INTERVIEW WITH VIN LEE

“With the dawn of the new year and era in America, we hope that peace will prevail, access relationships with ALROSA, launch our new diamond brand on wholesale and retail operations and make owning a diamond more accessible for everyone,” says Vin Lee, CEO- Grand Metropolitan and Finlay Fine Jewelry.

Vin Lee, is the CEO of Grand Metropolitan and Finlay Fine Jewelry. Grand Metropolitan also owns Pushkin Caviar, Gallery Rodeo, The Beverly Hills Cigar Club, and Beverly Hills Sports Car; participates in charity auctions, celebrity events, and red-carpet functions including the Cannes Film Festival, Oscars, Grammys, Emmys, and Independent Spirit Awards, and many more.

The Group specializes in distressed debt assets of luxury brands. Finlay Fine Jewelers is one of the largest private jeweler groups in North America. Heilig-Meyers is also one of the largest private furniture retailers in the United States.

Vin Lee spends his time between the Gulf Coast, Florida & Southern California.

In this exclusive interview with Precious World, Vin Lee in his characteristic style, mirrors the present US jewelry market with great clarity and uncommon elan…

Some excerpts …

Due to the economic slowdown in the USA currently, jewelry sales are reported to be hit severely. What exactly is the real picture now? And, post the Election and change in government has there been any positive change… to cheer for?  

Thank you for inviting me to participate in this discussion. Firstly, congratulations on the launch of your new publication Precious World. For the last several the fear of a global recession has loomed overhead. The United States has been especially charged with this very polarizing topic. For those above a certain income level with large stock portfolios they have seen growth in their investments, particularly as the Dow Jones flirts with an all-time high of 45,000 in comparison to a bottoming in the 19,000 during COVID in March of 2020.  In that same period the NASDAQ has also almost tripled to 19,000 from a low in the high 6,000s.

What has transpired isn’t magic or mystifying, the Biden Administration on day 1 took great strides to cut US oil production while encouraging the push to an aggressive progressive alternative fuel agenda. Several things happened as a result. Transportation costs skyrocketed for everyone from daily drivers to the entire transportation industry responsible for shipping goods across the planet. In addition, with the high cost of petroleum effecting any items or packaging consisting of plastic, all goods including food automatically spiraled upward. 

This raise in the price of everything, while crippling consumer budgets raised top of the line revenue for all companies participating in these events. This “growth” helped artificially push stock prices higher translating into a glowing economy while most Americans struggled to feed their families and pay their bills. Part of the United States political machine proclaimed loudly, “Look how great we are doing?!” while 2/3 of the population is starving.

The incumbent administration of the United States has won the election overwhelmingly on several points.  Firstly opening up America’s natural gas/oil resources cutting our dependance on international partners and creating both jobs and commodity for our commonwealth. This one move alone should slice the cost of gasoline in half or more to below the $2/gallon many enjoyed just a few short years ago. This will assist the American family in saving hundreds of dollars a month alone and directly. 

The administration has also promised to eliminate this absurd push to make EVs the only vehicle of choice for our society. A plan once championed by the Obama administration that has topped out at only about 1-2% of our total production and has only served to make Elon Musk the richest man in the world.

America seems to be the one country spending most of its energy on arguing about abortion and what/who is a woman instead of focusing on real socioeconomic commonsense solutions to problems plaguing the majority of our population instead of a small fraction of a percent. As I am certain you are aware we have more than 30 million people or 10% of our population that have entered our country illegally over decades that are hiding in the shadow of hardworking American families. 

Regardless of your position on this issue, no other country in the world just allows people to wander in and live forever without documentation and a vetting process. I cannot get on a private jet and fly from one state to another state within the country without having to go through security check. The new President and his team have vowed to address this issue head on and to help restore the border process rewarding those that have waited in line and “done it right” like I did when I came to the United States over 50 years ago. 

And as it pertains to our diamond industry, the terrible wars being fought between Ukraine and Russia as well as in Israel are a priority for the incoming American President. This will resonate around the globe when sanctions are lifted and all can participate in our trade again.

Being a strong supporter of mined / natural diamonds, what is your stand on the Lab-grown diamonds now? Can’t both categories survive, providing buyers liberty to choose? Your thoughts?

I grew up in the world of high jewelry. We were one of the largest retailers of Bernd Munsteiner gems in North America in the 1980s. That experience ingrained in me that jewelry and diamonds especially are unique and valuable works of art just like the people that make them. That being said, I was first introduced to fake diamonds in the late 1990s when Genesis came on the market. 

The company was founded by Carter Clarke Jr., a retired United States Army brigadier general and son of Carter W. Clarke, beginning as a 30,000-square-foot factory, outside Sarasota, Florida. I had just moved to Sarasota and went to meet management at the Long Boat Key Country Club about investment. At the time, they had these machines the size of dryers, a technology purchased from the Russian government, only capable of producing a few carats in very small weights and only in an off yellow. I offered to take on their entire production for my growing enterprise until I discovered the paltry beginnings also came with market competitive pricing.  No one was going to pay $4,000/carat for fake yellow diamonds in my world. And I wasn’t about to participate in something I felt would tarnish the legitimate integrity of an industry that had been so good to me.

Unfortunately, my contemporaries at national brands Helzberg and multiple banners under Signet Jewelers fully embraced the fake diamond trend fearing missing out on revenue with no concern for how an endorsed synthetic product would confuse and disrupt the consumer-confidence in the entire jewelry market.

Case in point, when I started out, tension rings were all the rage. When I got engaged, I pulled a beautiful trillion cut tension ring from stock to present to my girlfriend.  A few years later the intense precious from the setting collapsed one of the points and she came to me absolutely destroyed. I didn’t realize that the showpieces we had on display were not live goods and had in fact given her a “fake” diamond for our engagement. She never forgave me. That lesson alone demonstrates the problem. To tell your betrothed or not to tell that you bought them a synthetic stone for the most precious gift they will ever receive from you… A symbol of trust, love, and mutual respect. If you tell her that you bought this fake diamond from Helzbergs but saved $20,000, she will most likely feel cheated. If you don’t tell her and she finds out on her own, pack your bags. You are done.

Incidentally, many talented people have worked very hard to create a market for this product. Lisa Bissell, who took over as CEO of Genesis in 2014, became a very close confident and friend. She campaigned hard for the industry to adopt the “Pure Grown Diamond” moniker.  Charles & Colvard the pioneers of moissanite, an earlier adopter of the fake diamond movement, are worth less than my personal Patek Phillipe.

When DeBeers decided to get in the game it was clear that the industry was going to take a nose dive behind their marketing push and basic acceptance. I was more than disappointed in the one institution I had admired most in our industry. Thats when I started to believe that ALROSA was a better fit for my organization visiting them on the eve of their IPO in Moscow in 2012. 

To your point synthetic diamonds have a place in the world as they have for decades as industrial applications.  Putting them in showcases only serves to damage the larger picture like stocking your shelves with Swiss-made movements in Rolex casings. We operate in an aspirational market that serves to reward people with quality and beauty in exchange for their hard work and success.

Recent reports indicate that lab-grown diamond prices have dipped drastically. How has this affected the US jewelry market on the whole?

I will take your word for it as I refuse to track them or even be in a room with them. But the last data I saw in recent terms the larger stones were sinking faster than melee. I projected it would take about an engagement cycle or the length of the average marriage today to really feel the effects of this product in the marketplace.  So 3-5 years later when people are breaking up you have thousands of carats re-entering the market at literal fire-sale prices. This is what is starting to happen now.  All those hypothetical chat room arguments about how much money you lose when you try and sell a diamond vs synthetic are now moot. We have the data and it is reflecting in the showrooms of the top retailers in the trade.

You will notice that DeBeers has recent partnered with Signet Jewelers, doubling down on its efforts to promote mined diamonds to the consumer after a harassing woke agenda media blitz that last a generation pushing fake stones across North America. It resulted in Signets stock price flat since 1990 and the recent outing of its CEO. Meanwhile DeBeers parent company announced it would be open to an offer to buy the diamond giant.

At the higher end of the market, companies have been able to stay elevated above the noise of this most disruptive “technology”. The true fatality of LGD is the barrier to entry is terrifically small. Anyone with a phone and a pulse can start selling them to and through retailers or direct to consumers. No one has made a brand that has stuck in the consciousness and resonated with the wave of American consumers that participate in a $100 billion annual economy as a must-have product.  I am excited to see how the 2024/2025 Holiday seasons develop both globally and at home. We need to caste off this notion of fake meat, fake cars, and fake diamonds and get back to healthy quality living.

What about the Natural diamond prices…how is that part faring? Have the current sales of natural diamond jewelry normalized? A ‘Market Report’ from you will help!

I recently had a conversation with management that there is more money in metal than stones now with Gold rising towards $3,000 and settling under $2,800 today.  While platinum is a third of that. In comparison when I started out platinum was king to mainstream yellow gold in jewelry. But as in all things, one cannot exist without the other. But what is common on the showroom floor is a negotiating vehicle that involves higher margins in metal in partnership with tighter margins in diamonds.  We have yet to enjoy the days of prosperity prior to the Blood Diamond tragedy of the 1990s. In my opinion we do not have a strong leadership in our industry that has a public voice or presence like Elon Musk for EVs.

When DeBeers had a monopolistic hold on the world diamond industry starting in the 1970s they pioneered slogans and campaigns that pushed and educated the consumer towards the ideology holding up retailers, wholesalers, and producers. The iconic commercials with the ominous music back drops and ad agency J. Walter Thompsons immortal wordsmithing born generations that aspired to own and wear diamonds. 

Each generation has shed a level of sophistication like the skins of a reptile. Once homes had formal dining rooms with illuminated built-ins to display family crystal and porcelain. Today they have traded that space for a gaming room. Casual Friday has turned into Zoom calls in sweat pants and hair buns for most working people. So, it is very difficult to convince someone to spend $30,000 on a diamond ring when they aspire to spend $100,000 on a plastic EV because they don’t have to pay for the electricity at their parents’ house.

The sanctions on ALROSA’s rough diamonds have led to a shortage of polished diamonds globally. Currently, India’s manufacturing sector is almost closed. What effect will this have on the jewelry markets/sales/prices in the consuming markets? Your views on this situation?

Honestly this sluggishness was started back during the first Obama administration in the United States and has slowly poisoned the well across the planet. That is how a secondary offering like LGD can infiltrate our society.  It all starts with a reasonable resolution to the war in Ukraine. President Trump must have conversations with world leaders that allow Russia to save face and somehow triumphantly step down from its position.  The Biden Administration recent admitted to having not spoken to Putin since the war began. How is anything going to be resolved if all America does is keep writing checks to Zelensky every month or so?

Once ALROSA is again free to participate in all of the world sectors, we all will benefit. But as I previously mentioned, we need a leader in this industry to stand up and be the face and voice of the community on the World Stage. Companies like DeBeers and Signet Jewelers cannot keep hiring department store exiles for top positions and expect that bragging and boasting about ‘DEI and woke agenda’ on CNBC will demonstrate profitable advances throughout the diamond world.

How have your companies been faring in terms of, revenue, profit and so on? Was the latest slowdown in jewelry sales a deterrent to growth? What steps are you taking as of now?

Grand Metropolitan has a two-pronged business model.  During downturns we buy up our failing competitors and vendors. During economic booms we focus primarily on providing quality luxury goods and services to our clientele. Since 2008 we are about ten times the size having acquired dozens of quality brands and implemented them into our retail offerings. We are one of the largest privately-held jewelry groups in North America owning and operating about 20 of the TOP 50 retail jewelry brands of the last two centuries. 

Like many of our retail competitors we have spent the last two decades converting a very large brick & mortar footprint (close to 5,000 doors) to our digital platform with strong social media support. Today we are consolidating customer databases from dozens of acquired chains and monetizing the tens of millions of brand loyal customers through a personal shopping engagement aided by AI technologies. 

With the dawn of the new year and era in America, we hope that peace will be accomplished on the world stage allowing us to finally access relationships with ALROSA and finally launching our new diamond brand to be available throughout our entire of wholesale and retail operations accompanied by innovative finance vehicles making owning a diamond more accessible for everyone.