Jeweller - October 2022

OPINION
Soapbox
Forecasting the future
in times of great change
The international diamond industry is undergoing a period of significant change.
PAUL ZIMNISKY outlines his vision of the future.
Fellow New Yorker Bob Dylan once
famously sang ‘the times they are
a-changin’ and for the international
diamond industry, those words are
poignant in 2022 and beyond.
The industry is undergoing a significant
period of change as pressure is applied
on a range of fronts, including but not
limited to the rise of lab-created diamonds,
geopolitical forces, and changing
consumer mindsets, namely concerning
environmentalism.
For those operating in the retail sphere,
keeping abreast of the changes that will
come in the next five years is paramount.
Prices
In general, I believe natural diamond
prices will be higher and lab-created
diamond prices will be lower by the
time we reach 2027.
Perhaps most importantly of all, the
differentiation between the two products
will be more apparent in the eyes of
consumers five years from now.
Speaking of natural diamonds more
specifically, most medium and larger
stones will likely be sold with a certificate
of origin, and the supply chain will be
bifurcated between Russian and non-
Russian goods.
Speaking to lab-created diamonds more
specifically, there will be more products
sold the way that Lightbox is – fashion
jewellery sold in linear price points.
As far as new products, I am of the opinion
that we will see lab-created diamond
jewelry that is available in shapes,
sizes, and colours that is not possible
or economic with natural diamonds.
For example, all-diamond rings and
diamonds shaped as symbols, or perhaps
as alphabet letters or zodiac signs. These
will be available in many different colors.
Also, I predict that we will see a lot more
companies offering websites that allow
customers to design and create their own
custom jewellery in the coming years.
Lab-created diamonds
Since lab-created diamonds have
become more mainstream over the past
six or seven years, their availability and
distribution has been intricately connected
to supply. However, in recent years, levels
of production have exploded, primarily in
China and India.
So, going forward it is going to be a lot
more difficult to track lab-created
diamond supply and sales, especially as
more product is sold globally and on
online marketplaces such as Amazon
and Walmart in the US.
I am forecasting that global lab-created
diamond jewellery sales will exceed 10
per cent of all diamond jewellery sales for
the first time this year, with the share even
larger in the US.
That share will continue to creep up over
the next five years, however, at a slower
pace than in the past, as consumers
perceive the products as being less
substitutable.
One eye on India
The trend of lab-created diamond prices,
both as a standalone product and relative
to natural diamond prices, has been down
and to the right since 2015 or so. That trend
remains intact.
Higher energy prices globally could put
some stabilisation in nominal lab-created
diamond prices in the short term, as that
input cost is passed on from the producers,
however, longer term I still see lab-created
diamond prices aligning more with the cost
of production, and not with that of natural
diamonds, which is lower than where we
are today.
In the coming years, an important supply
catalyst will be the Indian government’s
For the natural
diamond
market,
continuing
to improve
supply chain
transparency
and increasing
spend on
category
marketing are
the two key
items to
focus on.
move to finance Indian lab-created
diamond producers with loans to be
used to purchase capital equipment,
for example CVD reactors.
The Indian government sees this as a way
to stimulate exports. This is likely to lead
to a further boom in lab-created diamond
production volumes.
So, I expect supply volumes to continue to
ramp up, while relative prices continue to
retreat.
Where to from here?
For the natural diamond market,
continuing to improve supply chain
transparency and increasing spend on
category marketing are the two key
items to focus on.
There is a relatively straightforward
solution to most of the natural diamond
industry’s biggest challenges.
If a consumer knows the source of their
natural diamond – most importantly
confirming that it is not a ‘blood diamond
– then that provides a story and most
importantly, a point of differentiation from
that of a lab-created diamond.
As far as marketing, anyone that has
followed this industry for long enough
understands how instrumental effective
marketing is.
The diamond industry lost its way a little bit
in this area over the past decade and the
prior, however, I sense that things are back
on track with the Natural Diamond Council
and the work that they are doing.
The rest of the industry should support and
contribute to this initiative when possible
as everyone will benefit longer-term.
Name: Paul Zimnisky
Business: Paul Zimnisky Diamond Analytics
Position: Independent analyst
Location: New York City, US
Years in the industry: 8
74 | October 2022