Lab-grown diamond jewellery is set for a surge in of demand post-lockdown, boosted by its price discount to natural diamonds, Pooja Sheth, MD and Founder of Limelight Handcrafted Diamonds tells Jewellery Outlook Editor David Brough.
Pooja will join a webinar to talk about the “Outlook for Lab-Grown Diamonds” at 2 pm UK time (6.30 pm India) on Wednesday April 22, 2020.
What impact will the current fall in prices of natural diamonds have on the market for lab- grown diamonds.
Natural diamond pricing has been falling due to a decrease in global consumption, geopolitical tensions, and a collective scale-back of production by the miners.
Interestingly, in the same time period lab-grown diamonds have seen a significant growth in demand driven by increased awareness amongst consumers of the authentic or “REAL” nature of the product, the sustainable aspect and the affordability of these diamonds.
2019, particularly, was the year for lab-grown diamonds.
In India alone (China and India being the largest exporters of lab-grown diamonds), lab-grown diamond exports were up by 102% y/y.
Even at the start of 2020, lab-grown diamond exports in India were up by 60% y/y, while natural diamond exports were down by 41% y/y.
Whilst the lab-grown diamond industry had seen a significant price correction in recent years with the cost of technology coming down, lab-grown diamond prices, particularly CVD diamonds, have now stabilized.
In fact, CVD diamonds above 1ct saw a 29% price rise in the last quarter of 2019 driven by significant demand and limited supply.
How is lab-grown diamond jewellery being marketed in India?
Indian consumers have slowly started embracing lab-grown diamond jewellery mainly due to the wide education drive about the creation process conducted by several brands in the country.
This has helped consumers understand that these diamonds are as real as natural diamonds and originate from a natural diamond itself – similar to the concept of IVF technology/test tube babies.
Along with that, a recent campaign by Limelight Diamonds helped consumers to understand that these are the purest type of diamonds – maintaining the aspiration behind the purchase just like any other precious gemstone.
Moreover, the young audiences, i.e. the Millennials and Gen Z of the country have shown even stronger support for these diamonds because of their ethical, social and environmental benefits as there is no mining involved.
However, a lot more education is still required for the trade and the consumers to infuse the confidence of establishing this as a distinct product category in the trade and a distinct product offering/choice for consumers.
What is the outlook for the use of lab-grown diamonds in bridal and engagement jewellery globally?
Globally, estimated at about $2bn currently, the lab-grown diamond jewellery market is expected to rise rapidly and exceed $15bn by 2035, says a recent report by renowned analyst Paul Zimnisky.
A major shift in consumer consumption patterns is a great contributor to the rise in demand for CVD diamonds.
Whilst the US has seen the biggest shift in consumers — with a recent survey suggesting that 70% of Millennials would consider buying a lab- grown diamond — India is also rapidly joining the trend.
Millennials and Gen Z as purchasers of luxury including diamonds, are steering away from natural diamonds because of their higher environmental and social costs, and are increasingly leaning towards sustainable luxury.
As a result, consumers are now exploring real diamonds that are grown in laboratories as the new alternative for engagement rings as well as everyday wear.
The product comes with the added benefit of being ethical, affordable, sustainable and more environmentally friendly.
A recent Deloitte report on Millennials in India stated that climate change and the environment had become the no.1 priority or concern for them.
Statistics also say that these Millennials are willing to pay 44% of the price on sustainable products/ materials.
With the largest population of Millennials in the world, India is perceived to become the largest market for lab-grown diamonds in the future.
“Women in today’s age make their own choices and decisions. They have their own independence not just in terms of profession but are now more empowered in their thoughts and opinions. This is very much starting to reflect in the trends in the fashion and jewellery industry where more women are opting for sustainable options – such as the lab-grown CVD diamonds – that allow them to enjoy several luxuries without damaging the planet for the future generation. With women getting economically and socially independent they deserve to celebrate every little achievement and any big success with a girl’s best friend – a sustainable diamond.” – Pooja Sheth, MD & Founder of Limelight Handcrafted Diamonds.
How will an expected global recession post COVID-19 affect demand for lab-grown diamond jewellery?
The overall luxury market is expected to be adversely affected by the global crisis.
However, whilst the economies may recover with all the liquidity infusion measures and other efforts being taken by governments worldwide, the pace of recovery for the luxury market will be much slower. This is naturally going to have an impact on the global gems and jewellery industry.
However, this pandemic has left a severe impact on consumers’ mindset and a significant change is expected in their behavioural and purchasing patterns.
A recent study by Bain & Co suggests that key consumer trends likely to be seen are:
- Increased environmental and social consciousness – consumers are likely to support sustainable products;
- Ethics will be as important as aesthetics – brands that effectively communicate their core values, beliefs and stand up for the appropriate ethical practices will be embraced faster;
- Increased love and demand for national products – whilst governments have also started working towards reducing dependence on other countries, national products will begin to gain higher confidence in the eyes of the consumer;
- Luxury brands will have to re-consider pricing to remain “affordable” – value for money will be given prime importance;
- Online shopping will become more popular
In short – “Purchase with a purpose is likely to be the new definition of luxury” and this spells out one clear answer that once economies revive, new perspectives and a change in the consumer mindset are going to popularise lab-grown diamonds further all over the world.