Diamond mining giant De Beers Group forever changed the game when it launched its own line of lab-grown diamond jewellery earlier this year. How is the market reacting to this development?
The growth potential of lab-grown diamonds has become more pronounced, with younger consumers continuously looking for more affordable and ethically sourced diamonds. The conventional wisdom however was that marketing of lab-grown diamonds would be a tall order, and it would take time for these to be accepted by customers. That is, until De Beers made its move.
This market has a lot of room for growth, according to Research Nester’s recent report entitled, “Lab-Grown Diamonds Market: Global Demand, Growth Analysis & Opportunity Outlook 2023.” The global lab-grown diamond market was worth US$16.2 billion in 2015, and is expected to earn US$27.6 billion by the end of 2023, with a compound annual growth rate of 7.4 percent during the forecast period (2016 - 2023), the report added. Meanwhile, global consumer demand for diamond jewellery was US$82 billion in 2017, up 2 percent from the previous year, according to De Beers.
De Beers, which solidified the diamond’s reputation as the ultimate engagement ring with its “A Diamond is Forever” tagline, helped form the Diamond Producers Association in 2016, which comprises the world’s seven biggest mining companies. The association went on to launch the “Real is Rare” campaign to effectively sell diamonds to millennials. Then came the ultimate about-face that caught everyone in the industry off guard: The launch of Lightbox, De Beers’ lab-grown diamond jewellery line. With its competitive pricing and upfront marketing, Lightbox enjoyed a good debut in September: Studs and pendants priced at US$800 per carat were sold out in the first few days. Curiosity played a part in the brand’s instant success, according to De Beers, and some of its buyers may have been industry people who wanted to learn more about the brand.
Others were quick to jump on the lab-grown diamond jewellery bandwagon. Richline Group, a wholly owned subsidiary of Berkshire Hathaway Inc, announced in late October that it was partnering with JCPenney and Macy’s to introduce Grown With Love, its own brand of lab-grown diamond jewellery, which caters to both the bridal and fashion jewellery markets. The products cost US$500 to US$10,000 and all diamonds are certified by the International Gemological Institute.
Richline Group’s partnership with JCPenney and Macy’s is likewise aimed at educating consumers about their choices, the company said. Salespeople at Richline’s partner retailers, including JCPenney and Macy’s, will receive training on the integrity, grading and analysis of lab-grown diamonds. “Richline is proud to be presenting an educated choice. We truly, continually believe in the rarity and romance of mined diamonds. However, the consumer now has an option to judge value and social responsibility as a personal choice,” said Mark Hanna, the group’s chief marketing officer.
The International Grown Diamond Association (IGDA), founded in 2016 by manufacturers, distributors and sellers of lab-grown diamonds, also highlighted the importance of education in the long-term development of the business.
As a founding member of IGDA, Russia’s New Diamond Technology (NDT) said disclosure and best practices, along with state-of-the-art technology, will enhance transparency and integrity in the sector.
According to NDT President Tamazi Khikhinashvili, demand for lab-grown diamonds is expected to grow fast as millennials continue to go for sustainability. “Many international brands have begun using lab-grown diamonds in their pieces, which is a sure indicator of burgeoning demand. Most importantly, manufacturers of lab-grown diamonds now focus on quality, not quantity,” continued Khikhinashvili.
NDT showcased its 10.06-carat, SI-clarity, octagonal step-cut, HPHT fancy intense yellow diamond at the September Hong Kong Jewellery & Gem Fair. “This is the only officially known fancy intense yellow lab-grown diamond of 10 carats,” he added.
Socially conscious millennials prefer lab-grown diamonds and gemstones accompanied by gemmological certificates, noted NDT. “Leading jewellery designers are intrigued by the possibilities brought about by NDT’s technology that provides them with a whole range of diamonds to work with. At the same time, this makes their design more price competitive,” Khikhinashvili said.
Off the beaten path
Created Diamonds Company Ltd (CDC) is one of the largest suppliers of rough and polished HPHT lab-grown diamonds in the world, with manufacturing facilities in India and China, as well as offices in the US, India, Hong Kong, Bangkok and Guangzhou.
“We aim to set standard practices for this industry and to offer more choices for consumers. Our target customers are those who think of diamonds in a non-traditional way, appreciate diamonds as what they are and care about environmental protection," stated Hu Yaoling, marketing manager of CDC.
Hu said the negative impression that people may have of lab-grown diamonds will soon dissipate as the industry becomes more and more transparent. She stressed that lab-grown diamonds can be marketed in many different ways, not necessarily as mere fashion jewellery items that are not suited for important occasions. Companies like CDC tend to market lab-grown diamonds as a new product in its own right, not as a cheap alternative to natural diamonds, continued the company official.
“Everyone in the lab-grown diamond industry is learning about and adjusting to constant changes in the market. The industry has huge potential for growth, and we have just started,” Hu said.
Millennials, who comprise 30 percent of the global population, are now the biggest group of consumers in the world. They are after sustainable goods and ethical practices, which means they reject the use of conflict diamonds and the environmental impact of diamond mining. Lab-grown diamond jewellery may just strike a chord with them.
In terms of geography, Asia Pacific has emerged as the largest market for lab-grown diamonds, according to Research Nester’s report. It accounted for the largest revenue share of 51.2 percent in 2015, while North America was responsible for approximately one fourth of the total revenue. Middle East and Africa are expected to be the fastest-growing markets in the future due to rapid growth in infrastructural facilities and rising demand for lab-grown diamonds.
Hu disclosed that lab-grown diamonds will someday be as popular as their mined counterparts. “Diamond jewellery has become a common fashion item for many, and demand for it will only rise as more and more well-designed pieces set with lab-grown diamonds become available," commented Hu. "Lab-grown diamonds will have a big impact on the traditional diamond sector. I hope the lab-grown market continues to evolve and create more opportunities for the diamond sector as a whole.”