The Conversation: Stephen Lussier

The gems and jewellery industry was among the earliest to overcome the disruptions caused by the Covid-19 lockdown. When the big fat weddings were curtailed, and people couldn’t go on expensive holidays or buy expensive clothes, they indulged in jewellery. As a result, 2021 was the best year for THE world’s largest diamond manufacturer, the $5.6 billion De Beers group, with business growing over 25%. Stephen Lussier, chairman of Natural Diamond Council, global CEO of De Beers’ retail brand Forevermark and strategic advisor to the De Beers Group, talks about the bounce-back, adoption of technology and commitment to sustainable business practices. Interview by Ajita Shashidhar.

This edited Q&A has been condensed for space and clarity.

Growing During Covid-19

Q: How did the diamond industry bounce back so quickly?

In January 2020, when I first heard the word Covid-19, interestingly, we were at a safety conference in Johannesburg. I got an email from a colleague in China asking if we could find masks in South Africa as they couldn’t run stores without wearing masks. That time, we didn’t realise what was happening. We had already started losing sales in China and had no idea of what was coming. When Covid-19 really hit, we closed our mines. Our priority was safety of people, and we understood that until we change the way we work, we will not be able to keep them safe. So, we had to close our operations in mining communities. That was painful economically, but necessary.

Soon after Covid-19 hit India, our cutting centres in Surat had to close down. As it spread, retailers closed, and there was a point in second quarter of 2020 when everything was shut. In the darkest days of second quarter of 2020, it seemed that the world economy was going to stop. However, what we didn’t see was consumers coming back as fast as they did. They came back faster than the industry recovered. It started with e-commerce. They started buying online. Retailers started re-opening before mines and cutting centres. It gave us confidence that consumers are going to be interested in buying diamonds. It also cleared the inventory in the long pipeline between the mine and the retailer. Consumers were buying but nothing new was being made. There was a lot of inventory with jewellery manufacturers and retailers that was getting used.

At start of 2021, we were in a completely different place—mines were re-opening, India was re-opening, consumers were buying and inventory had reduced. The only way you could sell new pieces was to process diamonds, so it created a tremendous pull.

Q: So, you never had short supply?

We were able to re-open just in time. It was done creatively. We brought in technology to track physical proximity of people to stop spread of Covid-19. We did enormous testing to keep people safe when they came to work. This enabled the industry to re-start. What happened in 2021 was remarkable. We saw highest demand for diamond jewellery, ever. The trend continued the entire year. Demand was just as strong even in January 2022 . We were used to 3-4% growth. In a big year, it used to be 5%. We saw 25% growth in 2021. In U.S., we saw 35% growth.

Q: What triggered this growth?

When you get something that big, it can’t be due to a single reason. On one hand, there were huge money transfers by governments . Stock prices and savings rates were high. People couldn’t travel. They feared going to restaurants, so discretionary spending was low. All this gave us an opportunity to gain market share.

Also, Covid-19 experience changed consumers. They reflected upon what was important to them, what mattered to them. Commitment became more important, recognising loved ones became more important. There is nothing in the world like a diamond to express your love. Our product was meeting a need which was heightened by people’s experience during the lockdown.

A jeweller who had an in-store event in U.S. during Christmas told me about a lady who used to buy a piece of jewellery from him every year. This year, he prodded her to buy two, and when she looked at her husband, he instantly agreed and told her that she completely deserved them. So, the pandemic created a desire for things through which one could appreciate each other. That helped us.

Q: How has India contributed to De Beers’ growth story?

Over 10% demand for diamonds comes from India. For De Beers Forevermark, India contributes up to 30%. This makes India an extremely important market for De Beers.

Getting Production Back

Q: How did you ensure quick turnaround for mines and cutting centres?

The most important innovation was around safety. There were two areas of focus for us. One was bringing technology to mines that enabled us to protect people from each other. The technology would tell who they were near to and for how long, so that if someone was diagnosed with Covid-19, we could isolate him. The safety technology was really important to us. The second was getting the vaccine administered. In India and U.K., vaccines came quickly and governments were able to vaccinate at scale. In South Africa, vaccines took time, so we took responsibility for our communities. We administered vaccines not just to miners but also communities.

Q: With demand soaring, how much has production increased?

We are producing about 33 million carats, which was the level pre-Covid. We can’t produce more with the resources we have.

A Hi-tech Shine

Q: You moved to selling jewellery online. What kind of a mindset change did that require?

Prior to the lockdown, share of online in our business was always low compared with other industries, only 10-12%. During the lockdown, there was a period when 80% sales were online. When stores reopened, their business came back, but online didn’t go back to where it was. Today, 20-30% of our business is still online. It feels like the industry has developed new capabilities and consumers have become more comfortable (online). When I say online, it’s never one over the other. Consumers may buy two pieces at the store and one online.

Q: To what extent is the diamond industry using blockchain for provenance, efficiency?

We have introduced blockchain to help our clients track their diamonds from the time we sell them till they sell to their clients. Blockchain provides consumers an opportunity to know where their diamonds have come from. We will share the technology with our clients and help them implement it. The good thing about blockchain is that it is public, not controlled, and will be accessible to all our clients. Another advantage of blockchain is that it can be as transparent as different players in the pipeline want it to be. The most important thing is for consumers to know that they can feel proud of the diamond they own. Earlier, it was not possible to provide that level of details for all the 30 million carats that we produce.

Q: There is a lot of conversation about brands investing in NFTs and metaverse. Do you have a strategy there?

Through the Natural Diamond Council, we are spending time to understand the NFT and metaverse space. We have to be quite imaginative. In the gaming world, there are opportunities for promotions. We can get products and brands involved and see how it works.

Sustainable Goals

Q: Customers now demand sustainability in business models. How much has been possible in such an industry?

We have recently announced 12 ambitious sustainability goals for the coming decade, including gender parity in workforce, supporting 10,000 women entrepreneurs in our diamond producing partner countries and carbon neutrality in operations by 2030. The goals are part of a sustainability approach embedded in the business’s commercial strategy and focused on maximising the positive impact of diamonds during their journey from discovery to retail. The goals were developed to galvanise De Beers’ employees, partners and consumers around the world – from our four producer countries to more than 30 countries where our brands De Beers Jewellers and Forevermark are found.

Q: How difficult is it to attain diversity goals at mines?

It is difficult. We have a diverse team at the senior management level, but the challenge at mines is that there aren’t enough women in Africa who make it to engineering colleges. It’s our goal to engage 10,000 women in STEM (science, technology, engineering and mathematics) by 2030 as part of our wider Building Forever sustainability goals.

The diversity rate in mines is 20-25%. Our goal is to take to 40-60%.