Jeweller - October 2022

Understanding Uncertainty| DIAMOND FEATURE
L to R: Natural diamond roughs; Lab grown diamond rough
Courbet
“[In the meantime] Lab-created diamond supply will
continue to increase as new players keep entering the
space and as existing producers ramp up production
capacity and relative yields.”
Revisiting the issue in September, Zimnisky says retail
performance during the holiday season will understandably
have an enormous impact on how 2023 unfolds.
“I think that current circumstances could benefit non-Russian
producers simply given the supply and demand balance. For
example, the ‘West’ represents around 75 per cent of global
end-consumer diamond demand, but only 65-70 per cent of
global diamond supply comes from non-Russian sources.
“Given the global macro-economic conditions and China’s
zero-COVID policy, demand and sentiment in the industry has
cooled in recent months, which has taken some pressure
off of the supply situation. However, if we have a holiday
season that is anywhere on par with that of last year, I think
the industry will run into natural diamond shortages as the
industry restocks in early 2023.”
Brighter outlook
Edahn Golan explored the battle between natural
diamonds and lab-created diamonds in his report Lab
Grown: All Fears Materialised.
“The diamond industry as a whole, natural and lab grown,
has a lot on its plate,” he said.
“Both have financial issues to resolve, both need to
improve their relevance in the eyes of consumers, and both
need to ensure they are acting ethically and sustainably.
“No one side can claim sainthood and simply point
blamingly at the other.
“The good news is the growing competition between the
two is also forcing them to up their game. In that regard,
this is a very welcome outcome.”
One crucial battleground between the two products
continues to be marketing.
Lab-created diamond manufacturers were quick to begin
selling the product under the mantle of ‘environmentally
sustainable’ – regardless of whether or not their claims
were accurate or truthful. Experts are urging natural
diamond companies to begin marketing diamonds and
diamond jewellery under a new unique narrative.
“Over the last few decades I think the natural diamond
industry lost its way by allowing its product to sell at lessthan-premium
price points,” says Zimnisky.
“Diamonds arguably fall into the category of a ‘Veblen
good’, meaning the higher the price the more desired they
become. Natural diamonds should be marketed as the
highest-end luxury item you can buy, and higher prices
Talking Heads
Chaim Even Zohar
IDEX Online
"Twenty-twenty always
had a nice ring to it, and
in the run-up to it, many
entities, both companies
andinternational bodies
drew up their vision
statements. However,
2020 turned out to be
quite the contrary and
will be remembered for
a long time for all the
wrong reasons."
David Kellie
Natural Diamond Council
"The industry is not
yet stepping up and
recongising that we
cannot be a successful
industry in a luxury
market without more
aggressive support
behind diamond
category marketing."
Pranay Narvekar
IDEX Online
“2021 helped the
industry 'right-size' its
inventories and bring
the overall business
model back in line with
what it should be."
support this perception.”
Golan says that the lab-created diamond industry will need
to adopt similar tactics if it is to survive.
“Lab grown is very much sold as the ‘other diamond,’ often
using negative context. A marketing program based on
the - real or not - shortcomings of the original product is
unsustainable,” he says.
“To succeed, lab grown needs to develop its own distinctive
story. It’s not ‘forever’ or a creation of nature. And to be
honest, ‘sustainable’ is not only a negative reference to the
competing product, but it will also hopefully be a given in
all aspects of our lives.”
He concludes: “Its physical attributes will soon be less of a
story too. Once all lab grown are D colour and flawless, the
only differentiating attribute will be brand. And brand is a
story. Until lab grown secedes from natural, it will continue
sinking in value: both monetary and perceptional.”
The Natural Diamond Council (NDC) is one organisation
hoping to boost the public image of diamonds and diamond
jewellery, beginning with a recently launched campaign
featuring UK actress Lily James.
NDC CEO David Kellie says he fears the wider industry still
fails to understand the importance of marketing. “I don’t
believe that our industry institutions understand the downside
of not supporting category marketing,” he says.
“The industry is not yet stepping up and recognising that
we cannot be a successful industry in a luxury market
without more aggressive support behind diamond category
marketing.”
Wake up call
The fight between champions of natural and lab-created
diamond networks is arguably as heated as ever and the
tension exists for a good reason – livelihoods remain at stake
and with the jewellery industry one of only a few industries
where family connection to business remains strong, concepts
of lineage and tradition are also at stake.
For those concerned about the future, Rapaport has a simple
message.
“By the way – don’t freak out everybody, this is the way the
world works,” he advises.“You’ve got winter and you’ve got
summer. Nobody is surprised when it’s hot in the summer
and cold during winter.
“We need to get used to the fact that things work in cycles
and that we are now involved in a far greater economic
system which involves factors such as inflation, interest rates,
disposable income and the wealth effect.
“Diamonds are ping-pong balls floating in the ocean, always
up and down, but hey - at least they’re floating!”
54 | October 2022