I’m going to do today’s edition differently. I’ve been reading about something fascinating for over a week and I couldn’t stop bringing it to you. Instead of going into the GTM rabbit holes or bringing a powerful marketing strategy, I’m doing an industry deep dive today. I bring you the fast-growing lab-grown diamond industry in India and the forces behind it.

Let’s get to it👉

The Genesis

General Electric produced the first lab-grown diamonds in 1954, using a high-pressure belt press exposing small seed crystals to temperatures of 2,912°F and atmospheric pressures of 100,000 atm. (source: International Gem Society (IGS)).

Over the following decades, researchers in the United States, China, and Russia adopted various methods based on GE's initial patent, leading to the creation of lab-grown diamonds that surpassed mined natural diamonds in carat size, color, and clarity. By 2017, it started gaining mainstream attraction.

Reason?  Better technology led to lower production costs which in turn led to lower costs to the customer. 

To the naked eye, lab-grown diamonds are identical to mined diamonds. They possess the same optical, chemical, and physical properties but cost 70%-90% less. The affordability factor and the growing awareness of ethical and environmental consumer choices have significantly boosted the popularity of lab-grown diamonds. 

According to Vantage Marketing Research, the Indian lab-grown diamond(LGD’s) jewellery market is expected to expand significantly from $2.6 billion in 2023 to $8.3 billion by 2032, at a CAGR of 13.7%

Let’s look at the forces behind the rise of lab-grown diamonds in slightly more detail now 👇

Forces behind the rise of Lab-grown diamonds

Clean Origins

There’s more to the story than just pretty little stones when it comes to the diamond industry. Mining diamonds takes a disastrous toll on the environment. The diamond miners strip away the planet layer by layer, leaving scars on natural landscapes and causing land erosion, carbon emissions, and pollution of air and water.  Additionally, the industry is infamous for human rights violations, child labor, inhuman treatment of workers, and connections to the mafia.

In stark contrast, Lab diamonds present a conflict-free choice. These man-made stones not only offer the same clarity and quality as mined ones, but are also created in a way that’s more sustainable, more eco-friendly, and a better long-term choice for the environment.

Lab-grown diamonds are not just jewellery, it’s jewellery that betters the world around you ❤️

Moreover, a Unilever study finds that 53% of shoppers in the UK and 78% in the US feel better when they buy products that are sustainably produced, that number rises to 88% in India and 85% in both Brazil and Turkey. 

In line with the study, we see a rise in eco-friendly D2C brands in India in recent years, and the trend is likely to follow in the diamond industry.

The Price Advantage

Lab-grown diamonds have a significant price advantage over natural diamonds.

The table below shows the median prices across 10 online jewelers in the US for Round G VS1 natural and lab-grown diamonds as of April 2023.

A similar price difference is also seen in the Indian market, where a 1-karat lab-grown diamond is priced between ₹75k and ₹90k, while a mined diamond with the same color and clarity is priced between ₹6 lakhs to ₹10 lakhs.

The informed audience math: Opportunity cost >>> Resale value

Traditionally, diamonds have been seen as a valuable investment. Consumers saw worth in the large purchase because it fulfilled two key needs - first, enhancing their look on weddings and anniversaries, and second,  having the potential to resell later in life.

However, with lab-growth diamonds at one-tenth the cost, there’s an entirely new narrative to how consumers buy diamonds. Instead of looking at the resale value, consumers have started re-evaluating the opportunity cost. A mined engagement ring worth 1 lakh vs a lab-grown diamond of ₹17k to ₹20k with the rest ₹80k in mutual funds seems like a more practical decision.

A side-by-side look: Lab vs Natural Diamond

Big brands aiming to grab the market early

Over the last 4 years, the loose lab-grown diamond contribution to the overall diamond sales has increased from 10% to 57% in the US.

Hoping for a similar market shift in India and sensing a high-growth opportunity, brands like Tata’s Trent (Zudio, Westside, and Utsa), and Senco Gold have started making moves to grab a larger piece of the pie early on. 

Tata’s Trent, after disrupting the apparel market with Zudio stores, has entered the LGD space with its brand ‘Pome’.  Their initial GTM is via product placements in selected Westside stores in Mumbai, Bangalore, Hyderabad, and Gurgaon. 

Senco Gold which has 136 showrooms spread across 99 cities in India is making a subsidiary called Sennes focussed on lab-grown diamonds and luxury leather accessories and perfumes. 

There are also a handful of D2C brands such as Jewelbox, which got glory from Shark Tank, Giva, and Aukera that have been making their mark in the lab-grown diamond space in recent years.

Summing it up

The new generation is environment-conscious. People in most parts of the world want to know how their products are created and if they are eco-friendly. Lab-grown diamonds fit into this narrative perfectly. Plus, the affordability appeals to a larger customer base. It’s going to be interesting to see how the traditional diamond market is disrupted in India.

Until next time!

Saurabh 👋