2023: The Era of Lab-Grown Diamonds

On New York City's 47th Street, there is a popular area called the Diamond District. This stretch is home to numerous gem shops and appraisers that can be found in almost every storefront and office. However, Pandora has presented a contrasting approach to the creation, purchase, and sale of stones, just 40 blocks away.

During the commencement of September's New York Fashion Week, the jewelry retailer took the bold step of temporarily closing off Astor Place, a bustling thoroughfare, in order to organize an extravagant event known as the "lab-grown diamond district." This affair attracted prominent figures from the fashion industry and celebrities such as Pamela Anderson, who currently represents the brand in their latest campaign.

Actor Pamela Anderson promoting Pandora's lab-grown stone range.

Courtesy Pandora

Pandora, despite not being a major player in the diamond industry, has successfully established itself as one of the world's largest jewelry brands, generating nearly $4 billion in revenue last year. Their success can be attributed to the popularity of their affordable charm bracelets, priced under $100. However, the growing demand for lab-grown diamonds, which possess the same characteristics as mined diamonds but are sold at a significantly lower cost, has created opportunities for even budget-friendly brands to offer high-quality jewelry.

Notably, Pandora is not the only company benefiting from this trend. Brilliant Earth, a lab-grown diamond brand, experienced a substantial 15.7 percent increase in net sales in 2022, amounting to $440 million. Similarly, Dorsey, another brand exclusively focused on lab-grown jewelry, successfully sold over a million stones last year.

Brands like these are revolutionizing the jewelry industry by redefining the traditional categorization of pieces based on materials and prices. In the past, diamonds were the epitome of luxury, with their trade predominantly controlled by small, specialized businesses or renowned brands such as Tiffany and Cartier.

The Paris-based company Diam-Concept produces lab-grown diamonds that are practically indistinguishable from their naturally mined counterparts.

Lab-grown stones have blurred the lines between traditional and synthetic stones. Originating in the 1980s, they are generated by subjecting pure carbon to high temperatures and pressure within a metallic enclosure, resulting in the formation of diamonds. These lab-grown diamonds are nearly identical to their natural counterparts. Recognizing this fact, the diamond industry has undertaken marketing campaigns to establish two distinct categories of stones in the minds of consumers.

However, these endeavors have not proven effective for the most budget-conscious consumers. For instance, a Tiffany tennis bracelet comes with a price tag exceeding $20,000, while a bracelet featuring lab-grown carats of similar quality from Brilliant Earth is priced at $3,450.

Can lab-grown diamonds be a substitute for natural diamonds?

Sales of lab-grown diamonds have soared in recent years, rising from less than $1 billion in 2016 to nearly $12 billion in 2022, as reported by jewelry industry analyst Paul Zimnisky. These man-made diamonds now account for approximately 17% of the total diamond market, as indicated by diamond research firm Edahn Golan. Furthermore, their sales growth rate has been rapidly increasing, with a remarkable 38% surge from 2021 to 2022.

Sales of man-made diamonds have increased from under $1 billion in 2016 to just under $12 billion in 2022.

Pandora's sales outlook has been raised twice this year, reflecting the significant impact of the growing popularity of lab-grown stones in the market. This has resulted in an impressive increase of over 100 percent in the company's share price over the past year. In contrast, De Beers, the world's largest diamond producer and distributor, is compelled to slash the prices of mined stones by up to 40 percent as the demand for traditional diamonds continues to decline.

Broadening the market

"A diamond is more than just a precious stone; it embodies a mesmerizing sparkle, exquisite beauty, and the profound emotions it carries," stated Mary Carmen Gasco-Buisson, Pandora's Chief Marketing Officer, in an interview with the Business of Fashion.

Many consumers are choosing to reinvest their savings from purchasing lab-grown diamonds into additional jewelry, such as a larger engagement ring. According to Megan Strachan, the founder of Dorsey, this technological advancement has also attracted more independent shoppers to the jewelry market who now purchase pieces for themselves instead of relying solely on their partners. As a result, couples are replacing natural diamonds in their rings with more affordable and bigger lab-made alternatives.

To appeal to the evolving consumer base, brands are modifying their marketing strategy. Traditionally, diamonds were promoted as a symbol of luxury, targeting men purchasing jewelry for their significant others. However, jewelers are now expanding their marketing efforts to engage a wider range of customers, with a particular focus on women seeking fashion-forward items.

First developed in the 1980s, lab-grown diamonds are produced by exposing pure carbon to a large amount of heat and pressure in a metal cube.

Valeria Mongelli/Bloomberg/Getty Images/File

"The lab-grown diamond is not in competition with mined diamonds; it is a complement to mined diamonds," stated Sayed Haider, Chief Operating Officer of Diamond Nexus, a company that recently introduced a line of lab-grown diamonds to its collection. "For instance, if you have a stunning engagement ring but desire a matching set of earrings or a pendant… You can now acquire all those desired pieces."

Whats selling now

While lab-grown engagement rings are becoming increasingly popular, it is in non-bridal jewelry where many brands are experiencing the greatest growth.

Dorsey has shifted its focus towards offering products such as tennis necklaces, bracelets, and vintage-inspired earrings. This decision was driven by the recognition that there is a larger market gap to be addressed in everyday jewelry. Furthermore, this approach enables customers to make repeat purchases, unlike the case with bridal jewelry which is typically a one-time buy.

"Whenever I used to visit a jewelry store in the past, there was always a constant feeling of being unable to afford anything," she expressed. "By embracing lab-grown alternatives, it is transforming an experience that was traditionally exclusive to the affluent into something accessible to all."

Model and former Vogue contributor Grace Coddington for Pandora's lab-grown range.

Courtesy Pandora

Dorsey, established in 2019, experienced a remarkable 600 percent increase in sales from 2021 to 2022 and is projected to double its sales once more this year. The company remains profitable, with word-of-mouth marketing playing a major role, particularly from influencers who independently discover and endorse the product.

The largest jewelry retailer in the Americas has reported a significant decline in sales of engagement rings.

Strachan stated that the marketing of man-made diamonds not only sells the product itself but also challenges the perception that increased accessibility means lower quality. Dorsey employs a photography style reminiscent of editorials found in Vogue magazine to showcase their jewelry in a fashion-forward manner, according to Strachan. Their Instagram account features polished images of elegantly dressed women, such as models Bella Hadid and Justin and Hailey Bieber, proudly wearing their necklaces.

Strachan emphasized that there is a missed opportunity in marketing campaigns by not recognizing that, much like selecting our shoes, we also carefully choose our jewelry.

A trade fair for synthetic diamonds in Zhengzhou, China. While lab-grown engagement rings are popular, non-bridal jewelry is where brands are seeing the most growth.

Pandora's recent fall campaign focused on promoting the accessibility of lab-grown stones using the tagline "Diamonds for All." However, their repositioning efforts are further exemplified through their participation in fashion week events and the recruitment of celebrities like Anderson and model Precious Lee. In a recent announcement, the brand also revealed a partnership with the British Fashion Council and will serve as a sponsor for The British Fashion Awards taking place in December.

Changing attitudes

There has been a sluggish response from legacy jewelry brands in embracing their new rivals. Despite De Beers entering the market with its sub-brand Lightbox in 2018, CEO Bruce Cleaver emphasized it as "affordable fashion jewelry that may not endure forever, but is ideal for the present moment," as stated.

Today, top-tier companies are increasingly venturing into the lab-grown market. Fred, a jeweler owned by LVMH, is currently presenting a fresh collection of man-made stones to affluent clientele in order to gauge interest. Positioned as a distinctive alternative to mined offerings, this new assortment showcases blue diamonds.

Lab-grown diamond brand Dorsey sold over a million stones last year.

Ashley Barrett

Lab-grown stones are increasingly gaining traction in the jewelry industry, and it has become a trend that legacy jewelry houses cannot ignore. According to Zimnisky, these lab-grown stones are projected to experience consistent growth with an annual double-digit percentage rate in the upcoming years. The initial skepticism surrounding them has transformed into a sense of pride, as stated by Amish Shah, founder of lab-grown jewelry brand Jevar. They are now regarded as the diamonds of the future.

Editors Note: This article was originally published by Business of Fashion, an editorial partner of CNN