Lab Grown Diamonds Market: A Sunrise Industry for Jewellers

The COVID-19 pandemic has made a profound impact on consumer behavior and has turned them more digital-savvy, cost-conscious, and environmentally responsible. Jewellers in India have already started adopting digital medium to reach out to their customers online. This article evaluates the opportunities in the cost-effective & environmentally-friendly Lab Grown Diamonds market that can emerge as a sunrise industry for jewellers in India.

Lab Grown Diamonds – A Technology Innovation

Lab grown diamond technology has been around for more than 60 years. However, it is only recently that advancements in technology have made high quality, affordable lab grown diamond a reality. Although at a nascent stage, demand for lab grown diamond is fast growing globally. It is only a matter of time that it would play a significantly important role in the Indian Jewellery market.

What are Lab Grown Diamonds?

Lab grown diamonds or man-made diamonds are real diamonds with the same chemical, physical, and optical properties as earth mined diamonds. The only difference is in their origin. Lab grown diamonds are produced in a state-of-the-art laboratory, unlike earth mined diamonds that are formed deep within the earth. Below chart presents a comparison of lab grown diamond and earth mined diamond across multiple factors:

Top 3 Benefits:

1. Cost savings: Lab grown diamonds are 60-70% cheaper than earth mined diamonds. This is due to a relatively shorter supply chain and a lesser number of middlemen involved in lab grown diamonds as compared to earth mined diamonds
2. More shine for the buck: Consumers can now afford a bigger size and better quality (Color, Clarity) lab grown diamond at the same price of earth mined diamond. They no longer need to settle for low quality or a smaller size diamond due to budget concerns
3. Environmental-friendly: Lab grown diamonds are grown in a lab and hence are free from environmental & ethical issues

Due to price advantage, lab grown diamond Jewellery bridges the huge gap between plain gold Jewellery and earth mined diamond Jewellery. It is ideal for the younger and cost-conscious consumers. It provides them a lightweight & fashionable diamond Jewellery option at an affordable price for daily wear and gifting purposes.

Opportunity for Jewellers

Diamond Market Expansion

Contrary to jewellers’ apprehension, lab grown diamonds may not disrupt the earth mined diamond business. Earth mined diamonds are natural diamonds that are rare, unique, & precious. They would continue to charm the consumers that look for unique and precious gifts to celebrate their important occasions in life.

Lab grown diamonds, on the other hand, might create a new segment of its own that can co-exist with earth mined diamonds. It would bring greater choices to consumers and most likely expand the overall diamond jewellery market.

Lab Grown Diamonds Market Size and Potential

Lab grown diamonds market is currently at a nascent stage and is growing rapidly at more than 50% per annum in India.

Globally lab grown diamonds accounted for around 2% of the diamond Jewellery market in 2019. It has the potential to capture between 5-30% of the diamond jewellery market in future.

The key driving factors are lower price and greater availability of the highest quality lab grown diamonds through rapid industrialization.

Although there are larger number of jewellers exporting lab grown diamonds from India, only a handful of jewellers are retailing in India. Thus, offering a huge opportunity for new entrants in the domestic market.

Lab Grown Diamonds Market Challenges

Low Consumer Awareness: Large scale consumer awareness is critical for driving the demand for lab grown diamonds in India. Consumers need to be educated about the benefits of lab grown diamonds. They also need to know that they are real diamonds unlike stimulants such as cubic zirconia (CZ) or moissanite.

Ready Availability in Jewellery Stores: Currently, most jewellery retailers in India don’t carry ready stock of lab grown diamonds. This is largely due to their apprehension of cannibalizing existing sales of earth mined diamonds. However, in western countries, online and established Jewellery stores have already started selling lab grown diamonds. They are selling it side-by-side earth mined diamonds from the same stores.

In 2018, leading diamond brand DeBeers launched its lab grown diamond jewellery brand Lightbox Jewelry and is selling through retail jewellers in the US.

Decline in Price: As the cost of production decreases with improving technology & economies of scale, lab grown diamond prices could come down in future. This raises the risk of carrying larger stock for jewellers.

Key Success Factors

Buy-back guarantee, Quality Certificate, and a Compelling story are the key success factors for jewellers to build credibility among customers. Brand endorsement and effective staff training would further facilitate the consumer buying decision.

Conclusion

Both lab grown diamonds and earth mined diamonds are likely to co-exist in future and expand the overall demand for diamond Jewellery. It would though be interesting to see how jewellers can educate the consumers and influence their buying behavior.

Given the rapid growth in demand for lab grown diamonds globally, it presents a significant opportunity for jewellers in India. The low competition in the market and higher product margins present added advantage for first movers. It also presents a unique opportunity for online jewellers and D2C brands to directly market to the end-users.

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