By Cynthia Unninayar
Centuries ago, when alchemists dreamed of transforming lead into gold, there were also those who tried tirelessly to convert common coal into diamond. While the former can be done at a steep cost in today’s highly advanced particle accelerators, the latter has seen a remarkable evolution over the centuries into what has become today’s affordable lab-grown diamonds.
In the late 1700s, scientists discovered that diamonds were pure carbon, so some enterprising souls tried myriad techniques, including crushing coal, to create the colourless gem. As the knowledge of physics and chemistry advanced, so did experimentation with creating diamonds. Among the early scientific attempts were those by French chemist and Noble laureate, Ferdinand Frédéric Henri Moissan in the late 19th century. He tried using his ground-breaking electric arc furnace to generate enough temperature and pressure to grow a diamond. Alas, his technology fell short, but his research eventually led to the creation of another gem, named moissonite in his honour.
Fast forward to the 1950s. A physical chemist named H Tracy Hall worked on General Electric’s “Project Superpressure,” designed to create the first lab-grown diamonds (LGDs). After a number of failed experiments, Hall modified the equipment and, in 1954, succeeded in creating the first man-made diamond. He later left GE and went on to co-establish the LGD company MegaDiamond, which is still in existence.
Over the last few years, the growing willingness of consumers to embrace man-made gems resulted in a surge of LGD manufacturers and jewellery designers/brands. Although the sector is relatively small—around US$1.9 billion, with 80 per cent consumed in the United States—industry analyst Paul Zimniskypredicts that LGDs will reach US$15 billion by 2035.
Star power has also helped to get the LGD message out. Celebrities such as Leonardo DiCaprio have endorsed the Silicon Valley lab-grown producer, Diamond Foundry, which also collaborates with several designers to feature their created gems. Another manufacturer that heavily promotes LGDs is Lightbox Diamonds, owned by ElementSix, a company in the De Beers group. Some industry watchers feel that, by entering the LGD sector, the mined-diamond giant can have its cake and eat it too, profiting from the high-end mined-diamond trade while cashing in on—and exerting influence over—the more moderate fashion jewellery segment that has gravitated toward LGDs. In addition to colourless LGDs, Lightbox also creates pink and blue man-made diamonds, while promoting rings with fashion designs.
An effective marketing effort for lab-grown stones can be seen at Swarovski and the masterful branding strategy of Nadja Swarovski, the brand’s fifth-generation executive. Once known as a crystal company, the brand today derives 80 per cent of its revenue from jewellery. After the launch of Atelier Swarovski in 2007, Nadja collaborated not only with iconic fashion brands and Hollywood celebs, but also famous jewellery designers. In 2018, one of her first collaborations involving LGDs was with luxury designer Stephen Webster. Explaining his desire for a greener earth, Webster uses recycled 14-karat gold and small, colorful and conflict-free Atelier Swarovski-created diamonds for this collection. Among others to join the be-kind-to-Mother-Earth movement is PenelopeCruz, often seen on the Red Carpet dripping in jewels, who began collaborating with Atelier Swarovski in 2019 with her own line of LGD jewels. Atelier Swarovski recently launched sixteen colourful man-made diamonds with such descriptive names as Gothic Cognac, Cubist Sky and Draped Fire. The company offers a combination of lab-grown colourless and coloured diamonds as well as its iconic crystal in addition to several types of mined gemstones.
Lab-grown diamonds have also entered the mass-market space with such mega-retailers as Signet Jewelers, purportedly the world's largest retailer of diamond jewelry and the largest specialty jewelry retailer in the United States, UK and Canada. Its brands include Zales, Kay Jewelers, Jared, H Samuel and others, which have been selling LGDs for more than a year, in several price points and styles. Not to be outsold, the US mega-chain Helzberg Diamonds also introduced its own created diamond called ALTR, in an exclusive license with New York wholesaler, R A Riam Group.
One of the marketing strategies for some LGD growers is the assertion that they are more “eco-friendly” than mined diamonds. Claims that LGDs have a nearly zero-carbon footprint are based on the assumption that the grower uses renewable energy. Since most LGDs are created in China (56 per cent of worldwide production) and India, these growers are more likely to use coal-based electricity, with a large carbon footprint. The argument that LGDs are “conflict-free” and “sustainable” is a stronger one, and obviously mining is not good for the planet. Mines scar the land, destroy eco-systems and displace local populations. On the other hand, mines provide employment. Clearly, the “eco” argument is nuanced.
Another marketing strategy is price, which is based on margins. When analyzing the wholesale and retail prices of unbranded man-made and mined diamonds, Zimnisky indicates that the retail gross margin of LGDs in popular sizes is as much as 1.8 times that of their mined counterparts. He notes, that a “retailer would theoretically only have to sell US$5,000 worth of man-made diamonds to generate the same gross profit as selling almost US$10,000 worth of equivalent natural diamonds.”
According to Bain & Company, the cost to make a lab-grown diamond in 2018 fell from US$500 to $300 per carat, compared with US$4,000 per carat 10 years earlier, and manufacturers continue to see a deep drop in production and operating costs. One advantage, too, of LGDs is the potential for creating popular sizes and cuts. “Consumers get the size, quality and brilliance, at a value that fits with their lifestyle,” says Amish Shah, CEO of ALTR.
As LGDs gain market share, the Federal Trade Commission in the United States has warned sellers that disclosure is an essential part of their business. For lab-grown stones to have a healthy future—and the future seems bright—they must be clearly labelled as such, with consumers understanding exactly what they are buying. As the jewellery industry constantly evolves, LGDs should not be seen as a threat to mined diamonds. There is space for both.
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