In recent years, the diamond industry has witnessed a significant transformation with the emergence of lab-grown diamonds as a viable alternative to their naturally mined counterparts. Lab-grown diamonds, also known as synthetic or cultured diamonds, are created in controlled laboratory environments using advanced technological processes that replicate the conditions under which natural diamonds are formed. This innovation has sparked discussions about the pricing, profitability, and ethics of the lab-grown diamond industry.
This article is to share the opinion of and recap the recent webinar held by Elena Barakhova “The diamond industry is not just about the money, it is about natural resources. After working for years in this industry I have realized not everyone is ethical.” In different regions, people invest in different assets. Now many are starting to jump into lab-grown diamonds, it is a high-profit, high-margin industry. So yes there is a place for lab-grown diamonds in the market. But the customers should not be fooled by the lab-grown diamond thinking it is priced similarly to natural diamonds. What is our stand with Lab-grown diamonds? Our recent post has brought a lot of light onto our opinion of lab-grown diamonds. We have nothing against lab-grown diamonds. We are highlighting the real cost of the raw materials of lab-grown diamonds and spreading awareness about it. Our goal is for people to be aware of what they are buying and advising dealers to be ethical about the same. Customers, who are not aware most of the time about the pricing and other industry details are relying on dealers to tell them honestly. There is already mistrust with dealers and therefore in general the whole industry as they have been taken advantage of and cheated many times before. We cannot compare real and lab-grown diamonds, lab-grown produce is very cheap. The materials and technology make it priced much less and in the future with the readily developing technology, the real price of the lab-grown diamond will further drop. Many dealers have supported this notion. Natural diamonds pose as investment assets and working previously in that field, Elena Barakhova understands this and tries to convey how much of an investment they really are. The Pricing of Lab-grown diamonds
One of the key attractions of lab-grown diamonds is their relatively lower price compared to naturally mined diamonds. Traditional diamond mining involves extensive extraction efforts, resource consumption, and logistical complexities, which contribute to the higher cost of naturally mined diamonds. Lab-grown diamonds, on the other hand, are produced through more efficient and streamlined processes, resulting in reduced costs. However, the pricing of them is set by many dealers using Rappaport pricing, but we must realize that it only relates to Natural Diamonds which are measured in carats and takes thousands of years to form compared to a lab-grown diamond that takes mere hours! For lab-grown diamonds, it should be fixed pricing and marked separately as the value can not go up in price and is the same as the next lab-grown diamond manufactured and not unique like natural diamonds. The diamond industry has long been associated with opulence, rarity, and high price tags. However, a revolutionary shift has been underway with the rise of lab-grown diamonds, promising more accessible and ethically sourced alternatives to their natural counterparts. This proposes a promising opportunity for lab-grown diamonds as a much cheaper alternative to natural diamonds (although holding no investment value) and can be used as a fashion stone. It is more than just money Many think the diamond business is just about profit and making money. It is more than that, it is about making people happy and providing value to our customers. We received an email from someone saying he sold a lab-grown diamond 25% of the natural diamond price. Those in the industry can calculate how much profit he is making, in comparison to a natural diamond, the lab-grown diamonds are -98% of the natural. This is a perfect example of how the industry is taking advantage of customers and justifies why the diamond industry is slowly losing trust. Willing buyer – Willing Seller This brings the topic of “If the client is willing to buy for the price then who is to stop them.” I disagree with the notion. There is a need for transparency in this diamond market. Dealers putting 300% on a lab-grown diamond where the value of the artificially grown diamonds is not ethical. We are making business with people, we are building a relationship with the client and then eventually turning to references as we are providing the best value to the customer and not just looking for provide.
The amount of money and resources spent on the business, education and growing the skills have together shown with how we handle and deal with our customers. Some who deal in lab-grown think of it as quick money, they enter into this market and destroy the growing trust of customers by deceiving them and leaving the business when they see no profit. This is why we must come together and create a community of people who love our product and understand the value we can provide to our customers. Diamond Business Ethics We might have the education and knowledge about these stones, and it is our duty to let the customers know about what they are putting their money in. We have to be ethical not only to our clients but to each other. In the industry, many have stolen customers and other things that go to show how the business has been tarnished. The diamond business is one of the most profitable businesses in the industry and we need to establish some rules and transparency to build trust with the clients. This business is not a one-time sale but rather a relationship that is building over time. When dealing with diamonds and if a person is truly in love with the product it is not easy to move into another industry.
We have talked to a few people regarding their opinions on this matter during our live webinar:
One manufacturer from Surat which holds one of the biggest in India, who has been working for the last 17 years in this industry has seen the incoming lab-grown diamonds come into the market and agree that lab-grown is just duplicate.
Another person working in the diamond industry situated in Mumbai mentioned how those selling CVD diamonds (to the bigger companies) are reduced, as jewellers should be able to take back the CVD diamonds that they have sold by paying a certain fraction of the price which puts the jewellers at a loss because of the high rates they would sell them at.
He affirms that now people are realizing that the CVD diamonds they bought a few years back have brought them no investment value and recognizes the value that natural diamonds bring to the table as a long-term investment.
What will happen next? The future of the industry
The diamond industry stands at a crossroads, where tradition and innovation intersect to redefine the value and role of these exquisite gemstones in the modern world. The emergence of lab-grown diamonds has sparked a new chapter in this age-old narrative, promising accessibility to the mass market and redefining the very essence of what a diamond represents.
As the market matures and consumers become more discerning, the realization that lab-grown diamonds may not hold their value in the same way as natural diamonds is becoming evident. This insight is projected to drive a significant reduction in the price of lab-grown diamonds over time, rendering them more akin to fashion accessories rather than enduring investments.
In contrast, the natural diamond industry is anchored in its timeless symbolism and value. Yet, challenges persist for those who find it difficult to sell natural diamonds. Instead of attributing this solely to the stones themselves, industry insiders urge a more profound introspection into how clients are educated and served. The ability to effectively communicate the inherent beauty, rarity, and emotional significance of natural diamonds will remain paramount in securing their place in the market.
Amidst these changes, it is essential to recognize that artificial replication is an inevitable facet of our evolving world. Innovations, like lab-grown diamonds, reflect humanity's drive to create, mimic, and improve upon natural phenomena. This coexistence of the natural and the synthesized opens avenues for exploration, discovery, and diversification within the industry.
The call to action for collective support and unity in the industry is a resounding one. Advocates assert that the evolution of the diamond sector requires a collaborative effort to balance the aspirations of both lab-grown and natural diamonds. By joining forces, the industry can shape a future that respects tradition while embracing change, preserving the sentiment attached to natural diamonds and expanding the horizons of lab-grown gems.
There is a reason we are being very vocal about these topics and opinions to urge how we should band together to support this mission which we all benefit from. We have already felt a lot of support on this topic from this industry and we are grateful for it.
We have to join our efforts to support natural diamonds!
Conclusion
It is acknowledged that the current pricing of lab-grown diamonds does not always align with their intrinsic value, leading to concerns about their long-term appeal as an investment. Ultimately, it is up to us to demand change. By advocating for fair pricing and transparency in the lab-grown diamond industry, we as diamond dealers can play an active role in shaping the market. If enough pressure is exerted, manufacturers may reevaluate their pricing strategies and move towards a more ethical and consumer-friendly approach. In conclusion, the potential of lab-grown diamonds to disrupt the traditional diamond industry is significant. However, the pricing disconnect between their ethical promise and current market practices underscores the need for a reevaluation of priorities. Read more about brands and their investment values: Is Luxury Jewelry Worth the Price? A Breakdown of the Factors That Affect the Price Read more about our project that creates this community of diamond dealers: Web 3 Ecosystem
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