Jeweller: The Great Diamond Debate - Round II

DIAMOND SUPPLIER
Is the ostrich finally lifting its
head out of the sand?
DROR YEHUDA’S KEY POINTS:
The problems in the natural diamond market cannot simply be blamed on lab-grown diamonds taking market share
Fierce ideological opposition to lab-grown diamonds is beginning to fade as the financial benefits become clear
Independent jewellery retailers in the US are embracing lab-grown diamonds and have seen positive results
It’s a myth that, when faced with danger,
ostriches bury their heads in the sand. In fact,
they usually face the threat head on.
Yet the ‘political’ leadership of our diamond industry
behaved like the metaphorical ostrich when they
tried to convince themselves that lab-grown
diamonds would not threaten the existing market.
They thought that they could make believe that
lab-grown diamonds are not ‘the real thing’ and that
people would understand. The thinking was, ‘All we
need to do is explain the difference to consumers.’
Trying to fight new technology has always failed.
Trying to do it in our era – when news travels from
one side of the world to the other in nanoseconds –
is Mission: Impossible.
I, unfortunately, think that the ‘politicians’ who lead
the industry made every possible mistake trying to
fight the lab-grown market.
The only little hope for me is that the Diamond
Producers Association (DPA) has finally begun to
advertise diamonds to the world.
In my opinion, the economic downturn in the
diamond industry began about 15 years ago when
De Beers decided to end its international marketing
and advertising campaigns.
We have to understand that if Coca-Cola stops
advertising today, it will continue to have great sales
for a few years – but at some point in the future it
will lose market share.
“Prophecy was given to the fools,” so says an old
Jewish idiom, so I won’t try to guess the future.
Nobody knows if lab-grown stones will take over
the natural diamond market; it may be considered
a part of that market or it may be a totally different
category. The jury is still out. I will, however, take a
small risk saying that lab-grown diamonds are here
to stay.
THE QUESTION OF PRICE STABILITY
As frequently occurs with new technology, the
prices of lab-grown diamonds keep dropping and
each time we see a price drop we think that it
cannot go lower – but it does.
Prices of natural diamonds have also dropped in the
past few years and again, we always have the feeling
that it has reached rock bottom, but it never does.
Is there a connection? There must be.
The lab-grown product has taken over some
percentage of the market, which means that
the natural diamond market has lost that
same percentage.
This change may have affected the price of natural
diamonds. There is no doubt that the price of
smaller diamonds has fallen since lab-grown
diamonds entered the market.
In other size categories, the price decrease can be
attributed to a shrinking market share.
However, I don’t see how the lab-grown diamond
market affects 10-carat D FL prices, which have
fallen by almost half in the past few years.
So, there is a connection between the two worlds,
but I believe that the real problems of the diamond
industry are far greater than to simply blame labgrown
diamonds for taking market share.
PROBLEMS – AND SOLUTIONS
The industry is in very bad shape. There are
hundreds of empty offices in the diamond
exchange buildings in Ramat Gan, as well as
many offices in New York’s diamond district.
Antwerp is a ghost town and in Surat, where there
used to be almost a million diamond cutters, more
than half are now unemployed.
The US has seen more than 5,000 jewellery stores
close in the past five years.
Four years ago, a new product – lab-grown
diamonds – entered the market that can help
people make a living. So, who has adopted it? Many
US independent jewellers! These smart people have
decided that instead of going out of business, they
will offer their customers lab-grown diamonds – and
they’ve done so successfully.
As far as I am aware, to date, no jewellers who
adopted lab-grown diamonds have closed
their doors.
Guess who tells them, ‘Don’t do it, it will ruin us’?
The ‘politicians’ leading our industry, that’s who!
December 2019 Jeweller 32