The Future of the Diamond Industry

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1:39Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenevec on Bloomberg Radio. The global lab-grown diamond market value between$26 and$30 billion. We've reported this across Bloomberg. The synthetic segment now accounts for over 50 % of all engagement rings, surging volume and falling prices have severely disrupted the$80 billion traditional diamond industry.

2:25And I got to say, you walk into any jewelry store, I have a jewelry store that my mom went to, we grew up with, and it's like mine diamonds, real diamonds, I guess you should say, synthetic diamonds right next to it. Then you've got like CZs and some other things, but it's just amazing the category when you go into a jewelry store. I wonder if Natalie Morrison is going to take issue with the word real that you use just now. I know. That's why I hesitated. I hesitated. She is the founder of Astria London. The brand, by the way, counts Sarah Jessica Parker as its global creative director. Natalie, welcome.

2:55Thank you. Make the point for us, though, this sort of distinction or no distinction between a lab-grown diamond and a diamond that's mined in the quote-unquote traditional way. Is there a difference? No. There is zero difference. Chemically, optically, structurally, it's a seed of carbon who all grows under the ground and take billions of years to get up to the surface and a lot of money and differentiation and time to extract versus putting it in my grave but it's a seed of carbon but if i if i take baby at the end if i take one lab grown uh and one uh mine diamond to to my friend brian's dad in midtown who's been doing this for you know 40 years can he tell the difference between the two no because there is none there's no gemologist in the world who can see the difference between a lab and a mine diamond.

3:40Do you know, I often made a really bad analogy, but it's a little bit like IVF versus an IVF baby. I've got four of them, trust me. They're all the same. Well said, well said. All right. I thought early on when they started doing lab-grown diamonds that there were limitations in size. But tell me, is that not the case? Can you do anything in terms of size, shape? You can do anything. The more technology advance, the less any constraints we will have, but there is no limits in anything, in color, size, quality. I actually believe today that the quality of lab-grown diamonds are superior, especially in the very high end of the diamond market that we are in, that we can find in the mine.

4:20Do you make them like, you know, I think about, was it the four C's or whatever? Do you just make, what's grown in the lab, are they all just the top of the tier, if you will? No. No. So you do make different, yeah. That's correct. So any diamonds come from the level of money, investment, quality of the reactors we have, technology behind it. So no diamonds are the same, whether it's a mine or whether it's a lab. So what is the technology? So there is two types of technology in order to make them. So as I said earlier on, it's a seed of carbon. So basically the carbon is the strongest material in the world, right?

4:57And which you put in a reactor. and we basically replicate what happened under the ground in those reactors with two methods called CVD and HPHT. So pressure. One is the pressure, one is replicate through the heat. Okay. And by doing that, within four to six weeks, a diamond is formed. Four to six weeks, how much energy does it take? Okay, so that's an interesting question, because the biggest challenge at the moment is one, the resale value, and one, the sustainability, which are the main questions, because it's no more secret that a diamond is a diamond whether it comes from a lab or a mine.

5:28So now the two challenges in terms of education we face, coming to energy. Obviously, it takes less energy in a reactor than under the ground. So the reality is it takes a fifth less approximately in a reactor than under the ground. However, it's not 100 % sustainable yet. I actually don't believe it. However, it's improving every day with technology, with renewable energy, with using, so today we only use recycled gold. So everything is improving all the time. We don't use water. There is no deforestation. There is no human traffic problem. So there is no many problems that we can talk of. I know, though, before we got going, we talked about the impact, certainly, on the economies that have depended on mining.

6:14And I guess it's safe to say that, I don't know, is that the downside of all of this? Sub-Saharan Africa, like Botswana, for example. Jen Zabasaja was here talking to us about that just a few months ago. Exactly. So there is that downside. Yeah, it's correct. It's correct that the Botswana economy has relied for years and years on the mine industry. But actually, the world is evolving through technology. And I think countries need to adapt. I think we do need to help those countries. So Astra, for example, give a percentage of their income for giving education to kids in Africa. And I think a lot of companies should do and help anyway, in general, in the corporate world.

6:51However, the mining industry, if you look at it today, also have given a lot of the percentage of their mining result to the beers. And I think today they are potentially buying out the beers or a part of it. So maybe it's not a bad thing for anyone. The world needs to diversify and the economy of each country needs to diversify. I want to talk a little bit about what took so long technologically for us to get here. Because, I mean, you know, it was almost like I got engaged a decade ago at this point. And this wasn't even a thing. like lab grown diamonds were not even part of the conversation.

7:23I talked to young people today and it's like for your wife to be, or just were they around? So the lab grown diamond have been around since after the war in 1950. They were actually made, but they weren't really, it was not prevalent. So out of the diamond market, lab grown diamond was 1 % of the market in 2015. Yeah, that's 20 there. 5 % of the market in 2021, 40 % last year. 70 % of the engagement ring of the US today are lab-grown diamond. And The Economist is expecting it to be 75 % by 2030. I actually think it will be faster than that. Yeah, so you're illustrating my point perfectly. Why was it such hockey stick growth and why did for so many years, was it under the radar?

8:09Well, the reality is the mine industry has been dominating the industry, the diamond industry for 100 years. And I've done an amazing exercise of marketing with the beers. First of all, telling us that the diamond is rare. Diamonds are not rare. The reality is there is enough diamonds in the world so that 8 billion people can each have alpha carat each, and you will still be having hundreds of thousands of them being hidden somewhere. So the reality is the diamond is not rare. But they've done a beautiful marketing exercise in order to promote it that way. Why are diamonds still, though, then so expensive?

8:42Like if so many people are choosing for engagement rings to do lab-grown diamonds. I mean, the lab-grown diamonds that I've seen have not been expensive relative to a mine diamond. What's the cost differential? Percentage. The difference of price is approximately... The difference? I'm out. You're good. Oh, you're good. You're doing well. So the difference of price is approximately 70 % between a lab-grown diamond and a mine diamond. 70 % cheap, less expensive. Yeah. Lab-grown diamonds are cheaper at 70%. First, it costs less to make them. You don't have to extract everything from the planet. You don't have anything.

9:13But you know, the real question today is actually the resale value. The biggest, I will say, problems between lab and mine diamond is they should work together. They should work together instead of fighting. The biggest critics that mine diamond gives to lab-grown diamond is, oh, there is no resale value. And I always say, yes, obviously, you may have no resale value, but there is a resale value to everything. So let me give you an example. Just got about 25 seconds. If you get two carats of lab-grown diamond today, you'll probably, in D-color, which is the high-end what we do, it probably will be$6 ,000.

9:48The same equivalent in mine will be$60 ,000. By the time you leave the shop, you've already lost$30 ,000. Personally, even if I lose everything, I know what I want to buy. I'm just going to take this and just like show it to my husband at home. Thank you so much. Natalie Morrison. She's the founder of Astria London. We'll get you back soon. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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12:46Hey, last month, Bloomberg out reporting on Las Vegas, noting that business on the strip is cold as tourists are deterred by rising costs, including parking, resort fees and higher prices for food and drinks. But I'm really curious about what our next guest has to say. Wouldn't that be everywhere? I know. Well, you know, they decided to, like, you know, focus on Vegas. No, but I feel like costs are going up everywhere. They are. They are. But I am curious to see what our next guest has to say, because they've opened the Fontainebleau Las Vegas, or has you said it much better than I did? I did not say it well.

13:20That's why you're saying it. The$3.7 billion property, it opened in late 2023. Let's get to it with Brett Muffson. He is president and partner at the Vertically Integrated Real Estate and Hospitality Group. It is? Fontainebleau Development. Fontainebleau Development. I want to make sure I said it well. They've been involved in more than 100 plus real estate projects and developments worth more than$27 billion in transaction value. And you guys play across the spectrum. Welcome, welcome. I warned you that we're in a little bit of a crazy way today. How are you? I'm doing great. Thanks for having me.

13:49It's good to have you here. You do a lot in Miami. You do a lot in Vegas. You know, are those the two places where you see the most opportunities? Because you can play everywhere and anywhere. And you do. We do, yeah. I think for our investment thesis is kind of investing, thinking about a paradigm shifts in our business. And what I mean by that is Fountain Blue, large-scale luxury resorts kind of span different income streams. So retail, entertainment, groups, leisure. We span kind of the tide of all of it, right? Nightlife. Wellness, maritime. You guys go everywhere. We touch it all. Yeah. So I think that those two markets clearly have the diversification of consumers that we can address.

14:29And we've had a lot of luck doing that in both markets. What do you make of Carol's opening about the focus on Las Vegas and the softness or the cooling that some people are saying we're seeing as a result of higher fees? Yeah, I think that, listen, in 2025 was clearly a year of normalization, right, after two record-breaking years in the prior years. So I think - You mean coming off of COVID? Coming off of COVID. Yeah, it's a normalization, I think, that we've experienced in 2025. In 26, though, if you look at just the calendar, it's incredible to see the demand, right? So LVCVA, which is the Las Vegas Convention Center Authority, they've announced that 2026 may be a banner year for meetings and groups.

15:09That's huge for our business, right? Consumer spending, yes, it's up, just like you said earlier, across the board. But, you know, there's been a clear bifurcation in the marketplace. It's a K-shaped economy, as a lot of people are talking about. And, you know, we have fortunately built our product purpose built for that luxury consumer. So how much pricing power do you have at the higher end? We're seeing a lot of prices. I mean, for us, listen, it's a little bit different. We're in our early years of growth. So every year we're growing year over year. The market. Double digit? Double digit. High teens?

15:40Yeah, about 18 % in the first quarter. But if you look at our competitors, you know, they have flat growth, even with visitation being flat. Right. And so I think that just means that spend is staying pretty consistent. I mean, there's about 26, I think it's about$23.8 billion of revenue, you know, across the strip in Las Vegas. It's a lot of money. And it's about$6 billion, which is about 36 % increase since pre-COVID levels. And so with that, though, you see, you know, there's a clear bifurcation. And we happen to be continuing to grow. And it's, you know, the numbers and the proof's in the pudding with the numbers.

16:16You know, people are spending more per visit, right, even with flat visitation across the board. Brett, you mentioned convention. I mean, we're going to be headed out to something in June. I think we still have to buy the tickets. Yeah, we're going. And then yesterday we talked. I hope you're staying with us. I don't even know if we have our tickets. Listen, there's a lot that we have to figure out today. But we were talking to a colleague who was out at Dell World, which was in Vegas. Like, how much of your business, like you guys rise and fall based on convention activity? Yeah, it's about 50 % of our business.

16:48Wow. And by the way, that spans also in Miami as well. I mean, that's our bread and butter. So when that's your business, do you find that individuals are paying or companies are paying? So the wallets for a convention spender are, if not better, depending on the group. Yeah. So it all depends on the quality of that group. But if you get the right quality, which is where you work on your patterns and finding the right groups, then yes, it could be better than a customer. Well, the reason I ask is we're hearing more and more about people going on, you know, it's called leisure, I think. It's like business slash leisure.

17:23So they go somewhere for work, but then they stay a few extra days because they like where they are. And it turns into sort of a mini vacation. And is that a big opportunity for you? Yeah, absolutely. I mean, we, let's say at the end of the day, it's a, as you know, we're in a screen economy. Yeah. And so our thesis around all of this, and this goes to groups where people need to meet to make deals, for example. They can't do it behind a screen. Or if it's nightlife, which is an experiential experience, so people are enjoying that. Or just food and beverage and getting in front of people and being human.

17:59I think that's a big deal in today's environment. How big of a driver is in Las Vegas, at least for you, at Fountain Blue, is the sphere and people coming to see stuff at the sphere? We've seen a major uptick in our customers actually combining their visiting us because of the Sphere. There's no doubt. You talk to, I mean, I've talked to so many people. We've been out there since the Sphere was there. We kind of keep hoping for a work event so we can actually go. How much do you like fish, Carol? Big fish head over here. So maybe, you know, I think they're done. We tend to do a 24-hour trip when it comes to Vegas.

18:31When you look at real estate generally, though, before I get into like areas and stuff, the rate environment. How is that making certain projects more attractive? Are you holding off in hopes that it changes maybe in the next few months? I think it's a double-edged sword. I think new projects are very difficult to get built. Interest rates don't make that easier. But on the other side of it, we were very fortunate to own an asset that we got built in a market that had zero supply in 15 years. So that's helpful. Barriers to entry are higher for us. But yeah, there's no doubt, there's no hiding it, that rates are higher than they have been in the past.

19:10And I think that's kind of fed through the food chain, so to speak. And that's why you're seeing consumer pricing kind of matching that, right? And offsetting that for owners and operators. Brett, is it making you guys say, you know, let's just hold off on this project. Let's just kind of wait and see where the dust settles. Or no, are you still saying, we want to do this. The market looks good. The opportunity looks good. Let's do it. Listen, we play in a premium luxury customer space. And so when you're in that space, in a K-shaped environment, which we are in, which I think is going to have no stopping in the foreseeable future, we think that you can still build to that customer.

19:47But it's not without challenges. Where else do you go to build? Well, historically, we've been in Miami. We have two large-scale hotels there. The Fountain Blue, obviously, in Miami Beach. And then we have Turnberry Isle Resort and Club, which is in Aventura. And then we also have a hotel in Nashville, actually. Hilton Nashville, which is right in the center, right in the downtown. Everybody loves Nashville, man. It's a great city. But what about expanding beyond where you already have a presence? What are the markets that are attractive to you right now? Well, our pipeline is actually pretty robust.

20:21We're looking to expand the Fountain Blue brand across the globe. and no better place to kind of launch it than moving it from Miami after 70 years of history, moving to Las Vegas. And so that was our second entree. And we plan to expand our presence in Las Vegas and then beyond. So we're looking at markets like the Middle East and Dubai. We look at Asia markets and across the country. Does the war in the Middle East make you think differently about that as a region? It makes you take a pause, but at the same time, I think that it's a short-term situation that they're in, and there's a lot of growth going to happen there, and we're believers in that long term.

20:58Apart from those international markets, what about additional U.S. markets? Any market for us that has the ability to capture large-scale resort product, which is unique. So we need to be in the markets that have enormous group demand, that have an appetite for nightlife, big food and beverage presence. Our skill set is in the lifestyle and luxury resort, but in large scale where you have meetings taking place as well. New York. There you go. New York could be on our horizon. I was here for 15 years, so that would be a dream. Is it? Is it on the horizon? Not yet, but hopefully. Well, we talked about coming in, just all the different things you guys do.

21:36Hospitality, residential, commercial, aviation, gaming, culinary, maritime, and more. Wellness, too. I mean, is the growth area really hospitality? is that where you guys get the most bang for your buck or no it's across the board you know vegas is a diversified demand you know environment yeah so i mean so is all of our resorts for that matter just given the diversity of what we do um but vegas in particular they did an incredible job making it the entertainment city of the world right the capital of the world so for us it's gone through so many iterations remember when it was supposed to be like bring your family it's for the family and then it's kind of gone back.

22:13There's still a lot of families. But you can still do it all. You really can. I mean, we have a, I mean, the sphere is another example of it reinventing itself. Allegiant Stadium does incredible events with the Raiders. VGK has an enormous fan base locally. You can't forget that the town has really gone from a gaming town to an entertainment business and infrastructure. Is Florida getting crowded? Florida, I mean, absolutely. There's been a massive amount of growth. Yeah. Is it less opportunity opportunities? No. In fact, I actually think there's an enormous amount of demand and the future is is is bright for Miami, especially South Florida.

22:49And and I could go on and on and talk about, you know, all the different firms that are moving down there and moving their offices from New York. And that's we've been the beneficiary of that in the hospitality space. Anything out there give you pause right now? Great question. No, I think. listen the only thing that gives you a pause at the end of the day the consumer is hurting yeah right and we all see that um so you know as you invest i mean we invest at the high end so we're luxury and fortunate we're you know lucky and fortunate to have that but well what is the typical profile of your customer our customers spends about two trips a year coming in and out of vegas they got about 150 000 of of net worth um on average right we're talking about average which is not the aspiration.

23:36So we're very focused on the data and having oil prices where they are and other things. I mean, travel's down, right? Visitation's down. But at the same time, you hear the Delta CEO talking about how 60 % of its revenues are coming from the premium cabins. I mean, that's our business. I love those premium cabins. I'm just going to put it out there. Who does it? Who does it? No, again, again. No, you're talking to the airlines, right? They just keep expanding. And the companies are the ones paying. So there's a high willingness to pay on that part. Brett, this is great. Come back. I appreciate you guys having me.

24:09Yeah. Fun shot. Appreciate it. Brett Muffson, he's president and partner at Fountain Blue Development, joining us right here in studio. Stay with us. More from Bloomberg Businessweek Daily coming up after this.