Call them synthetic, lab-grown or man-made diamonds, these gems are growing in popularity and the technology to create them is advancing faster than ever before.
According to diamond industry analyst Paul Zimnisky, while this technology has been around since the 1950s, an unprecedented amount of capital has been invested in promoting lab-grown diamond production technology in recent years, aimed at improving the diamonds’ size, quality, and production costs.
This progress, he says, has affected not only jewelry traditions and consumer preferences, but also diamond application in a variety of non-jewelry-related industries, such as science and mechanics, but their future success will depend on branding, marketing, production economics, consumer perception of value, and underlying demand for diamond jewelry.
Branding and marketing have always been key to the success of luxury goods, especially diamonds and jewelry, where proper branding and marketing fosters consumer perception of value and prestige, and as a result – brand loyalty.
For lab-grown diamonds, being a novelty essentially, branding and marketing are particularly important, especially when quality jewelry can, at times, include imitation gems such as moissanite, cubic zirconia and white sapphire. Also, since most major brick-and-mortar jewelers do not sell lab-grown diamonds, it is up to the industry to create consumer awareness.
Branded diamonds cater to consumer concerns regarding authenticity, quality and ethical sourcing, while also providing an alternative to generic diamonds, Zimnisky says, pointing to the fact that lab-grown diamonds have an advantage in terms of being authentic and ethically sourced, and their unique production method can increase their appeal to the millennial, “high-tech” demographic.
Creating incremental value and customer brand loyalty, however, may prove more complex and hinged mostly on increasing customer awareness, but this has been done before by the cultured pearl industry, so this objective is not out of reach.
One must also remember that the lab-grown diamond industry’s primary advantage over natural diamond mining is pricing, as in the long run, this technology is already more cost-effective and further improving production economics will allow for outright lower pricing and higher margins of profit that could then be reinvested into branding and marketing, he says.
“As capital continues to be invested in improving production processes, lab-created diamond production costs will come down. Some producers will vie to be the low-cost generic producer, with their angle selling diamonds for a significant discount to natural diamonds,” Zimnisky predicts.