The global market for fancy color diamonds is witnessing significant growth, driven by increasing demand from passionate collectors of high-end jewelry and individual investors. The $ 5 (five) billion yearly market for fancy color diamonds has sufficient room for growth for new jewelers. Coloured diamonds (red, pink blue) are coveted possession as only one out of 10,000 diamonds is naturally colored diamond. Therefore, their prices appreciate more than regular colourless diamonds.
In fact, rare red diamonds are invaluable and diamonds with a pure red hue can sell for over $1 million per carat. Most of the extremely rare diamonds that sell in auctions by Christie’s and Sotheby’s are mounted wherein the excellent settings emphasise their colour and hide inclusions. With fewer of these diamonds being unearthed each year, they become increasingly rare and coveted by high net worth individuals and alternative investment funds.
The key trends for diamond jewelry in 2024 are as follows…
Geometric shapes with crystal clear lines symbolise modernity and add stylish accent to the look Big oversized hoops are a timeless classic but with intricate details Bold bangles in a variety of colours and materials including precious gemstones Chunky chain necklaces add touch of versatility and sophistication to make a statement Floral jewellery designs Post pandemic, consumers seek immortality and prefer jewelry with personalised/customised touches (including engravings) or bespoke pieces that reflects their unique identity which they want to preserve Tech savvy millennials have started integrating smart tech seamlessly into their jewelry designs (functionality such as fitness, voice activated controls, interactive, etc) Millennials/ GenZ are eco-conscious and seek to buy sustainable jewelry that minimize environmental impact.
Over the last 60 years or so, the appreciation value of diamonds has remained stable. From 1999 to 2011, three-carat diamonds increased by 145 per cent, while five carat diamonds rose by 171 per cent (Source: Rapaport Diamond Trade Index). Data indicates that diamond prices have risen by approximately 32-33% over the past decade, resulting in an average annual gain of around 4%.
The global market for fancy color diamonds is witnessing significant growth, driven by increasing demand from passionate collectors of high-end jewelry and individual investors. The $ 5 (five) billion yearly market for fancy color diamonds has sufficient room for growth for new jewelers. Coloured diamonds (red, pink blue) are coveted possession as only one out of 10,000 diamonds is naturally colored diamond. Therefore, their prices appreciate more than regular colourless diamonds.
History [(as per The Fancy Color Research Foundation (FCRF)]
Some of the earliest records of these gems date back to the 6th century when diamonds from the Golconda mine in India were highly prized for their colorless clarity and occasional pink, blue, and yellow hues. These diamonds were incorporated into the jewels of royalty and aristocrats, including the famous Hope Diamond and many other important gems.
Throughout the centuries, fancy color diamonds continued to capture the attention of the world’s most wealthy and powerful individuals. In the 18th and 19th centuries, diamonds in shades of pink, blue, and green were highly valued, and many of these gems were set into exquisite pieces of jewelry worn by aristocrats. For example, the Grand Duchess Vladimir Tiara, created in the early 1900s, features numerous pink and white diamonds and was worn by the Romanovs, the ruling family of Russia. The Patiala Necklace (with a large vivid yellow center) was a necklace designed & made by the Cartier S.A. in 1928.
In the mid-20th century, fancy color diamonds became increasingly popular, with yellow diamonds in particular gaining attention. In 1961, the largest known yellow diamond at the time, the Tiffany Yellow Diamond, appeared in the iconic movie Breakfast At Tiffany’s and was the first ever fancy color diamond on the silver screen.
During the 1970s and 1980s, the market for fancy color diamonds saw notable growth. Independent jewelers played a significant role in selling these rare diamonds to high-profile figures, including the Saudi royal family, the Sultan of Brunei (who still holds the world’s largest fancy color diamond collection), and other Middle Eastern leaders. Meanwhile, in the Western hemisphere, affluent industrialists and celebrities like Paul and Bunny Mellon, the Horten Family, Elizabeth Taylor, the Wallis Simpson family and many more sought out these elusive diamonds without fully grasping their rarity or investment potential.
Privately owned jewelers played a crucial role in facilitating these sales, with many emerging from wholesale backgrounds and gaining a competitive advantage over larger brands as they made these multimillion dollar purchases and sales by themselves while sharing the most intimate secrets of their clients. These visionaries became the founding fathers of the fancy color diamond history. Among them were esteemed names like Shlomo and Aliza Moussaieff, Laurence Graff, and David Morris from London;Harry Winston, Oscar Heyman, and Fred Leighton from New York; Alexander Reza from Paris; Maria Gaspari and the Bulgari family from Italy; Chopard, Mouawad, Chatila and the Gol Brothers from Geneva, Ephraim Zion from Hong Kong among many others who are not mentioned here. Moving into the 1980s and 1990s, pink diamonds experienced a surge in popularity. The fame of the Hancock Red (1987) paved the way to multimillion-dollar per carat prices paid for rare fancy color diamonds. Pink diamonds from the Argyle mine in Western Australia, particularly the vivid pink and red varieties, captured the attention of collectors and became highly sought-after. During the 1980s, Japanese collectors, known for their affinity for blue fancy color diamonds, also entered the diamond collectibles market, further fueling its growth.
In the early 2000s, a wide range of diamond colors began to capture the attention of collectors, with these colors fetching some of the highest prices ever seen for fancy color diamonds. 2010 marked the year when new Chinese jewelry collectors noticeably gravitated towards fancy color diamonds. Prices peaked and set a new threshold for almost all colors that year. Notable examples include the 12.03 carat Blue Moon diamond, selling for $48.5 million in 2015, the 14.62-carat Oppenheimer Blue, selling for $57.5 million in 2016 while one carat vivid purplish pink diamonds and the exclusive Argyle tenders sold for $1.5 million per carat and fancy red for over $3 million per carat. Finally, the 11.15 carat Williamson pink star that broke all auction records with a $5.2 million per carat at Sotheby’s during 2022. Fancy color diamonds continue to captivate collectors and jewelry lovers with their rare beauty and unique characteristics and achieve even higher prices when sold behind closed doors, mainly through known jewelry designers and international jewelry brands. An increasing number of diamond companies is entering the fancy color diamond segment. As the market expands, emerging jewelers have the opportunity to establish themselves as reputable players by demonstrating a large offering with expertise in the fancy color diamond segment. This growth potential allows for increased competition and innovation, benefiting both consumers and industry participants.
FANCY COLOR DIAMOND CATEGORIES
In this chapter, we will examine and map the different segments of color diamonds that are available for jewelers. We will explore the distinct characteristics of each segment and discuss the potential sources from which they originate.
Yellow Melée
Yellow fancy color diamond melée comes in a wide range of shades and saturations, ranging from fancy light to fancy vivid and deep. It also comes with various color modifiers such as orange, brown or green with clarities ranging from VS to I2. Yellow melée is popular amongst jewelry designers and can be seen in almost any jewelry category, including in luxury watches. With the increasing popularity of lab-grown diamonds, the jewelry industry is adapting its approach towards fancy color diamonds as well. In recent years, diamond wholesalers have been sending yellow diamonds to diamond laboratories to ensure that no lab-grown diamonds are mistakenly mixed in during the production process. This precautionary measure reflects the evolving dynamics of the industry. Highly saturated yellow fancy color melée is sourced mainly from Congo and manufactured in India. The average polished size produced from Congolese rough is between 1.2mm to 1.8mm. Sizes under 1 millimeter or larger than 2.8 millimeters are being produced in minimal quantities.
A similar category of diamonds can also be manufactured from yellow rough diamonds found in South Africa, but most of them will be with lighter saturations ranging from fancy light to fancy intense yellow, and a large portion will be in larger sizes from 2.5 to 3.2 millimeters although smaller size are available as well.Melée diamonds sourced from Sierra Leone typically offer larger sizes with a unique color sensation, ranging mainly from fancy intense to fancy vivid. The clarities of these diamonds usually range from VVS to SI1.
Pink Melée
Pink melée have been unearthed in the Argyle mine in Australia. These diamonds exhibit a range of intensities and sizes, ranging from faint to vivid, ranging from a “warm” orangey/brownish pink to a “cold” purple pink. Although the majority of these pink diamonds possess a blue fluorescent property, it does not impact their appearance. The size of pink melée diamonds typically range from 0.01 to 0.14 carats in all clarity grades. Rough diamonds that yield pink melée are no longer available. According to our estimates, there are 5,000 to 10,000 carats remaining on the market, stored with dozens of wholesalers and jewelers. Once the supply of pink melée runs out, this category will no longer be available for anyone. Following our conversation with manufacturers, we did not find any evidence to suggest the existence of another source for small pink rough.
Other regions that produce pink rough in these small sizes account for less than 1% of the overall amount.
*The Argyle mine also produced a smaller sized category of violet-gray diamonds
Yellow Diamonds between 0.20 to 0.99
Yellow fancy color diamonds, primarily in sizes ranging from 0.20 to 0.99 carats and in shapes other than rounds, constitute the second-largest section in terms of unit numbers, following melée diamonds. Each year, thousands of these diamonds, predominantly in cushion and radiant cuts with a smaller portion in other fancy shapes, enter the market, with the majority accompanied by GIA reports. The significant quantity of diamonds in this category enables the crafting of relatively uniform and consistent layouts for necklaces, bracelets, and eternity rings. Recently, there’s been a notable increase in the number of diamonds within this size range that feature higher clarities and consistent makes.
Yellow diamonds from 1 carat and above
Yellow fancy color diamonds in this category represent the most popular article. Lighter color and smaller sizes represent the entry level diamond in a single piece of jewelry while large yellow diamonds, or midsize intense and vivid yellow are coveted by diamond connoisseurs as they create a strong visual impact with their pleasant yellow color are considered to be quite rare. Exceptionally large fancy vivid yellow diamonds sometime fetch prices per carat, of light pink or blue diamonds.
Exotic colors – all sizes
We have divided this category into two groups. The first group includes colors that are either in their single form or diamonds that have a color modifier other than brown or gray. This group includes colors such as bluish-green, yellow orange, purplish pink, pinkish orange, as well as single-color diamonds like blue, red, purple, pink, green, and others. Diamonds in this color section are typically found at top retailers and are sought after by savvy diamond lovers who recognize the long-term wealth preservation element or aim to differentiate themselves with their jewelry collection. Diamonds with these colors can reach the highest price per carat in the diamond market.
The second group comprises diamonds with an earthy-color palette, exhibiting a combination of brown or gray with other colors. Examples include fancy yellowish-brownish orange or fancy grayish green, among others. This group is considered to be more accessible in price but can still have a significant impact in a piece of jewelry.
JEWELRY RETAIL SEGMENTS
We recognized three groups of retailers that offer fancy color diamonds. The groups are not characterized by their turnover or reputation but rather by their business culture and the way they operate.
The first group comprises privately-owned, mid-sized independent jewelers, some of whom are authorized sellers of leading luxury watch brands. These jewelers are typically leaders in their respective geographic areas and incorporate fancy color diamonds into classic jewelry designs. Their sales teams are experienced, with some being owners or family members. Due to the infrequent turnover of sales personnel and their local residency, many of these retailers have established long-standing intimate relationships with their customers. This is significant because it often replaces the need for in-depth knowledge about fancy color diamonds to finalize a sale, although having such knowledge would likely result in a higher success rate with potential customers. These privately owned retailers are also recognized for their flexibility and quick response times, when it comes to price discounts and customizing jewelry designs to meet customers’ preferences. Additionally, local retailers prioritize pricing over placing an emphasis on traceability or strict quality standards. Consequently, if needed, they may feel more comfortable offering lower-quality fancy color diamonds to accommodate a budget.
The second group comprises a diverse collection of high-end, privately owned brands and jewelry designers who aim to make a statement with rare fancy color diamonds. Some of them create bold and unique multimillion-dollar pieces centered around colored diamonds, enjoying the artistic freedom to design their fancy color jewelry without adhering to any pre-existing design philosophy or rigid brand values, as most large international brands do.
Moreover, these brands primarily sell unique, one-of-a-kind jewelry pieces rather than jewels from a collection with a narrative, affording them more pricing flexibility and freedom. As most sales are not made from an annual, international collection with a predetermined price, the need to account to other customers is therefore low and as a result, pricing is more flexible in this category. Here are a few companies that represent this wide category: Graff, Moussaieff, Chopard, David Morris, Boodles, Cindy Chao, Anna Hue, Lorraine Schwartz and more. These jewelers typically have a global presence and in some cases, even travel to serve discerning clients, as part of their strategy to offer personalized and intimate service.
Generally, in this level, the owners of the company or very senior sales staff such as family members, are responsible for the multimillion-dollar fancy color diamond sales. When it comes to quality, these jewelers are not obligated to a structured policy but rather to what they find attractive, and avoid diamonds with certain properties relying on past experiences with clients. They also demonstrated the highest level of understanding compared to other retailers in other categories, and are involved in almost every purchase, attend trade shows and sometimes even in re-cutting procedures of their fancy color diamonds.
The third group includes large international brands that play a role in the history of luxury, such as Tiffany, Harry Winston, Van Cleef, Cartier, Dior, Bulgari, Piaget, Chanel, and Boucheron. De Beers Jewelers is also included in this category, even though it is considered a newcomer in this luxurious segment. These companies use fancy color diamonds constructively and consider them in their yearly budget. Some of these brands offer a wide range of jewelry categories mounted with color diamonds, such as engagement rings, jewelry collections, and rare one-of-a-kind pieces unveiled in exclusive gala events. However, through interviews made with wholesalers supplying these brands, we found out that most brands restrict themselves with rigid quality specifications for fancy color diamonds that don’t always impact the stone’s visual assets and value, but rather rely on gemological features taken from their general colorless diamond guideline. Color diamonds are rare and create better margins than colorless diamonds however, in most cases they are manufactured under no standardized quality parameters which makes them difficult to source in a consistent quality, especially when using the colorless diamonds parameters. When these jewelry companies are searching for a significant number of color diamonds within a specific timeframe for a collection, various departments like design, acquisition, and marketing become aware of the challenges associated with fancy color diamonds and change their standards in comparison to colorless diamonds.
These challenges arise from their rarity and the absence of manufacturing standardization. Following conversations conducted with certain customers, we realized that buying a color diamond from an international luxury brand, one that is perceived to stay around “forever”, gives a greater sense of security and strengthens the feeling of preserving the diamond’s value over the years, an advantage very few jewelers have.
THE FUTURE
When considering the future perspective of the fancy color diamond industry, it is important to approach the topic with modesty, as predicting the future is inherently challenging. However, there are certain factors that can be taken into account. One key aspect is the rational expectation of a slow but steady growth in demand from private clients and the alternative investment community. As the global economy evolves, there is a likelihood of a gradual increase in the demand for fancy color diamonds, driven by various factors such as improving consumer confidence and evolving preferences. Additionally, the expansion of the wholesale sector and the decreasing supply plays a significant role in shaping the future of fancy color diamond prices. The growth of the wholesale segment not only brings more players into the market but also leads to advancements in manufacturing. These improvements contribute to consistency and standardize production, ensuring a steady supply of fancy color diamonds and facilitating the creation of innovative and appealing jewelry designs. It is worth noting that the future of the fancy color diamond industry, like any industry, is subject to various uncertainties and external influences. Market dynamics, global economic conditions, and shifts in consumer behavior in the luxury space can all impact the industry’s trajectory. Therefore, while acknowledging the opportunity for growth in the jewelry sector, it is essential to approach the future perspective of this niche while recognizing the inherent complexities that surround the luxury world as a whole.
