Luxury Giants Like Louis Vuitton Are Falling for Big Gems

A handful of huge diamonds have made their way into the world of fine jewelry, which could spoil the whole business.

In January 2020, Louis Vuitton, the world’s most valuable luxury brand, revealed it had purchased the second largest rough diamond ever mined. He purchased the 1,758-carat Sewelo for an undisclosed amount in collaboration with Lucara Diamond Corporation, the Canadian company that owns the mine in Botswana where it was discovered, and HB Company, a diamond manufacturing company in Antwerp, in Belgium.

But it turns out the brand’s appetite for big diamonds was only just beginning. In November, she purchased a smaller, but still unusually sized rough diamond, the 549-carat Sethunya. Its mining partner Lucara has been particularly adept at finding such stones. It is at the forefront of using X-ray transmission technology to locate diamonds before they are shattered into small pieces during ore processing and has a special Mega Diamond Recovery circuit dedicated to research .

The acquisitions are irrefutable proof that Vuitton, the star of the vast luxury conglomerate LVMH Moët Hennessy Louis Vuitton founded by Bernard Arnault, is polishing its high jewelry references. And it is not alone.

“Several luxury players are considering entering or further penetrating the fine jewelry category,” wrote Achim Berg, head of the clothing, fashion and luxury group at McKinsey & Company, in an email. “Jewelry is seen as a potential growth segment for the future. The majority of this segment is unbranded and luxury brands believe they could change that. By acquiring exclusive and very large stones, they get a lot of publicity and customers who otherwise would not have thought of these brands for fine jewelry.

And while the pandemic has changed lives around the world, customers who want to spend hundreds of thousands, if not millions, on high-end jewelry have been largely isolated from its effects. “After the last financial crisis, demonstrating wealth by spending luxury goods was considered vulgar and callous in many places,” Berg wrote.

“So far, we cannot see this effect during the pandemic. In many developed regions, the middle class and the better-off have been less affected, ”he added. “On the contrary, many have increased their savings rate due to the lack of spending opportunities (no travel, no restaurant visits, etc.). Therefore, spending money on luxury goods is seen by many as a reward. “

Louis Vuitton presented its first fine jewelry collection in 2009, but diamonds represent the first opportunity for clients to participate in the entire bespoke process: from the rough stones to the work on the final designs with Francesca Amfitheatrof, director artistic Vuitton jewelry and watches.

(The two diamonds could not be more different in appearance, even though they were mined from the same lobe of Kimberlite, the type of rock where diamonds are found, at the Karowe mine in Botswana. The Sewelo has an opaque surface. in carbon black, while the Sethunya is transparent.)

Michael Burke, CEO of Louis Vuitton, sees bespoke fine jewelry as a natural extension of the brand’s origins in leather goods. “Vuitton was born in the 19th century,” he says. (1854 to be exact). “We were born into the world of made-to-measure. At the time, no one left Louis Vuitton with three trunks under their arm.

Buyers shouldn’t expect instant (or even quick) gratification. Vuitton plans to have a buyer accompany his head of gemology to HB’s operation in Antwerp to see the cutters create a sort of small window in the selected gem, to allow a view of its interior. The cutters will then spend several months studying the structure of the stone to determine any cuts and sizes of gems. Once a customer has made their choices, cutting and polishing will take months more.

In all, the brand said, it will take at least a year to get a finished piece of jewelry – although that’s a blink of an eye in the life of a billion-year diamond.

Mr Burke also has a calm attitude towards the sale of the stones, which were certainly the brand’s multi-million dollar investments (which, of course, contributed to LVMH’s turnover of 44.7 billion euros. , or $ 54.3 billion, in 2020.)

“There is no timetable,” he says. “The beauty with Louis Vuitton is that we are giving ourselves decades to be successful in a new profession.” The house is now known for its ready-to-wear, although it only entered the category in 1998. And in 2012, it presented the Objets Nomades collection, inviting respected designers to create furniture and designs. design objects for the brand.

As of yet, there is no way to predict the future of either diamond. Of the Sewelo, Mr. Burke said, “Someone could buy it and keep it as it is and spend the next 20 years dreaming about what to do with it. Or a collector could get it back without anyone else seeing it. Lots of things could happen. The crazier the idea they have, the better. “

Of course, that’s if the diamond actually leaves Vuitton. “Bernard Arnault does not want to sell it,” said Mr. Burke, referring to the chairman of LVMH. “He told me several times.

Coincidentally, Tiffany & Co., whose acquisition by LVMH was finalized earlier this month (and where Mr. Burke is now chairman of the board), has plans for a high-carat creation. He recreates – with modern touches – a necklace he produced for the 1939 World’s Fair in New York and presented at the opening of its flagship on Fifth Avenue in 1940.

But this time, instead of an aquamarine, the necklace will feature an 80-carat diamond, color D, internally flawless. Mined in Botswana, the stone is the largest Tiffany has ever offered for sale and is expected to be the most expensive.

Like the original necklace, the reinvented one will be on display when the Fifth Avenue store reopens in 2022, after a complete renovation.

Experts say the benefits of such projects go far beyond the bottom line.

“When you work with fine jewelry and unique stones, it gives a halo of exclusivity and desire to everything that comes from your brand,” said Mario Ortelli, Managing Partner of Ortelli & Company Luxury Advisors in London .

But “the legacy and the legacy don’t last forever,” he said. “You have to strengthen your legacy and your legacy over time, even brands that have a long history. There are diamond brands that don’t invest, don’t create new icons. They are disappearing from the consumer’s radar screen. “

Of course, size is not everything and sometimes poses challenges – try wearing a ring with a 200 carat diamond. It would probably be the size of a golf ball.

Yet “exceptional pieces always sell,” said Albert Boghossian, managing director of the Geneva-based family business Boghossian. Last spring, at the very start of the pandemic in Europe, she sold a necklace of rare natural pearls in her shop in Gstaad and in November, a river of emerald and diamonds for $ 7 million at a sale to Christie’s auction in Hong Kong.

And Mr. Boghossian was able to add some remarkable gems to his coffers. “During the lockdown, all of the major jewelers stopped production and stopped buying stones,” he said. “So I took advantage of the fact that the merchants were sitting on jewelry. I bought a 16 carat ruby, a blue-green diamond and a deep blue diamond.

Of course, niche fine jewelry houses and global mega-brands are not the only way to acquire notable diamonds and gem rarities. Sotheby’s, for example, auctioned off a flawless 102.39-carat oval D diamond for $ 15.7 million in October in Hong Kong and a 14.83-carat vivid purple-pink diamond called The Spirit of the Rose for $ 26.6 million in November in Geneva.

“Some collectors will still prefer auctions to private sales, and vice versa,” said Sonia Fazlali-Zadeh, jewelry and watch specialist at Gurr Johns, a global appraisal and consultancy firm. “For larger stones and large diamonds, most collectors will buy wherever they are offered, provided the price is right.”

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