Jeweller - July 2022

Editor’s Desk
When the window of opportunity opens,
don’t pull down the shade
The conflict between Russia and Ukraine has handed the lab-grown diamond industry a unique opportunity.
ANGELA HAN says making the most of these once-in-a-lifetime chances is how history is made.
Timing is everything in business and right
now, the diamond industry finds itself in
critical territory.
Taking advantage of unexpected and
surprising societal changes, often
generated by external market forces, has
been part of the key to the unpredicted rise
of many, now-legendary, businesses.
With Russia being excluded from significant
sectors of international trade, perhaps there
is a lesson from history to be remembered
for lab-grown diamond suppliers. For
example, in the 1950s, three major US car
manufacturers – General Motors, Ford, and
Chrysler – ruled the roost and dominated
the domestic market.
In the US, bigger was always better! Efforts
to design and manufacture smaller and
more fuel-efficient vehicles were as far
removed from a priority as can be. This
manufacturing mindset continued through
the 1960s before slamming into a brick wall
in 1973 when OPEC, led by Saudi Arabia,
declared an oil embargo targeting Canada,
Japan, the Netherlands, the UK and the US.
The US retail gasoline industry was forced to
begin a national rationing program at petrol
stations. They would display a green flag if
they had petrol to sell. A red flag, well, that’s
obvious. Within months of the embargo, the
price of oil had risen by nearly 300 per cent.
Another restriction would follow in 1979,
causing dramatic changes in approach to
the global economy.
These circumstances were a disaster
for General Motors, Ford, and Chrysler,
as domestic car dealers began to report
consumer resistance towards Detroit’s
‘gas-guzzling’ vehicles.
Feeling the pinch of expensive fuel for the
first time, and terrified of the prospect of a
global recession, consumers went in search
of vehicles a little kinder to the hip pocket.
Saving money was the aim, especially if the
product essentially did the same thing –
getting you from point A to point B.
These circumstances opened the door
for Toyota.
As the oil crisis continued to send
shockwaves, consumers increasingly
favoured vehicles such as the Toyota
Corolla – designed with fuel efficiency in
mind – and today, the Corolla is the world’s
all-time best-selling automobile by units,
with more than 50 million sold.
Toyota capitalised on an opportunity, created
by geopolitical factors far beyond its control,
and as a result grew into a company that as
of today, is the ninth-largest in the world.
Talk about luck and good timing!
The perfect storm
With manufacturing capability and quality
on the rise, the timing has never been better
for lab-grown diamond suppliers to grab a
larger slice of the pie.
Jewellers we’ve spoken to in recent weeks
have reported that it’s more likely to be
younger people visiting stores who are
increasingly curious about lab-grown
diamonds.
For some, the messaging around labgrown
diamonds being the ‘environmentally
friendly’ alternative to practices such as
mining has hit home, even if not true.
Younger consumers are attracted to
products offering sustainability, even if the
facts don’t support the belief, while others
suggested that social media has played a
big role in a change in mindset.
Lab-grown diamonds can allow consumers
to buy a physically bigger stone at a cheaper
price tag. The larger the diamond, the easier
it is to photograph with a smartphone for an
Instagram or Facebook upload.
Jeweller has been monitoring search
engine data for many years and has verified
a steady increase in ‘digital interest’ in labgrown
diamonds in the lead-up to the start
of the war in Ukraine. Russia’s invasion,
and the resulting economic upheavel –
especially in the diamond industry – has
resulted in the term ‘conflict diamonds’ reemerging,
thereby pushing new consumers
in the direction of lab-grown diamonds.
However Jeweller’s research shows that
the interest in man-made diamonds was on
the increase long before the first shots were
fired in February, and long before the first
sanctions were put in place.
It’s important, of course, to remember
that keyword search engine data trends
are simply that – data. It does not
differentiate between users or intent. That
is, we can’t tell the difference between a
customer poised in front of a laptop, credit
card in hand and, say, someone searching
reasons for why they should not buy a labgrown
diamond!
And while those
heavily invested
in the success
of lab-grown
diamonds might
see the economic
upheavel as
pennies from
heaven, they
would be well
advised to
remember that
windows can
eventually
slam shut.
However, they both gain a search result
and contribute ‘data’ to a trend. Not all
individual searches are equal in the grand
scheme of things.
Nonetheless, it’s an intriguing piece of a
larger puzzle.
Nothing lasts forever
And while those invested in the success of
lab-grown diamonds might see the economic
upheavel as pennies from heaven, they would
be well advised to remember that windows
can eventually slam shut.
Ask any stock market investor about ‘trend
reversals’. In fact, that have a name and
measure for it - Relative Strength Index.
The first oil crisis began in October of 1973.
While the market experienced shockwaves
for years to come, the embargo was ended in
March of 1974 – less than a year later.
As previously mentioned, a second oil crisis
took place in 1979 which started as a result of
the Iranian Revolution. The price of crude oil
increased over a 12-month period and once
again the US was subjected to long lines at
petrol stations and waves of fuel shortages.
After 1980, fuel prices experienced a steady
decline over the next two decades, bar a
brief rise during the Gulf War. These two
windows of opportunity were all it took to
cripple the US car manufacturing industry
and elevate Toyota to one of the world’s
largest companies.
One year after the Iranian Revolution,
Japanese car manufacturers had surpassed
Detroit’s total production and had become
number one worldwide. Two small windows
of opportunity and history is changed forever!
Not all trends last forever. Need an example
of trends reversal closer to home? The
SWATCH watch phenomenon of the 1980s
ran it’s course demonstrating that good
things can come to an end. That is especially
so when your competitors start to fight back!
Will lab-grown diamond manufacturers
follow suit and make the most of their
unexpected window of opportunity?
Who knows? And only time will tell, but we
can’t assume the natural diamond suppliers
will sit on their hands doing nothing because,
after all, it is hands that close a window.
Angela Han
Publisher
July 2022 | 11