In an article yesterday, JCK quoted the views expressed by consultant Vinit Jogani at a seminar titled “Understanding the State of LGD Industry Using Data”. Overall, Jogani said -
Lab grown diamonds should form their own differentiation, and operators should also bring some "completely different concepts" to the market, thereby creating new demand among those "groups who cannot afford natural diamonds."
From this perspective, Jogani believes that there are seven development trends for lab grown diamonds:
1. Decline in retail profits
“In the past, retailers could sell lab-grown diamonds for six times (cost), but this is unsustainable in the long term. Especially when lab-grown diamonds start to be sold in offline stores like Walmart, as well as online retailers This will become more difficult to sustain as price competition intensifies."
“Ultimately, retailers will sell at 3-4 times (cost), thus maintaining a similar profit to what they would earn from selling natural diamonds.”
2. Costs continue to decrease
As technology advances, the cost of blank growth will continue to decrease. In the cutting and grinding process, the industry is working hard to develop automation (the original text is "robotic"), so the cost in this area will also be reduced.
Jogani believes that one carat can now be purchased for US$200, but may drop to around US$100 in the future.
“It is possible that lab-grown diamonds will move to some sort of ‘fixed price model’ rather than a ‘price per carat model’.”
“The cost of getting goods continues to fall, which means there will be fewer lab-grown diamonds with certificates... But the price reduction (on the B-side) is positive because for retailers, the reduction in material costs is a good thing, so there will be more Funds are used for marketing.”
3. Pay attention to market segments
Only the top 2% of people will buy natural diamonds, and the remaining 98% is the market for cultivated diamonds. Natural diamonds tell more of a “luxury story,” while lab-grown diamonds tell an “affordability story.”
"Laboratory diamonds will expand the overall market size."
Jogani gave an example in the article: There may be two to three million weddings every year, but there are also 85 million mothers celebrating Mother's Day every year. "This market is larger and it will not conflict with the natural diamond business."
4. Differentiated grading and pricing systems
“Why do we grade lab-grown diamonds the same way natural diamonds do? Can we just use three color grades and three clarity grades?”
Jogani believes that a "simpler classification approach" would be more useful, easier and cause less confusion for operators in downstream markets.
Jogani expects that lab-grown diamonds will no longer be priced using the Rapaport price list and will move to a linear pricing model.
5. Unique diamond shape
About half of the lab grown diamonds are now cut into round shapes. Jogani believes this is because lab-grown diamonds want to stand on the shoulders of natural diamonds and cannibalize their market. After all, 75% of natural diamonds are round.
But we should use more creativity to create more possibilities for cultivated diamonds. People can create more shapes, such as letter shapes, stars, etc.
"These opportunities will come."
6. Learn to coexist with natural diamonds
The approach of "lowering the reputation of natural diamonds to gain more market share" will not achieve the goal, because natural diamonds will in turn educate the public that "cultured diamonds are fake, synthetic, and worthless."
"Rather than keep fighting and destroying each other's business, both sides should focus on creating new opportunities."
7. Less “greenwashing”
Lab-grown diamond producers will find it increasingly difficult to make “sustainable” claims in the future without backing. With the introduction of Green Guides in the United States (which should refer to content such as environmental protection guidance documents), increased information disclosure in Europe, and the continued marketing efforts of the natural diamond industry, the practice of "greenwashing" will not be suitable for future development—— Especially from a long-term perspective.
As mentioned at the beginning of the article, we do not agree with some of Jogani’s views, and the purpose of this article is not to take his remarks as a guideline, but to present all the contents truthfully and let industry partners make their own choices.
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