Tuesday, June 25, 2024

Lab-Grown Diamonds: Unleashing New Opportunities in the Gem Industry

A week ago, True Diamond, an online startup specializing in lab-grown diamonds, introduced Batman-shaped ear studs for men and women.

“The diamond is cut in the shape of the Batman logo. This is only possible with lab-grown diamonds. If it were mined, the cost would be disproportionately high due to the need for larger rough diamonds to cut such shapes,” said Darayus Mehta, Co-founder and Director of True Diamond.

Lab-grown diamonds (LGDs) are created by placing a mined diamond seed in a reactor where manufacturers replicate the temperature and pressure conditions found in the Earth’s core. This process has opened up limitless opportunities, allowing diamonds to be cut into various shapes, such as letters or logos.

One of Mehta’s partners created an entire poker set from LGDs, demonstrating the playful and creative potential of these diamonds. India has embraced this creativity, producing some impressive works.

LGDs have been available for over a decade but gained significant attention when Indian Prime Minister Narendra Modi gifted them to Jill Biden, wife of US President Joe Biden. This act triggered a 100-fold increase in search volumes, though actual sales growth has been modest but noticeable.

The industry is poised for transformation within the next 3-5 years. Currently, two-carat solitaires are popular due to their affordability. “A one-carat solitaire that cost ₹4 lakh can now be replaced with a two-carat lab-grown solitaire at a quarter of the price,” Mehta noted.

Reflecting this trend, De Beers recently reduced its LGD prices by 40%. LGDs are particularly appealing to millennials, especially those aged 30-45. While older consumers need more convincing, demand is rising in tier II and III cities. South India, traditionally a gold market, now seeks clear and quality diamonds.

Before the rise of LGDs, 80-90% of all diamond cutting and polishing was done in India before export. Now, the government aims to ensure India controls the entire LGD supply chain. This move could make India the largest player in diamond manufacturing, processing, and designing. India’s LGD production capacity has increased tenfold over the last three years, with improved quality and clarity driving higher demand and lower prices compared to mined diamonds.

Consumer curiosity about LGDs has evolved, with fewer people questioning their authenticity. Instead, new brands focus on building trust with consumers. LGDs offer middle-class consumers the opportunity to own and enjoy diamonds, and the export market, particularly to the US and the Gulf, is expected to grow.

Reports predict a 7-9% growth in LGD exports, reaching $1,500-1,530 million in 2024-25. India’s design capabilities are world-class, and the ability to create various shapes with LGDs is remarkable. This versatility makes LGDs appealing not only to women but also to men.

True Diamond operates entirely online, receiving orders nationwide, with 50-55% of sales coming from tier II and beyond cities. Demand is particularly high in Maharashtra, Delhi, and southern India. The startup, which began operations in late 2023, has grown steadily, with average order values between ₹70,000 and ₹1 lakh.

True Diamond sells exclusively online, using personal consultants to guide customers through video calls. While serving all parts of India, the company has also received inquiries from the Gulf and the United Kingdom. The company educates consumers on the financial benefits of LGDs, highlighting the immediate savings and potential investment returns compared to traditional diamonds.

“Buying an LGD means saving 90% upfront. If you invest those savings, the financial benefits are clear,” Mehta explained.

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