Lab-grown Diamond Industry Becomes More Efficient
As the holiday season approaches, producers of lab-grown diamonds come up with ways to boost the sales and increase the efficiency of their production, while battling the decline of price points. Jewelry items with lab-created gems are expected to be the essential holiday gifts this Fall and Winter, and the companies behind them put an effort into making sure of that.
According to recent reports, around 50% of all engagement rings sold in the US are set with lab-grown stones. This is a great achievement for the industry that nobody took seriously merely 5 years ago. Customers tend to choose the LGDs either because of the sustainable production, or - what’s more often - significant price difference. However, while lower prices help attract the consumers to the jewelry stores, they can also become a matter of concern for some retailers. “How can I keep my margins the same if the prices keep going down?” This is a rather fair question, especially if we take into account the price drop of approximately 40% that the mined diamond market experienced over the past two years.
Lab diamond producers brought forth a few ways to battle this: from putting a lot of effort into building up the brand names to making luxury lab-grown diamond items that can’t be achieved with the mined gems. However, their main goal is to prevent oversupply. The balance of demand and supply is what keeps the markets steady and profitable, and this is exactly what the lab-grown diamond industry is working towards.
The 2 week Summer vacation was introduced to the Indian LGD cutting facilities this year. It was successfully implemented twice already - in May and in August. Factories halted production for 15 days to stop the threat of oversupply. They successfully managed to not only stabilize prices, but actually increase them before the hot season - both at the wholesale and retail levels. These actions will certainly help jewelry retailers maintain their profits during the upcoming holidays and may lead to an even bigger promotion of lab-grown diamonds for the final consumers.
At the same time, the mined diamond industry still sees the rise of the lab-grown diamonds as a threat, trying to stop it where it can. For example, the Natural Diamond Council recently made a complaint to remove the LGD brand ad from the internet, citing the false marketing. However, the better strategy would be adopting some of the innovations. Yes, lab-created gemstones have changed the paradigm and are forcing the mining industry to adapt. Still, this is not a bad thing, if in the end both markets are able to rise. In fact, several large mined diamond companies used the same practice of Summer vacation at the cutting facilities last month, so we may see the supply and demand starting to balance each other out for them this year.
However, the halt in production doesn’t mean that jewelers or consumers would have to wait longer for the diamonds to get into their hands. The International Gemological Institute introduced the mobile labs that would operate inside the high-volume growing factories to make the certification process faster and more efficient. A few years ago, the producers had to wait for around two weeks for a diamond to be graded and certified. And now it can be done in a matter of a few days. There are already 13 mobile labs operating in several countries, and IGI plans to increase its presence. IGI’s revenue from grading the lab-grown diamonds has increased twice over the last 3 years, and now accounts for about 60% of their total revenue. So it only makes sense from both financial and efficiency perspectives to cut time required on certification. At the end, all of the parties - the laboratory, the grower, and the client - get happier.
What is undoubtful is that the fast rise in popularity of lab-created diamonds brought a new injection of ingenuity into the whole jewelry industry. Experts at every stage of the diamond pipeline are now looking for new ways to create and promote, and thus the industry is moving forward and getting ready for a new type of consumer. But the LGD companies don’t have to stand in the opposition to the mined diamond industry. The best course of action is to work together towards the stabilization and increase of the diamond and jewelry markets. Lab-grown diamonds are not the replacement, but just an additional option that at the end of the day only helps the retailers attract the customers and make the sales.
