Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Lab-grown diamonds are forever

Written by Li-Ann Chin, associate 
Edited by Scott Reid, associate partner
6 May 2021

Good morning,

‘A diamond is forever’ written by copywriter Frances Gerety at NW Ayer, a Philadelphia agency in 1948, remains one of the most iconic brand taglines of all time. Flash forward seven decades, billions spent in marketing and one particularly catchy Shirley Bassey anthem, and diamonds are still the ultimate symbol of love and luxury for modern consumers.
 
Earlier this week, Pandora announced they would no longer use mined diamonds for any new designs and will be switching to laboratory-made diamonds instead. The change is part of a broader sustainability drive within the company and is reflective of the growing ethical concerns held by consumers about the mining industry, especially around so-called ‘blood diamonds’.
 
Sustainability increasingly ranks highly as a key consideration for consumers, this we know. Research by Deloitte has shown that at least 45% of millennials and generation Z have stopped purchasing certain brands because of ethical or environmental concerns. That coupled with the disruption wrought by lockdown has resulted in global sales falling by 15% in 2020. Demand for man-made diamonds is, by contrast, growing fast.
 
Pandora is a small player in the gem industry. Out of the 82m pieces of jewellery it sold last year, only 50,000 featured diamonds. More likely Pandora is looking to entice new buyers to a tired brand that has, prior to this, fallen in and out of fashion. The Danish company has hinted at its lofty goals to disrupt the market for diamond jewellery with “affordable, sustainably created products.”
 
Shares jumped six per cent on the Nasdaq Copenhagen stock exchange after Tuesday’s announcement, signalling investors’ approval of the business strategy. Whether canny marketing ploy or otherwise, Pandora is one to watch as a potential example of how businesses can do well, by doing good.

News

Polls have opened in elections across England, Scotland and Wales. Voters in Scotland are set to elect the 129 members of the Scottish Parliament while 143 local councils, several mayoralty and crime and police commissioner races, and a parliamentary seat in Hartlepool are up for election in England. In Wales, voters are to elect the 60 members of the Welsh Senedd. As a result of Covid-19 restrictions, must of the counting will not begin until Friday.
 
The UK is sending two Royal Navy ships to monitor a protest in waters around Jersey’s main port amid a fishing rights row with France. This move is in response to the French government’s threat to cut off Jersey’s electricity over a post-Brexit dispute.
 
David Nabarro CBE, special envoy to the World Health Organisation, has called for wealthy countries including the UK to send spare vaccine doses to developing economies struggling with the Covid-19 pandemic before organising booster jabs. This comes after Nadhim Zahawi, UK vaccines minister, stated extra funding would fast-track new vaccines to “future-proof” the UK against new Covid-19 variants.
 
The government has been accused of neglecting the country’s “cultural national health” following a consultation by the Office for Students which has proposed a 50% funding cut to arts subject at universities including music, dance, drama and performing arts. A petition to stop the planned cuts has been put forward by the Public Campaign for the Arts.

Business and economy

The US has backed a temporary suspension of intellectual property rights for Covid-19 vaccines, which would, in theory, allow any pharmaceutical manufacturer in the world to produce “copycat” vaccines without fear of being sued for intellectual property infringement. The waiver was initially proposed at the World Trade Organisation by India and South Africa last October, and has received backing from almost 60 nations.
 
According to new data by Xero in partnership with Accenture, around 410,000 small business jobs need to be created by the end of 2021 to return to the UK’s pre-pandemic jobs trajectory. The research revealed UK SME job losses have been almost double those in big organisations since the start of the pandemic.

Columns of note

Among the lessons learnt from the Covid-19 pandemic is that strong policies require strong public engagement. Half the battle was ensuring people fully understood the scale of the threat. The same can be said about the climate crisis, argues George Marshall in The Guardian. To remedy this, Marshall suggests the conversation around climate change requires tailored messaging to different audiences and a proactive outreach programme.
 
China is notorious for punishing companies and countries for a range of perceived political slights. And yet, because the likes of Apple, Starbucks, Nike, H&M are still very much reliant on the huge and growing Chinese market, they are, as a result, increasingly fearful of antagonising Beijing. Jamil Anderlini describes in the FT how western brands in China have succumbed to Stockholm syndrome.

Cartoon source: The New Yorker

Markets

What happened yesterday?

Equities in London performed better than expected on Wednesday, on the back of the heavyweight mining sector.
 
The FTSE 100 ended the session firmer by 1.68% at 7039.30, while the FTSE 250 was up by 0.25% at 22,385.90.
 
Sterling was stronger as well, advancing 0.19% on the dollar to $1.3919 and trading 0.32% higher against the euro at €1.1596.
 
In the US, stocks nearly wiped out their gains as technology shares turned lower, offsetting previous optimism over corporate earnings and economic reports. The S&P 500 grew by less than 0.1% while the Nasdaq 100 finished in the red. The Dow Jones Industrial Average rallied by 0.29% at 34,230.34.
 
In company news
 
Facebook has confirmed it will not reinstate Donald Trump’s social media accounts, but said a formal review will be carried out.
 
KFC announced it is looking to fill 20,000 part-time and full-time positions nationwide, amid a labour crunch in the US restaurant industry as customers return.
 
Archegos Capital is reportedly preparing for insolvency, as banks try to extract from Bill Hwang’s family office the $10B they lost when its derivatives trades flopped in March.

What’s happening today?

Finals
Trainline

Q1
Bank Pekao Sa
Kosmos Energy

Trading Announcements
Aib Group
Barratt Developments
Derwent London
Equiniti
Hansard
Mondi

AGMs
Aib Group
Avast
Aviva
BAE Systems
Costain
Elecosoft
Emis
Genel Energy
Getbusy
Glanbia
Howden Joinery
IMI
Indivior
Jardine Math.sr
John Laing
Jupiter Fund Management
Melrose
Mincon Grp
Mondi
Morgan Advanced Materials
Morgan Sindall Group
Quixant
Rathbone
Reach Plc
Scotgems
TransGlobe Energy
Vitec

UK economic announcements
(00:01) RICS Housing Market Survey
(09:30) PMI Services
(12:00) BoE Interest Rate Decision

Int. economic announcements
(07:00) Factory Orders (GER)
(10:00) Retail Sales (EU)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
 

Source: Financial Times

did you know

The ancient Romans and Greeks believed that diamonds were tears cried by the gods or splinters from falling stars. The Romans also believed that Cupid’s arrows were tipped with diamonds, perhaps the earliest association between diamonds and romantic love.

Parliamentary highlights

House of Commons

The House of Commons is in prorogation and will next sit on 11 May.

House of Lords 

No business scheduled.

Scottish Parliament 

The Scottish parliament is in recess ahead of the election on 6 May.

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