LVMH formalizes: synthetic diamonds are luxury
In 2018, the FTC allowed “a mineral composed essentially of crystallized pure carbon in the isometric system” to be described as a “diamond”, whether natural or man-made. Since then, the jewelry establishment has erected entry barriers for lab-grown diamonds in their lucrative $84 billion global market.
The Natural Diamond Council set the official party line, stating “Made by nature over millions of years, natural diamonds are inherently valuable, rare and precious.” Lab-grown diamonds, on the other hand, are cheap manufactured substitutes whose value is “strictly tied to the cost of production” and therefore have no lasting value.
With the most to lose, luxury brands including Bulgari, Cartier and Tiffany (now a brand of LVMH) stood firmly behind this barrier and considered only natural diamonds to be luxury.
But now the walls have been broken with LVMH Luxury Ventures, along with other investors, having achieved a $90 million investment round in Israel Lusix, a pioneer in the synthetic diamond (LGD) industry.
Lusix joins MadHappy, Gabriella Hearst, Versed and Stadium Goods in the LVMH Luxury Venture portfolio. Its investment priorities are clear: seek brands at the forefront of emerging trends and innovation in the luxury market.
More specifically, it invests in “iconic luxury brands, recognized for their distinction and the quality of their products and services, with significant growth potential”.
Lusix does the trick. It is the first 100% solar grown diamond producer in the LGD industry with its stones sold under the brand name “Sun Grown Diamond”. It can grow clear and custom rough stones in its large-scale reactors and it is one of the leading producers of premium diamonds in the industry.
“LVMH’s investment in lab space is a statement that labs are massively moving into luxury,” said Marty Hurwitz, founder of The MVEye, a research firm specializing in the jewelry market.
“Right now, the demand for lab-grown diamonds is exploding and the only thing holding it back is supply. LVMH’s investment in Lusix will give them secure access to premium quality supply,” he continued.
Lusix’s technological advance made it particularly attractive to LVMH. The company was founded by Benny Landa, who made a name for himself advancing digital printing technology with his Indigo Printing Company, which was eventually sold to Hewlett-Packard in 2002.
He then formed Landa Group, and under that Landa Labs, to explore nanotechnology research and applications. Lusix was established in 2016 as a separate company led by Landa and co-founder Dr. Yossi Yayon, who holds a Ph.D. in physics and postgraduate work at the University of California, Berkley.
The $90 million investment will be used to bring a second 100% solar installation online this summer.
Landa said in a statement: “We are delighted and proud to welcome such prestigious investors, including LVMH Luxury Ventures, providing their financial support and valuable industry knowledge. Their help will greatly contribute to the success of our business as the implications of this investment, both for LUSIX and for the synthetic diamond segment, are profound – and so exciting! »
This is undoubtedly great news for the entire lab-grown diamond industry, which today is estimated at just under $6 billion and prior to this announcement it was expected to double in size by 2025.
With LVMH now giving its official luxury endorsement to lab-grown diamonds, it’s safe to bet it will grow even faster than that.
“Lusix will double its production by 2023, which will further accelerate the market,” explained Hurwitz.
Finally, Frédéric Arnault, 27-year-old son of LVMH CEO Bernard Arnault and head of his Tag Heuer brand, likely helped get his father to take a closer look at LGDs. Earlier this year, Tag Heuer introduced its first watch with lab-grown diamonds at the super luxurious price of $360,000.
“It’s not about replacing traditional diamonds with lab-grown diamonds,” he shared with Business in vogue. “We use what is different and inherent in this technology, which allows us new shapes and textures.”
Frédéric understands what next generation luxury consumers want and who have the choice between natural diamonds with their environmental challenges and lab-grown diamonds that are renewable and can be produced without the high environmental price tag.
Additionally, consumers can obtain a larger and often higher quality stone at a lower price. It’s the kind of choice everyone wants.