“It was the best of times; it was the worst of times.” With this timeless opening, Charles Dickens ushered readers into the tumultuous world of “A Tale of Two Cities,” set against the backdrop of Victorian England. Curiously, a similar duality unfolded within the diamond industry with the entry of lab-grown diamonds, referred to as LGDs. In a traditional industry where LGDs were once taboo, that perception shattered when De Beers introduced Lightbox in 2018. Initially conceived for everyday elegance and affordably priced fashion jewelry, lab-grown diamonds (LGDs) unexpectedly became emblematic of the industry’s defining moments—engagements, romance, and celebration.
Genie Unleashed. The launch of Lightbox was akin to unsealing a mystical bottle, releasing a genie of profit-seeking fervor into an industry that had long grappled with razor-thin margins. Suddenly, producers, retailers, and even distant cousins found themselves awash in financial gains. Yet, amidst this newfound prosperity, a fundamental truth had been obscured: profits are the lifeblood of any business
The Changing Landscape. Historically, the allure of diamonds was measured by their intrinsic beauty. Then came the Gemological Institute of America (GIA) which codified this beauty, creating clinical parameters. Rapaport then introduced a diamond Price List, tethering prices to these parameters. Yet, the industry’s landscape shifted—from De Beers’ monopolistic grip to an oligopoly—making profit akin to sipping soup with a fork.
De Beers’ Dilemma. De Beers faced a conundrum: maintaining high prices invited criticism, while lowering them eroded profits. A strategic review by Bain led to De Beers allocating rough diamond supply to Sight holders adding value especially venturing into the jewelry vertical, yielding modest gains but demanding substantial investment. Simultaneously, e-commerce platforms selling diamonds disrupted the status quo, squeezing profits of brick-and-mortar stores to anemic levels. In hushed tones, insiders joked about “profits by mistakes.”
Prodigal Son. Lightbox’s introduction by De Beers not only legitimized LGDs but also injected much-needed margins. The same skills that shaped natural diamonds now fueled a frenzy of prosperity. LGDs, polished and certified, followed the Rapaport list, riding the coattails of their natural counterparts. Prices plummeted, and demand surged, yet the deluge of lab diamonds threatened to drown the market. Growers and traders now grapple with consequences. De Beers, acknowledging this sea change, halted Lightbox’s gem diamond production, albeit continuing sales to clear inventory.
Margins Mirage. Ironically, some bemoan retailers’ hefty margins on lab diamonds. However, growers and wholesalers of LGDs are facing low margins or no margins. On the other hand, the natural diamond industry now grapples with its own identity while facing its own reckoning due to continuous inventory losses on certified goods.
Need for a Refresh. In these tumultuous times, soul-searching beckons. Natural and lab-grown diamonds coexist, each with distinct weaknesses and virtues. Lab-grown diamonds have donned the mantle of eco-friendliness and social responsibility. Still skeptical? Just ask Chat GPT. While I don’t claim infallibility, the results consistently favor LGDs. However, let’s not overlook the virtues of the natural diamond industry. Despite its positive impact, consumer education often gets drowned out in the cacophony of social media and the deluge of misinformation. As De Beers CEO Al Cook recently stated, ‘the natural diamond story needs refreshing.’ Stay tuned, for soon Signet Jewelers and De Beers will launch a joint campaign to promote natural diamonds, centered around a new ‘beacon’ product.
Love is powerful, and even more potent is the allure of diamond as symbol of everlasting love. If only we can somehow make sure consumers learn more about the good that diamonds do.