Lab-GrownSep 23, 2024
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Lab-Grown Diamonds: A Threat or an Opportunity?
Many lab-grown manufacturers in India are rethinking the earlier antagonism between lab-grown and natural diamonds.
“There is greater acceptance [of lab-grown diamonds] today, but manufacturers had to put in a lot of effort to make it happen,” said Smit Patel, director of finance for lab-grown diamond company Greenlab, whose factory in Surat, India, is pictured.
Mumbai, India—The lab-grown diamond industry in India continues to march forward, although the rate of expansion has slowed slightly when compared with earlier levels.
In the process, Surat, the undisputed global center for manufacturing natural diamonds, now straddles two worlds.
Resources that are no longer needed because of the global slowdown in natural diamond demand, including physical infrastructure and skilled employees, are being absorbed by the emerging lab-grown diamond industry.
Yet, even as the pipelines of these physically similar products develop almost in parallel, perspectives on the relation between, and the future of, each segment vary.
A ‘Zero-Sum Game’
At a session during the recently concluded India International Jewellery Show (IIJS) in Mumbai, Dilip Mehta, chairman emeritus of Rosy Blue who now leads lab-grown diamond company Lumex, provided an interesting insight.
“Rather than viewing this as a zero-sum game, where one must win and the other must lose, I believe we have an incredible opportunity to expand the market together,” he said.
“Both natural and lab-grown diamonds bring unique value to the table, and when leveraged correctly, can complement each other and help grow overall jewelry consumption.” – Dilip Mehta, Lumex
In a later interview with National Jeweler, Mehta termed the earlier approach of pitting the two products against each other as a strategic mistake that led to a race to the bottom, while stressing that it was better to look forward than spend time “crying over spilled milk.”
“I believe,” he elaborated, “that both natural and lab-grown diamonds bring unique value to the table, and when leveraged correctly, can complement each other and help grow overall jewelry consumption.”
Citing examples from different industries, Mehta said it was believed airplanes would sound the death knell for sea travel, or that the introduction of the smartwatch would eat into the jewelry business.
Yet today, sea travel has been reinvented in the form of luxury cruises, and there is still significant demand for bejeweled watches and timepieces.
The Rise of Detection Technology
India’s Gem and Jewellery Export Promotion Council (GJEPC) always believed the two categories constituted distinct product streams, said Praveen Shankar Pandya, chair of the Natural Diamond Monitoring Committee, an initiative of GJEPC and the Bharat Diamond Bourse.
The committee was set up more than a decade ago after some cases of mixing were detected by labs.
“This [mixing] had the potential to destroy consumer confidence in the product, and so monitoring the trade became necessary,” he explained.
Once simple and affordable detection devices became available, first at the business-to-business level and now even at retail, the focus has changed.
Ongoing efforts to advance detection techniques and carry out consumer education must go on so that, “both streams can co-exist and grow,” Pandya said.
A Spectrum of Options
Smit Patel, director of finance for Greenlab Diamonds and chair of the GJEPC’s lab-grown diamond committee, stressed that the lab-grown diamond business is still in its infancy when compared with its natural diamond counterpart.
“There is greater acceptance today, but lab-grown diamond manufacturers had to put in a lot of effort to make it happen.”
Patel believes the lab-grown diamond business should be viewed from the perspective of its end use.
“Currently, gem-quality lab-grown diamonds are predominantly an input into the jewelry industry and there are multiple possibilities. They can greatly expand the market for studded jewelry by providing affordable alternatives to consumers who aspire to buy diamonds but are restricted by high prices.”
Lab-grown diamonds can find space both in fashion jewelry, as well as for high-value designs, he said. As research and development advances and manufacturers develop greater expertise, more innovative cuts and fancy colors will be produced.
“The possibilities are immense, and vertically integrated manufacturers can tailor supply to suit market demands,” Patel said.
The Need for Distinct Narratives
Vinit Jogani, director at Diatech, which offers advanced, AI-based solutions to the diamond industry, feels both segments have limited their scope by failing to develop unique and compelling narratives around their products.
The lab-grown diamond industry also has failed to create a standalone marketing and distribution strategy.
He cited the example of the lab-grown diamond industry’s focus on engagement rings.
“If lab-grown diamonds were promoted as memorable-yet-affordable gifts for occasions that keep recurring … [and] collections were developed annually in sync with prevailing fashion trends, the market could expand phenomenally.”— Vinit Jogani, Diatech
This category is limited, he explained, as for many consumers, it is a once-in-a-lifetime purchase, outside of those who look to upgrade on milestone anniversaries or get remarried following a divorce or a death.
“Instead, if lab-grown diamonds were promoted as memorable-yet-affordable gifts for occasions that keep recurring, like Mother’s Day or birthdays, and innovative, theme-driven collections were developed annually in sync with prevailing fashion trends, the market can expand phenomenally,” Jogani said.
“Imagine how lab-grown diamonds, a volume-driven, lower-margin business, could benefit.”
The lab-grown diamond business will be more about affordability and innovation, Jogani believes. It can be developed to cater to impulse purchase at lower price points, and unique products with patented cuts and colors at higher ones.
The natural diamond business, meanwhile, can be about luxury and exclusivity.
The natural diamond business, meanwhile, can be about luxury and exclusivity.
“In some markets, the natural business also needs to position itself as a store of value by developing a clear and transparent framework. The current state of the Chinese market shows the implications of failing to do so,” he said, a reference to the number of Chinese consumers eschewing diamonds in favor of gold in reaction to the country’s current economic instability.
Integrated Operations at Scale
Ashish Lakhani of Kira Diam said vertical integration offers many advantages for lab-grown diamond manufacturers.
“We entered the segment later than others but that helped us understand the dynamics of the industry better,” he said. “We also have the advantage of operations being led by some very experienced employees with a deep understanding of the diamond business.
“That makes it easier to plan the entire cycle and produce as per market needs. Within the span of four to six weeks we can deliver large volumes of products that are in demand.”
Related stories will be right here …
He said having integrated operations at scale provides multiple benefits in a segment that is driven by volumes.
He added that, “Kira has become a new type of supplier of choice—we can deliver exactly what the market needs.”
Going forward, Lakhani said consumers will determine the pace and direction at which each stream grows, noting, “We do not need a pre-conceived vision of the future.”
Meeting Consumers’ Needs
The view from Surat seems in sync with Dilip Mehta’s assertion that, “Lab-created diamonds are a designer’s dream.
“They offer flexibility and creativity and allow designers to think outside the box. They can create exciting new products, including accessories.”
The view from Surat seems in sync with Dilip Mehta’s assertion that, “Lab-created diamonds are a designer’s dream.
“They offer flexibility and creativity and allow designers to think outside the box. They can create exciting new products, including accessories.”
Mehta foresees a future where both streams work hand in hand.
“This innovation should not be seen as a threat, but as an opportunity to enhance the industry and broaden its appeal. It is a moment of opportunity rather than division.
“The rise of lab-grown diamonds doesn’t mean the decline of natural diamonds; it means we have more tools in our toolkit to meet the evolving needs of consumers,” he concluded.
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