Last month, I wrote that staunch natural diamond advocate, Martin Rapaport, held up the white flag and acknowledged that the lab grown diamond market has permanently damaged natural diamond demand. Whilst this admission wasn’t exactly shocking or groundbreaking news, many in the industry have not fully considered the full set of consequences of such a shift from natural diamonds to lab grown diamonds. One such consequence is the effect on small manufacturing jewellers, predominantly in high-wage countries such as Australia, New Zealand, Canada, US and UK. Whilst the business model of a small manufacturing jewellery workshop was clear cut five years ago, with the price of lab grown and natural diamonds sinking, the very viability of these workshops is now in doubt.
This past week, diamond tzar Martin Rapaport came out and accepted defeat in the war on lab grown diamonds. In his latest editorial, he states that the current slump in natural diamond demand is due to, amongst other factors, “synthetics replacing natural diamonds” and that “These changes are fundamental and long-term. Business will not return to normal.”. He then goes on to blame jewellers selling lab-grown diamonds for causing such “damage”, seemingly oblivious to fact that most jewellers are simply selling what their customers want, and in some cases to just stay in business. Whilst Rapaport is right about the diamond industry having changed fundamentally, it really should be a wake up call to the natural diamond industry to pull their proverbial socks up. Unsurprisingly, the industry has very much been “all talk and no action” in the face of the worst crisis the diamond industry has faced in modern times. Whilst reducing supply is a good start, the natural diamond industry must now focus on increasing demand and stop crying over spilt milk. Whilst this is no doubt a difficult task, below are a few suggestions.
Recently, a rather unusual story popped up on IDEX, involving New York based fine jewellery wholesaler Arazi “taking a stand” against lab grown diamonds and pulling all their goods from retailers who stock lab grown diamonds. In the aforementioned IDEX article, the company’s vice president, Josh Arazi, makes a pretty convincing case in favour of the move, stating that retailers who also sell lab grown diamonds are selling less of his goods, which is fair enough – consigning goods to retailers is a very expensive way to do business and therefore, you want to only consign to the best performing retailers. However, I don’t think Arazi’s actions are the problem here, rather, it is the somewhat snide comment that Arazi made, stating that he “does not wish to wait until jewelers are competing with gas stations to distance ourselves from such stores” that smacks of the elitist attitude that has always and continues to dominate the industry.
Every so often, especially on online forums such as Reddit, the topic of diamonds comes up and inevitably a response is garnered along the lines of “Diamonds aren’t rare! They’re a scam!”. Whilst the simple fact of the matter is that diamonds are in fact not rare at all, gem quality natural diamonds are in fact rare, especially large ones with minimal hue and imperfections. Whether they are a scam or not really is up to the individual to decide, but at the end of the day, no one is really forcing people to buy diamonds or diamond jewellery. This “anti-diamond” attitude has its roots in the late Edward Jay Epstein’s book The Rise and Fall of Diamonds which was first published in 1982. However, more than 40 years later, a lot of people are still parroting the same lines published in the book, seemingly oblivious to modern-day reality.
Every week it seems there is more and more bad news being released about the diamond and jewellery industry. From diamond miners making a loss, to manufacturers making pseudo-layoffs to the falling sales and profits of jewellery retailers, the entire industry seems to be one in decline. Whilst every industry has its ups and downs, this downturn which started over two years ago, begs the question as to whether or not the entire industry is in permanent decline, and whether or not other factors, other than the overall decline in demand for natural diamonds point to the same conclusion?
Last month, Joshua Freedman of Rapaport released a video detailing his experiences going “undercover” with three high end boutiques in Las Vegas. The three boutiques were Tiffany, Van Cleef and Arpels and Cartier. Although Joshua seemed happy with the salespeople at two of the stores, it seemed one of the store’s salesperson wasn’t up to scratch. However, one thing they all had in common was to rely heavily on GIA certification, and as Joshua stated:
“There was also a tendency to rely on the GIA – rightly or wrongly – as the answer to all questions about product verification.”
This begs the question – has GIA turned the entire industry into “NPCs” (Non-Playable Characters) who are simply hawking pieces of paper, rather than selling diamonds and jewellery?
A couple of weeks ago, diamond mining behemoth DeBeers announced it was closing down its lab grown diamond brand, Lightbox and focusing its efforts on producing industrial diamonds and marketing natural diamonds. With DeBeers holding a minute percentage of the lab grown market, this announcement seemed fairly insignificant in the scheme of things. However, combined with other announcements in the industry, it did mark what some a calling a significant turning point in the lab grown diamond industry.
As I have written many times before, the price of lab grown diamonds is crashing. Whilst this is great news for consumers, many in the industry, including myself have been taken by surprise by the rapid rate of decline of lab grown prices. Whilst most in the supply chain, including manufacturers, wholesalers and retailers will see out this “lab grown craze”, the fact is, many companies will struggle financially when lab grown diamond prices hit rock bottom, and the lab grown industry matures and gravitates toward the more popular low-end and fashion jewellery market.
Something that baffles diamond and jewellery consumers on a regular basis, and something I regularly get asked about is the apparent random pricing of diamonds and jewellery across various stores. For example, one shop may be selling a diamond ring for $5,000, whilst another down the road will be selling something very similar for $10,000.
For nearly two years, I have writtenabout the decline in natural diamond prices. After rising to dizzying highs in 2021, natural diamond prices have seen a prolonged decline over the past two years. Whilst efforts by large Indian diamond manufacturers in late 2023 to curb the decline through a two month ban on diamond imports worked in the short term, with natural diamonds rising about three percent, they have since plateaued and have reverted back to their pre-moratorium prices. Whilst lower prices are great news for consumers, and in certain situations, good news for members of the trade, it is clear that the current slump is mostly caused by a lack of demand – as evidenced by the slump in sales from De Beers – the world’s largest diamond miner. Like most things in life, this prolonged decline isn’t due to one specific factor, but numerous factors occurring at virtually the same time.
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