from the mass design but still view themselves as Milestones collection with Nude unique. Jewelry helps a woman express and Chocolate diamonds. her individuality and show that she’s up on the latest trends, but the guy — who in the past has been the target market for diamond-buying — is looking for a conservative piece.

It’s a difficult dynamic that doesn’t bode well for the survival of the industry, Levian cautions. And it’s a challenge he believes his brand can overcome, as it can target both sets of consumers through the trend forecast.

“The stores need their jewelry to be in fashion so that the woman can get something new every season and so that the guy can feel safe to be the hero when he buys something for her,” he explains.

Strawberry gold ring with Nude diamonds, “The acceptance by the consumer that from the Milestones collection. this is the trend of the year is the key to our success.” ◼

COLOR OF THE YEAR

HOW TO SELL BEAUTY This is a role Levian is happy to fill; unlike the fashion industry, he suggests, the jewelry trade lacks a united voice that can push a trend and stimulate demand.

Le Vian’s predictions are largely informed by the company’s observations of collectors at the 3,500 or so one-day shows it hosts across the US each year, as well as its experience dressing celebrities.

The company also keeps tabs on the mining sector so it knows what new and interesting gemstones are available.

A case in point is Peacock Aquaprase, which the brand introduced this fall. It was in response to a request by the fashion editors at Harper’s Bazaar that Le Vian scoured its contacts in the gem world for something in grey, and the new stone, discovered by geologist Yianni Melas, was the result.

But it’s keeping in touch with fashion that Levian believes gives his company an extra edge. Tapping the fashion world enables it to look at diamonds from a female-centric viewpoint, he explains. It’s what motivated

DIAMONDS.NET

JANUARY 2019 25

TH E FINAL CU T QU IZ

PASSING GRADE How well have you been paying attention to the year’s diamond news?

Rapaport Magazine gives you the chance to find out.

3. Cards Against Humanity, a creator of politically incorrect party games, offered a 1.50-carat lab-grown-diamond engagement ring for 99% off on Black Friday. How much did it sell for?

A) $11.99 B) $14.58 C) $32.15 D) $49.99

7. The US Federal Trade Commission removed the word “natural” from its definition of “diamond” in July, arguing that when it had first adopted the previous wording, natural diamonds had been the only type on the market. When was that?

2. De Beers’ line of synthetic-diamond jewelry, Lightbox, will contain stones of what clarity?

A) F TO VVS2 B) VS C) SI TO I D) THEY WON’T HAVE A CLARITY GRADE.

A) 1953 B) 1956 C) 1968 D) 1971

5. Kay Jewelers customer Requitta Darshae East wrote a fiery Facebook post claiming the retailer had stolen rings she’d brought in for servicing.

What did it turn out had really happened?

A) KAY HAD GIVEN THE RINGS TO THE WRONG CUSTOMER. B) THE RETAILER HAD ACCIDENTALLY SHIPPED THEM TO THE WRONG STORE. C) EAST HAD GONE TO THE WRONG STORE TO PICK THEM UP. D) THE RINGS HAD BEEN EATEN BY A DOG. 116 JANUARY 2019

DIAMONDS.NET

A) LISA BONET B) GIGI HADID C) ZENDAYA D) ZOË KRAVITZ

8. Which luxury jeweler is cutting and polishing the 1,109-carat Lesedi La Rona rough diamond?

A) CHOPARD B) DE GRISOGONO C) GRAFF D) HARRY WINSTON

WORDS BY JOSHUA FREEDMAN. IMAGES: RAPAPORT; GEMFIELDS; TIFFANY & CO.; REQUITTA DARSHAE EAST/FACEBOOK; GRAFF

A) MEHUL CHOKSI B) LEV LEVIEV C) JATIN MEHTA D) NIRAV MODI

A) LION B) TIGER C) ELEPHANT D) GORILLA

6. Which actress stars in Tiffany & Co.’s 2018 holiday commercial?

ANSWERS: 1. A; 2. D; 3. C; 4. A; 5. B; 6. D; 7. B; 8. C

1. Several high-profile jewelers had encounters with law enforcement in 2018. Which troubled tycoon is pictured?

4. Gemfields unearthed a 5,655-carat rough emerald in Zambia, naming it the Inkalamu. What does the name mean in the Bemba language?