An employee presents a high jewellery diamond ring from the Red Carpet 2018 Collection at the luxury jeweller Chopard store in Paris, France, July 4, 2018. REUTERS/Charles Platiau

Buying a Diamond is Set to Change as Lab-Grown Diamonds Grow

Among the most valuable commodities, formed deep in the Earth’s crust over billions of years, a diamond is forever – but now forever can be found at a warehouse in Washington.

Smack dab in the middle of Washington state, Wenatchee hugs the Colombia River and is commonly referred to as the “Apple Capital of the World”, but it might soon be better known for its diamonds.

Diamond Foundry, which was recently valued at US$1.8 billion ($2.3 billion) creates its lab-grown diamonds there, and they plan to ramp up production to five million carats at the end of next year, which would make it one of the ten largest diamond mines.  

Despite potential preconceived notions of authenticity, lab-grown diamonds are as real as a diamond mined from the ground.

The only difference between the two is that one is made in a lab, either using High Pressure-High Temperature (HPHT) or Chemical Vapour Deposition (CVD) systems and one is found underground.

As a growing contingent of younger buyers bases their purchasing decisions on environmental sustainability, the world’s largest jeweller by volume Pandora, announced that they will begin phasing out mined diamonds in their offerings.

In announcing Pandora Brilliance, its first lab-created diamond collection, Pandora said it aims to create jewellery that is affordable and sustainable.

“It’s a new collection of beautifully designed jewellery featuring lab-created diamonds,” Pandora CEO Alexander Laciks said.

“They are as much a symbol of innovation and progress as they are of enduring beauty and stand as a testament to our ongoing and ambitious sustainability agenda. Diamonds are not only forever, but for everyone.”

Consumers mindset is shifting

Consumers are becoming more aware of lab-grown diamonds, but there is still confusion surrounding the authenticity and ‘realness’ of the product.

“Consumers are looking to make purchasing choices with a clear understanding of their impact on the environment and communities, as they are more aware of where their food comes from, how their clothing is made and how items are sourced,” Mona Akhavi, CEO of Diamond Foundry’s jewellery direct-to-consumer business VRAI said.

“With the rise of socially and environmentally conscious brands and products, we expect to see a positive incline in the perception, interest and demand in sustainably created diamonds,” she added.

Consumers however are still evoking “mixed associations” when it comes to lab-grown diamonds, according to Bain & Co’s Global Diamond Industry 2020–21 report.

The report stated that most consumers associated lab-grown diamonds with artificiality and affordability and that they do not see substantial differences in sustainability between mined and lab-grown diamonds.

In a survey of 5000 Americans from diamond giant De Beers, who offer their own lab-grown product through their LightBox business, similar results were found.

Most consumers in the survey saw mined diamonds as more authentic and romantic while 47 per cent of consumers did not agree with the statement that lab-grown diamonds are “real”.

Consumers still consider acquiring them as they are perceived as “fun” and “fashionable”, according to the survey.

“Lab-grown diamonds are atomically identical to mined diamonds, and with an increase in education around sustainable diamonds (which we’re already seeing) and a continued effort with consumers to focus on sustainable products and brands, consumers are increasingly thinking of them as the same,” Akhavi said.

“Recently, the National Advertising Division of BBB National Programs recommended that the Natural Diamond Council discontinue certain advertising claims comparing mined diamonds with man-made diamonds, including the carbon emissions associated with diamond mining compared with diamond manufacturing, the scarcity of mined diamonds, the resale value of mined diamonds versus man-made diamonds, as well as claims that described mined diamonds as “real”, in contrast to man-made diamonds,” she said.

“As education and awareness continue, more consumers will realize that mined and sustainably grown diamonds are the same and the only differences are origin and carbon footprint,” she added.

A study from MVI Marketing found lab-grown diamonds held particular sway amongst the millennial cohort.

In a 2018 survey of over 1000 thousand 21-40 years old, it found that nearly 70 per cent of respondents said they would consider a lab-grown diamond for an engagement ring centre stone. This is up 13 per cent in 2017.

In the 2020 study which was sponsored by International Grown Diamond Association, MVI said approximately 38 per cent of independent jewellery retailers in the US carry lab-grown diamonds either online or in their stores, the company said in the report that the number will rise to more than 50 per cent by the end of 2020.

The survey found the proportion of consumers who have heard about lab-grown diamonds has risen to 80 per cent in 2020, up from 58 per cent two years ago, with eight per cent having bought a lab-grown diamond.

Lab-grown market share is growing

According to diamond industry analyst Edahn Golan, lab-grown diamonds accounted for 3.1 per cent of jewellery revenue by volume in the fourth quarter of 2020 in the United States. This is up from two per cent in the fourth quarter of 2019.

In 2020, China produced six to seven million carats of lab-grown diamonds, with 50 per cent to 60 per cent of them made using high-pressure, high-temperature technology, according to Bain & Co.

Chemical vapour deposition is gaining traction, with India and the United States emerging as major manufacturing hubs.

“As expected, retail prices for lab-grown diamonds fell in 2020 while wholesale prices remained stable,” the report said. “That led to a margin contraction for traders and jewellery manufacturers. We believe additional price drops will make labgrown diamonds accessible to broader groups of price-sensitive consumers and push them further into the fashion category, where they have growth potential.”

Bain & Co said if costs and prices continue to drop, “lab-grown diamonds could expand into the wider mass jewellery segment, targeting a different audience than natural diamonds”.

The report said if the trend of product differentiation reverses, we could see lab-grown diamonds in the premium jewellery segment, compensating for the decreased supply of natural diamonds.

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