The topic of the sixth session was a question to which many in the industry would like an answer. With a title like ”Future of diamonds: Will the Indian consumer accept lab-grown diamonds?”, it was bound to be quite an interesting interaction.
The session was moderated by Pranay Narvekar, Partner, Pharos Beam Consulting. There were three eminent speakers in the panel — Chirag Soni, Co-founder and Director, SGL, and also one of the partners of RJIF 2020, Jignesh Mehta, Founder and MD, Divine Solitaires, and Jithendra Vummidi, Director, VBJ.
Starting the discussion Soni said, “Lab-growns are a new product, and going forward, they will create their own niche and space. They account for just 3%-5% of the total diamond market, but they are growing faster than the other categories, and probably that’s where the concern lies.”
Soni, however, advocated embracing change. He said while the natural diamond industry accounts for 95%-97% of the total market, and there is a great deal of romance around natural diamonds, environment-conscious consumers are increasingly embracing lab-grown diamonds. Sustainability is becoming very important for consumers in a world where social media ensures that information spreads very fast.
Sharing his thoughts, Mehta said, “The Indian consumer takes into account three attributes before buying a diamond. These are: art, represented by the beauty of a piece of jewellery, emotions, which encompass relationships, and value, which is the monetary worth of the asset. Those customers who value art more than the other two factors are the ones who are going for lab-grown diamonds. Then there is another set of consumers which want to balance all three factors. So, the industry cannot have a herd mentality, and we need to understand that we all are independent players and need to develop our own marketing tools to actually position the category for a specific set of customers. Hence, differentiation is key. I think regardless of whether we are dealing in natural diamonds, or lab-growns, what matters is the USP we create. I am of the opinion that both the natural and lab-grown diamonds can coexist in a retail outlet.”
In the middle of the session, Narvekar asked a question about the trust factor, and replying to him, Soni said that detection equipment will play a huge role in the classification of natural and lab-grown diamonds because if lab-growns have to co-exist with natural diamonds, they will need to be segregated at every single level.
Joining in the discussion, Vummidi said, “No matter how much we are against the lab-growns, there is no denying the fact that they have reached the market. But India is a country where people are culturally associated with jewellery, and it is passed down generations. In this scenario, I don’t know if lab-grown diamonds can really have that value for customers.”
At this point, Soni said, “About 2 million carat of lab-grown diamonds are being traded around the world, and pricing is a very important point. As of today, there is no resale value for lab-grown diamonds and overall prices have dropped over the last three years. But the last quarter has been very good, with prices for 1 carat plus size lab-grown diamonds having gone up.”
Vummidi added that if lab-grown diamonds have to be around, then there should be some differentiation in retail, both in terms of price and buyback. There should be at least a 25 per cent price difference, and buyback should not be allowed. He went on to say that the responsibility to ensure that these conditions are met should be that of the dealers and retailers of lab-grown diamonds.
“At the retail end, we have installed the Synthdetect machine in our showroom to segregate the lab-growns from natural diamonds. We have another machine in the back office to do the assortment, and we also send all our diamonds to GIA for Melee analysis service. It is very important that we deliver clearly-marked and segregated products to customers. We have a huge consumer base which depends on us to do our job to the best of our capability,” he added.
Retailers carry a huge amount of stock in natural diamonds, and they don’t want it to depreciate. Vummidi said that it is in the best interest of the trade that stock value remains as it is, because if it falls, the outcome will be detrimental to the lab-grown diamonds as well.