Lab-grown diamonds, the manmade alternative to naturally-grown diamonds, have faced an uphill battle to be recognized by the jewelry industry as an acceptable alternative to mined diamonds.
Now Pandora, the world’s largest jewelry company by volume, and Diamond Foundry, one of the nation’s leading producers of lab-grown diamonds, are out with news that prove the staying power and skyrocketing demand for a modern, affordable alternative to mined diamonds.
After years of being denounced by many as synthetic, fake and artificial, the industry’s trash talk was forced to end in 2018 when the FTC removed the word “natural” from its previous definition of a diamond: “a natural mineral consisting essentially of pure carbon crystallized in the isometric system.”
Now both lab and naturally grown “pure carbon crystallized stones” can be called diamonds. The only hitch is manmade diamonds must be clearly identified as such in advertising and labeling to distinguish them from the natural kind.
All the while, consumers have been clamoring for the stones that the industry rejected. Awareness of lab growns grew from virtually nil in 2004/2005, when MVEye conducted its first U.S. consumer study, to 80% in 2020. And in a just-released report, Europe isn’t far behind, with 77% awareness in France, Germany, Italy, Spain and Great Britain.
The consumer appeal is clear. Lab-grown diamonds are in every way, chemically and compositionally, the same as mined diamonds and they are graded by the same 4Cs industry standard –color, clarity, cut and carat weight. But – and this is the best part for consumers – they typically retail at a 30% or more discount off their natural diamond equivalent.
“Consumers already accept lab-grown diamonds in all channels,” remarks Marty Hurwitz, CEO of MVEye. “The roadblock to the success of this category has never been the consumer; it has been the trade.”
Seeing the writing on the wall, the industry has finally begun to open the doors to lab growns. DeBeers, the mined-diamond powerhouse that has exercised near-monopolistic control of supply and prices, launched its Lightbox Jewelry lab-grown collection aimed at the fashion jewelry market, but reserved its mined-diamonds for engagement, wedding and anniversary jewelry, the market’s cash-cow.
Signet Jewelers, the largest U.S. jewelry retailer and the world’s largest retailer of diamond jewelry, now sells them side-by-side with mined diamonds in its stores, including Zales, Jared, James Allen, and Kay Jewelers.
And in the last week, more barriers of resistance broke down. Pandora, the Danish jewelry manufacturer and retailer and the world’s largest jewelry producer by volume, though it trails Cartier and Tiffany in sales, just announced it would use only lab-grown diamonds worldwide by 2022, following an introduction of its first Pandora Brilliance lab-grown diamond collection in the U.K. recently. Pandora is famous for its collectible charm bracelets.
This follows news Diamond Foundry, one of the nation’s leading producers of lab-grown diamonds, secured $200 million in Series C funding from Fidelity, raising the company’s valuation to $1.8 billion.
The investment will be used to ramp up production to “mining scale,” CEO Martin Roscheisen told the Financial Times. The company aims to raise production to 5 million carats to meet increased demand for semi-conductors and its Vrai jewelry business.
Supply, not demand, has been an ongoing challenge for the lab-grown business.
Commenting on these two major lab-grown diamond industry announcements, Hurwitz says, “It’s a resounding affirmation of the category and it all happened in a seven-day time frame.”
Pandora follows its customers into a new category
Described on its website as positioned in the “affordable luxury segment of the fine jewelry market,” Pandora is taking “one small step” for the company, but a “giant leap” for the jewelry industry by committing to lab-growns for its future.
Before, diamonds never fit into the company’s promise to its customers, or in corporate-speak, it’s business model.
“We are very clear with the values that underpin the Pandora brand proposition – collectability, personalization and desirability. All three drive the idea of us helping people express themselves and whenever we branch out or stretch the brand, it has to fulfill these criteria to a degree,” Pandora CEO Alexander Lacik says.
“If you look to mined diamonds, their price points don’t fit the affordability metric,” he continues. “But now, with lab growns, their affordability allows us to present the allure of diamonds and broaden the access for many people. We talk a lot about democratizing the jewelry space in general and this gives us a way to execute that in an interesting way.”
Lacik foresees the Pandora Brilliance lab-grown diamond collection expanding its reach to the next generation of Pandora customers, all the while offering a sparkling new reason for its current customers to add to their collections. Previously, the company offered only a single charm with a very small mined diamond because of price constraints.
“We’ve been selling on average 50,000 pieces of this a year, but compared with the 50 million charms we sell, it was a fraction of a fraction of a fraction,” Lacik shares.
Now Pandora will be able to offer bigger stones in a wider range of jewelry pieces, including rings, bangles, necklaces and earrings set in sterling silver or solid 14K yellow or white gold.
The new collection will be themed around the infinity symbol, allowing the pieces to be collected and layered together. And the infinity symbol is wholly appropriate for the vision Lacik has for the new collection.
“We are trying to take the concept higher. It’s not so much about the stone itself, but rather the idea of infinite possibilities it represents,” he expresses.
The company’s commitment to sustainability is another factor that made lab-grown diamonds a compelling choice for the current moment.
“When I joined the company about two years ago, the sustainability agenda was not well articulated, though our founder [Per Enevoldsen in 1982] had it in his genes and to quite a large extent, our activities always were in the spirit of sustainability,” Lacik shares.
At the start, the company’s diamonds will be grown using 60% renewable energy, but with the goal to be 100% next year. It also is committed to using more recycled silver and gold.
Diamonds for all
Looking across the competitive landscape, Lacik sees Pandora’s move into lab-grown diamonds as opening the market up and exposing consumers to diamonds in a new way.
“I think this can lead to more interest for diamonds and help grow the whole category,” he says, noting that the purchase occasion for a Tiffany diamond engagement ring, for example, is very different from that for a piece of Pandora jewelry.
“We are not a niche proposition. We are a mass proposition,” he maintains.
In response to the mined-diamond interests emerging favorite argument against lab growns – that they don’t maintain investment value – Lacik counters that it’s important to recognize where the real value of any jewelry piece is in the eye of the consumer. And that is in the emotional value and personal meaning of the jewelry item to the individual, not the monetary sum of its parts.
Since its founding, Pandora has been all about creating jewelry items rich with emotional meaning at an affordable price.
“Take a bag of 100 grams of gold dust and a beautiful piece of jewelry that contains the same 100 grams of gold. The melting value of both are the same, but the associations that comes with beautiful jewelry is where additional value is created,” he says.
And Lacik has some final advice for the entire diamond jewelry industry, both lab grown and mined:
“Diamonds have been a business that have been purely mined for centuries. Then all of a sudden, there’s an alternative. It constitutes a threat and people start dressing up arguments to deal with the threat. But it’s safe to say that lab-created diamonds are here to stay. So we better figure out a way to coexist in a positive way together.”