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Big Diamonds Get Bigger As Brides Age, Compete
By LAUREN LIPTON Special to THE WALL STREET JOURNAL

5/16/2003

Another, "clarity enhancement," involves filling flaws to make lesser-quality stones look more perfect. That's what Yehuda Diamond Co. does, and the New York manufacturer says its clarity-enhanced stones sell for about one-third less than nonenhanced versions -- and that business has grown fivefold in five years. "It's good for me that women want to show off," says company president Dror Yehuda.

Maybe Chris Lynch shouldn't have waited seven years. By the time he proposed to his girlfriend, his friends' sweethearts had two-carat diamond rings, leaving Mr. Lynch nowhere to go but up. His 27-year-old fiancee's new solitaire: 3.13 carats. "She now has one of the biggest on the block," says the Iowa telecommunications executive.

Gentlemen, here's a new reason to fear commitment: ring inflation. Even in these times, the benchmark size of an "impressive" diamond has crept up, from a single carat in the 1990s to two or even three today. Diamond behemoth De Beers Group says sales of stones a carat and larger have outpaced smaller ones -- up 81% from 1996 to 2002. And it's not just at the fancy places: One big Southeastern mall chain, Reeds Jewelers, just began stocking two-carat solitaires in October. And warehouse retailer Costco says it's selling $20 million a year of diamonds from 1.5 to more than six carats, after introducing them two years ago. "Amazing, given the economy," says Megghan Harruff, a merchandise manager.

Behind the run on large stones: Older brides with higher expectations, megarock celebrity engagements (thanks, Jennifer Lopez), and new technologies that can make flawed diamonds look more perfect. Competition from Internet vendors, meanwhile, has helped to make big rocks cheaper. The industry has been happy to push them, too, with stores running new bigger-is-better campaigns and one national chain taking out newspaper ads for multicarat rings -- with no-interest financing.

Still, life with a large stone isn't always happily ever after. Some of the attention these rings draw is surprisingly negative. From an investment standpoint, most big stones at best keep pace with inflation. And the elation may be short-lived: Even a spectacular stone, many wives say, can start looking average after a few years. (They even have a catchphrase for it: "diamond shrinkage.")

For Christine Henderson, it wasn't that her rock shrunk -- her lifestyle just got bigger. When the 40-year-old mom got engaged a few years ago, she was delighted with her one-plus carat ring. Then came her husband's lucrative Wall Street career and early retirement to Palm Beach, Fla., and something befitting the couple's new station in life: a seven-carat, canary-yellow diamond. "I really thought I wanted a three-carat ring, but then I thought, 'Set your sights big,' " Mrs. Henderson says. "We grow up."

Oversize Push

The $27 billion U.S. diamond-jewelry industry -- $4.3 billion of that is engagement rings -- is taking that sentiment to the bank. It's De Beers, of course, that controls much of the world's diamond market and popularized diamond engagement rings, and then persuaded grooms to spend two months' salary on them. But while past De Beers brochures assured buyers that "Smaller Is Beautiful," last summer its marketing arm came out with a campaign pushing larger diamonds. Caption under a small stone: "Where'd you get that diamond?" Under a much bigger one: "Where'd you get that man?"

Even grooms in good financial shape can find the price daunting. Jewelers pay about $10,000 to $100,000 for three-carat stones and then mark them up 15% to 100%, says New York diamond dealer Joseph Schlussel. But sellers themselves say they're surprised so many men are buying: When exclusive New York jeweler Fred Leighton Ltd. expanded its line of engagement rings last year, it expected to sell lots of one-carat stones -- but those have gone unsold, it says, while nearly half of buyers have gone for three-to-five-carat versions.

For Whitney Mantooth, buying an impressive stone for his girlfriend recently meant putting off buying a new Mercedes and starting an M.B.A. program. The business owner in Chattanooga, Tenn., says he'd just sold his ad agency, too, so he had some money on hand. "She caught me at the right time," he says.

To the chagrin of the guys who paid retail, some new technologies are making the three-carat club easier to enter. Irradiation treatments can turn less-expensive stones into fancy colors that are rare in nature. Another, "clarity enhancement," involves filling flaws to make lesser-quality stones look more perfect. That's what Yehuda Diamond Co. does, and the New York manufacturer says its clarity-enhanced stones sell for about one-third less than nonenhanced versions -- and that business has grown fivefold in five years. "It's good for me that women want to show off," says company president Dror Yehuda.

But as these rings go mass-market, the backlash is brewing. Some see them as ostentatious, while others assume the wearer sacrificed quality for size. Meanwhile, simulated stones have become more realistic-looking than ever. So even if there's little chance that a $20 dime-size cubic zirconia will fool anyone, the $425, three-carat version from Impostors, an upscale-fakes chain, just might.

'I've Been Following You'

That's been a problem for Liz Hoffswell, who wears a 3.25-carat pear-shaped diamond in a Michigan town where most are significantly smaller. "I have people tell me all the time it's the biggest they've ever seen," says the small-business owner, who once had a couple shadow her at a wine-tasting event. Finally, the wife came up to her. "I've been following you all evening," the woman said. "Is that real?"

To avoid such questions, some people are taking the opposite tack. At Tiffany, where the average engagement ring is under a carat, they're seeing some buyers choose smaller, high-quality stones. Even the sellers of simulated diamonds say many customers are opting for smaller stones to throw off nosy friends and coworkers. Also popular: rings featuring three smaller (lower-price) stones instead of one big one.

Big-rock lovers, however, are unmoved. Even if their stones aren't great investments, they say, they still hold most of their value -- which was a good thing for Nikki Salerno. The Bel Air, Calif., actress was wowed when her boyfriend of six months proposed during a private hot-air balloon ride, with an 3½-carat princess-cut diamond ring. Three years later, she's sold it for $25,000 to help cover legal fees in her divorce. Still, she says, that hasn't soured her on big rocks. "I would never go smaller," she says. "No way."

Write to Lauren Lipton at lauren.lipton@wsj.com

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