Prime Minister Narendra Modi gifted a piece of lab-grown diamond (LGD) from Surat to Jill Biden, the first lady of the United States, during his recent State visit to the world’s oldest democracy. That was the sign of arrival of a burgeoning domestic industry, which began commercial-scale production less than a decade ago.
At some point, more lab-grown diamonds will be sold than naturals. This is a given and does not even require any diamond analytics, as natural diamonds are a finite resource, and over time, their supply will dwindle. Lab-grown diamonds are factory made, and the raw materials for producing them are nearly infinite. Lab-grown diamonds sales will eventually outpace naturals. The question is not if but when this will happen.
Synthetic diamonds have been around more than 70 years. Historically, the material’s hardness and durability suited it to industrial applications like drilling and cutting in the automotive and aerospace sectors. However, advances in diamond-growing methods, especially chemical vapor deposition (CVD), now allow scientists to utilize these diamonds for more nuanced purposes, including thermal cooling solutions, limitless batteries, and quantum-grade computers.
Martin Rapaport recently released an incendiary memo to the diamond and jewelry industry calling on them to stop doing business in lab-grown diamonds (LGD), which he characterized as “synthetic” and “fraudulent.”
Lab-grown diamonds are growing in popularity. According to a 2022 BriteCoTM report, lab-grown diamond market penetration rose 9.7%, from 18.7% of engagement rings in 2020 to 28.4% in 2021.
Lab-grown diamonds have been around since the 1950s; however, many people have continued to purchase natural diamonds because they believe synthetically grown gems don’t hold their value.
Lab-grown diamonds are a living contradiction. Demand is rising, but prices are falling. They are hot in the US, but not sweeping the rest of the world. Wholesalers accommodate price erosion. It’s a technological driven product catering to a young crowd and striving to follow in the footsteps of a centuries-old product, while enthusiastically adopting many of its ills.
In 2018, De Beers launched Lightbox Jewelry, a lab-grown-set jewelry collection with an unstated primary goal of disrupting the lab-grown market through devaluation and separation. Divide and conquer is an age-old battle strategy, but in this case, it didn’t work as well as hoped for. Surprisingly, not only is the natural diamond industry seeing its fears materialize. So also is the lab-grown industry. Following is the sum of all their fears.
Economy 707 maintains that prices rise with demand. The logic is that when the market wants more of something, competition pushes up the price. But sometimes, there is a price anomaly, and prices behave differently. Enter lab-grown, for instance.
When consumer demand for lab grown (LG) was relatively low, there was a frenzy to join the supply chain. Everyone from producers to retailers wanted in. So far, the result of this frenzy is the LGD Price Anomaly: rising consumer demand and declining wholesale prices.
In mid-2018, Edahn Golan, a longtime diamond industry analyst, began publishing a quarterly lab-grown diamond price list charting wholesale transactions. His timing was spot-on—2018 was a watershed year for the nascent lab-grown category. Lightbox, De Beers’ lab-grown diamond subsidiary, made its debut at JCK Las Vegas that May, just as the industry’s retail gatekeepers indicated they were finally willing to give lab-created diamonds a chance.
LONDON, March 25, 2021 /PRNewswire/ — Despite the challenges experienced in 2020, US consumers expressed strong demand for diamond jewelry throughout the fourth quarter of the year, outstripping demand for other luxury categories and apparel, as they sought out purchases with emotional meaning and enduring value, according to De Beers Group’s sixth Diamond Insight ‘Flash’ Report, published today.