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LABORATORY-GROWN DIAMONDS

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2022 IS BEGINNING TO LOOK LIKE A BANNER YEAR
FOR LABORATORY-GROWN DIAMOND PRODUCERS

 

It’s looking like a banner year for the laboratory-grown diamond sector, which could be one of the few jewelry industry categories to benefit from the current Ukraine crisis, and the consequent efforts by many in the industry to create daylight between themselves and the Russian rough producers.

In a recent article published by National Jeweler, two leading industry analysts agreed that sales of lab-grown stones are likely to increase substantially in 2022, with Edahn Golan stating that they could account for a 7 percent market share, and Paul Zimnisky being even more bullish, saying that they could climb as high as $8 billion this year, approaching 10 percent of the total diamond market.

That’s a far cry from before 2018, when lab-grown diamond jewelry sales were estimated be less than $1 billion, or not much more than 1 percent of the total global diamond jewelry market. Golan’s stated that in for 2018 have lab-grown diamonds accounted for fewer than 1.5 percent of all diamond sales by specialty retailers in the United States.

Speaking in April to CNN Business, Golan noted that the data showed that the number of engagement rings featuring lab-grown diamond sold in the United States rose by 63 percent in March, when compared to the same month in 2021. The number of engagement rings sold with a natural diamond fell by 25 percent, he said.

In February, Golan added, the rise in engagement rings set with lab-grown stones were up 80 percent, while rings set with natural diamonds were down 13 percent.

“The big fear in the natural diamonds industry is that consumers will start accepting lab-grown diamonds in engagement rings,” Golan told CNN. “It’s actually happening.”

As result of a perceived public opposition to buying jewelry set with diamonds of Russian origin, some jewelers who were earlier were disinclined to include items set with synthetics are now prepared to consider otherwise.

AVOIDING GOODS OF RUSSIAN ORIGIN

There are a good many reasons for the sudden popularity of lab-grown stones, some economic and others cultural. But the Ukraine crisis certainly has exacerbated the situation.

With public sentiment in the major markets clearly favoring the Ukraine, as well as punitive economic measures being leveled against Russia, consumers who previously may not even have realized that a substantial portion of the jewelry they buy are set with diamonds mined in the country are now taking more interest.

At the very least, that is what retail jewelers are concerned about. As a result, some jewelers who were earlier were disinclined to include items set with synthetics in their display cases are now prepared to consider otherwise.

Simply stated, from a jeweler’s perspective, it is considerably easier to ensure that a diamond is not of Russian origin if it is known to be synthetic, than a natural diamond of unknown origin. This is especially the case with melee, where a higher percentage of the goods coming onto the market were being supplied by the state-controlled Russian mining company, Alrosa.

MORE INCLINED TO CONSIDER LAB-GROWN

But that’s not the only reason to favor lab-grown stones, especially where sales to younger consumers are concerned. Buoyed by the vocal support of jewelry brands popular with Millennial and Gen Z buyers, with Pandora and Brilliant Earth prominent among them, the message that laboratory-grown diamonds are more environmentally friendly has clearly resonated. This is in spite of the fact that there still is inconclusive evidence for such a claim to be made.

But it’s not only the progressive brands that are being transformed, but the established brands as well. In her March earnings call with market analysts, Virginia Drosos, CEO of Signet, said that lab-created diamonds are among the big jewelry trends she expects this year. The company is expanding its laboratory-grown bridal jewelry selection in both its Zales and Kay Jewelers subsidiaries, in response to increased demand, she noted.

It is also worth noting that the larger sales of laboratory-grown diamonds in terms of U.S. dollars means considerably more sales in terms of carats, given the already substantial price difference that today between synthetic and natural goods. Cost, too, is clearly an incentive to buy lab-grown, particularly during an inflationary period, when consumers are more price conscious.

Speaking to CNN, Golan noted the price differential. The average retail price of a 1-carat round diamond engagement ring in the United States was $2,318 in March, he said, which is 73 percent less than what was paid for the equivalent ring set with a natural diamond, which was $8,740.

Younger consumers are generally more attuned to claims that lab-grown stones are more environmentally friendly.

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