News from All Diamond

Follow the latest insights shared by All Diamond in memory of Ehud Arye Laniado and access all articles written by Ehud Arye Laniado

The History of Lab Grown Diamonds: Retail

The History of Lab Grown Diamonds: Retail

So far in our look at lab-grown diamonds, we have focused mostly on the history of their development, which, surprisingly, spans several centuries. We have also seen how new technologies have developed, technologies that are expanding the possibilities for lab-grown diamonds in many new and exciting industrial applications. But I think that what everyone in the natural diamond industry is concerned about is the application for gem-quality lab-grown stones in the jewelry industry. So far, this has yet to become a significant challenge, and consumers have not adopted this new product in any significant way. But many retailers are coming around to man-made diamonds, and some have even shifted their entire product offering away from naturals. Let’s take a look at some of the developments in the retail industry, and find out who is doing what to push the product to new consumers.

As I have written in the past, the natural diamond industry has suffered in recent years from a lack of generic marketing. A recent announcement from the Diamond Producers Association (DPA) of a significant increase in their annual marketing budget is a step in the right direction, and should be welcomed by our industry. However, the man-made industry finds itself in a similar position. A similar governing body has been created, namely the International Grown Diamond Association (IGDA), but it has not yet organized to create any widespread marketing that might move consumers en masse towards lab-grown stones. Retailers must establish their own marketing campaigns and budgets, which has prevented wide-scale acceptance of the product thus far. Most companies selling synthetic diamonds are utilizing a two-pronged marketing approach: namely touting the purported reduced environmental and social impact, and the lower price point.

But things are slowly changing. Leonardo Dicaprio has added his star-power to San Francisco based Diamond Foundry, and this has helped to at least communicate to a new breed of consumers that such a product indeed exists. The start-up company was able to raise $100 million in an equity offering last year, which was subscribed by several high-profile investors, including Dicaprio and Twitter founder Evan Williams. Diamond Foundry sells online, and has its collections in stores across the US and in London. At the moment, production at the company is small, estimated at about 1,000 carats per month, and not likely to have a significant impact on the natural or lab-grown industry. But the company has the financial backing to grow. They currently market their stones under the slogan “Diamonds. Evolved.”

Pure Grown Diamonds was created in 2014 after a re-structuring at Gemesis Diamonds, which has been at the forefront of diamond manufacturing since the mid-1990s. They initially began selling their proprietary lab-grown diamonds through a network of retailers, but have since begun to offer their own line of jewelry directly through their website.

“Artisan created diamonds” is the catchphrase of Canadian based Spence Diamonds, which had for years advertised its direct relationship with Antwerp manufacturers, to cut out the middlemen in their natural stone inventories. The company made the shift to lab-grown stones after being acquired by private equity firm Lion Capital in 2015, with a goal towards expansion across North America. The company continues to offer both natural and man-made stones, but their marketing initiatives are more geared to creating a new market for their ‘artisan’ diamonds.

Brilliant Earth is another San Francisco based retailer that deals in both natural and man-made diamonds. Their belief is that simply relying on the Kimberley Process definition of conflict-free diamonds is not enough, and they go beyond this definition to source their natural diamonds from ethical miners in major producer nations around the world. They first sourced their natural stones only from the Diavik and Ekati mines in Canada, but have since expanded to purchase from Russia, Namibia, Botswana, and Australia. The company was established by two Stanford university alumni after apparently having difficulty sourcing their own ‘ethically produced’ diamonds. Their marketing efforts are more focused on the perceived human and social impact of diamond mining in conflict regions, and their sourcing efforts extend to other precious gems and metals also.

In China, consumers almost whole-heartedly rebel against the idea of synthetic diamonds, which are seen as ‘fake’. But since China is far and away the largest producer of synthetic diamonds in the world, it hasn’t eliminated the problem of synthetic stones being set in jewelry alongside natural diamonds, with unscrupulous jewelry makers believing that they can increase their margins using lab-grown stones in place of naturals. In China, there has been a significant investment made by retailers in detection equipment to identify synthetics being passed off as natural. China’s largest jewelry retailer, Chow Tai Fook, has been one of the largest customers of De Beers Element 6, which sells detection equipment that now supports very small diamonds already set into jewelry.

The truth is, retailers selling lab-grown diamonds are facing an uphill battle. The issue of conflict diamonds has largely been eradicated from the world, which would have been an important marketing angle for them to take. From a cost perspective, marketing man-made stones at a discount to naturals has also not been overly effective, since this isn’t actually the case for all stones, and some man-made diamonds are actually more expensive (a topic that I will discuss next week). The retail market for lab-grown diamonds is, for the moment, very small, and has not yet achieved any worthy economies of scale. In fact, the natural diamond industry, despite being exponentially larger, has also struggled in its generic marketing efforts. In such a highly fragmented retail industry, it would take a retail behemoth switching to man-made diamonds before consumers could really expect to have both choices available to them in a meaningful way, and that is something we don’t expect to see any time soon.

       The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser.

Truly Dazzling Potential / Hedge Magazine
CAN TECHNOLOGY CHANGE THE WAY WE LOOK FOR DIAMONDS...

SUBSCRIBE TO NEWS BY ALL DIAMOND

ARTICLES TRENDING

The diamond industry pipeline starts with mining, then rough trading, manufacturing, jewelry setting and finally retailing. It may look like a short and efficient journey, however it is anything but t...
It might surprise people to know that there are only around 50 active diamond mines in the world. These mines never seem to be found on the outskirts of major cities. Instead, they are usually located...
We have seen how the industry has undergone significant changes over the past 20 years and how smaller companies have emerged to play an increasingly important role in supplying rough diamonds to the ...
When I discussed fancy brown diamonds in last week’s article, I stated that unlike other fancy color shades that are extremely rare in nature, brown diamonds are plentiful and therefore command much l...
In the last two decades, much has been said about an impending demand vs. supply imbalance in the diamond industry. Huge mines discovered over the past 40 years are nearly mined out, some argue, and n...
A major diamond rush, located in Lüderitz (in the former German colony of Deutsch-Südwestafrika - German South West Africa) is among Namibia’s most famous diamond sites. In 1907, the Germen railroad w...
When most people hear about diamond mining, they think of South Africa, where diamonds were discovered in 1866 in the Kimberley region. A 15-year-old boy discovered the now-famous 21.25-carat Eureka D...
Copyright © 2022 - ALL DIAMOND - In Memory of Ehud Arye Laniado - All Rights Reserved.   | Privacy Policy | Terms of Use