Mixed messages: Wading through the lab-grown diamond debate
by jacquie_dealmeida | June 14, 2016 9:00 am
By Jacquie De Almeida
The 4 Cs are usually part of the selling process when it comes to diamonds, but at Toronto’s Fair Trade Jewellery Co., you can add ‘3P’ to the conversation.
As a triple bottom line company, the atelier operates on the ‘people, planet, profit’ business model, which encourages social responsibility and sustainability. So when colourless lab-grown diamonds could be created similar in quality to their natural counterparts, the company decided to add them to their product offering.
“We had been looking at lab-grown diamonds for a while,” says Fair Trade co-founder Ryan Taylor. “The idea we could offer diamonds that are unmined fit with our portfolio quite well. For us, it’s about giving people a choice as to what they want to prioritize. Visually, the difference between a machine making something and digging a giant hole is pretty significant, and a lot of our customers respond to that.”
And it appears others have as well. When Oscar-winner Leonardo DiCaprio announced he was one of 10 investors in California-based Diamond Foundry, the lab-grown diamond industry suddenly went mainstream. Consumer media was taking notice of a product that had been the subject of much debate in trade circles for the last several years, though mostly due to the issue of disclosure and maintaining consumer confidence.
Think positive
DiCaprio’s backing of lab-growns quickly drew criticism from the trade for saying they reduce “the human and environmental toll of the diamond industry by sustainably culturing diamonds without the destructive use of mining.” His comments set off a slew of open letters to the superstar, notably from Martin Rapaport, who took issue with the idea lab-grown diamonds, in DiCaprio’s views, are less harmful, ignoring the fact the natural diamond industry supports the livelihood of millions of artisanal diggers in Africa.
The negative marketing surrounding lab-grown diamonds is a point of concern for many, given it elevates them as a more ethical choice, while diminishing the value of natural diamonds. Mel Moss, president of Regal Imports in Vancouver, sells both lab-grown and natural diamonds. He says a marketing message built on the so-called ethical superiority of lab-growns may actually work against itself. Likewise, he says the natural diamond industry should not impede the marketing of man-made diamonds.
“Marketing is everything with lab-growns, and if you promote them by saying they don’t ruin the land or they’re more ethical, of course that type of marketing turns people off buying natural diamonds,” he says. “But the interesting part is that natural diamonds are the basis of the lab-grown diamond business, and if people don’t want to buy a natural diamond, why would they want to buy a lab-grown. This type of marketing is destructive to all forms of the diamond business, lab-grown and natural.”
Promoting lab-grown diamonds to consumers is one of the primary objectives of the International Grown Diamond Association (IGDA), although one of its members—Diamond Foundry—has also engaged in a war of words with Rapaport over the ethical value of one diamond over the other. Originally comprising about 10 companies, IGDA now counts close to 20 members, including Fair Trade Jewellery.
Taylor agrees with Moss that negative marketing is harmful. “That’s not how we position them at our atelier,” he says. “It hurts the entire industry to say natural diamonds are bad because customers would then question buying either of them. Consumers just want to make sure they’re educated at retail—that’s the difference between good retail and bad retail.
I think the fear in the industry is, what happens when bad retailers flood the market with lab-growns, which is a valid argument.”
A choice in the matter
Positioning lab-growns as another choice can help create a balanced marketing message, says Moss. “Saying they’re less expensive by 30 per cent is one way to do it,” he explains. “To market diamonds, we need to talk about them in positive terms. The jewellery industry can destroy itself by being shortsighted and negative. If we don’t start talking positive about all components of jewellery instead of putting each other down, sooner or later, the negative talk will hurt the industry in the long run and decrease desire for diamonds.”
Pure Grown Diamonds president and CEO Lisa Bissell says the company positions lab-growns as conflict-free and eco-grown, and works to ensure consumers understand the stones are optically, chemically, and visually identical to a mined diamond.
“The only difference is the point of origin—instead of being from below the ground, lab-grown diamonds are grown above the ground,” she says. “It is helpful to offer the analogy that a rose grown in a greenhouse is just as beautiful as one from the garden.”
In 2014, Natural Diamond Monitoring Committee (NDMC)—which was co-founded by Gem and Jewellery Export Promotion Council (GJEPC)—reported the annual production of gem-quality rough synthetic diamonds was less than 350,000 carats, compared to more than 125 million carats comprising production of natural gem-quality rough.
Carl Lehnhardt, director of diamonds at Stuller, says less than one per cent of the loose diamonds the company sells are lab-grown. Although the U.S. jewellery manufacturer has only been offering the stones since March, Lehnhardt says he doesn’t see lab-growns accounting for more than 10 per cent of Stuller’s diamond sales when it peaks.
“Lab-grown diamonds are here to stay, but none of us really know where the top is,” he adds. “For lab-growns as an industry to outpace mined diamonds, you would have to have hundreds of thousands of CVD machines running 24-7.”
Like Fair Trade Jewellery Co., Stuller is positioning lab-grown diamonds as a choice, says its vice-president of diamonds and gemstones, Stanley Zale.
“The value of a lab-grown is derived from the value we put on a natural diamond,” he said. “If we’re going to go around and bash natural diamonds, then I don’t see that as being productive and enhancing the value of lab-growns.”
Taylor estimates lab-grown diamonds account for about 30 per cent of his sales, although he says customers tend to lean toward buying natural diamonds in the bigger sizes. Fair Trade’s selling process, however, is not about pitting one option against the other.
“We present both lab-grown and naturals at once as a bit of an à la carte menu,” Taylor explains, adding consultations can sometimes take several hours. “We spend more time educating the customer than we do selling them.
“The jeweller has gotten away from being a trusted advisor about a very precious item and shifted toward moving goods, rather than providing a luxury service around those goods. If a retailer has a culture of dialogue, then any product that has a deeper conversation associated with it is going to be an easier sell for them.”
Can’t sell from an empty wagon
Moss says he’s received a few calls from Canadian retailers looking to buy a lab-grown diamond. Most of the time, it’s because the consumer has come in looking for one, rather than the store promoting them.
“Canadian retailers are more afraid of them than they are of seizing an opportunity,” he says. “Consumers don’t ask for a product you don’t display. If you want to make an opportunity for yourself, you don’t wait for your customer to come in and ask you for something. You promote it. As my father used to say, ‘You can’t sell from an empty wagon.'”
Zale says changes in consumer preferences and shifts in the market are inevitable. “Regardless of what business you’re in, you always have to look over the next hill and over the horizon to see what’s coming next,” he says. “This is an industry that is steeped in tradition in so many ways, but when I look back over the last 30 years, there’s been nothing but change.”
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