Force of nature

For an industry frantically trying to relate to millennials, it’s striking that so many jewelers are skeptical about the movement that has burst onto the scene promising an ethical, sustainable alternative to mined diamonds. So far, it seems, the retail sector is still not convinced by the phenomenon of synthetics.
   Most retailers will “definitely or probably not” sell synthetic diamonds in the coming year, according to a June survey commissioned by the Diamond Producers Association (DPA). Store owners and their employees gave a number of reasons for this, from the potential impact on their brand’s reputation to the fear of plunging price points. 
   The trade doesn’t think lab-grown stones are about to replace natural diamonds, if the survey is any indication. In fact, the numbers suggest leaders in the natural-diamond industry are having some success in persuading people that diamonds are only the real McCoy if they came from the ground. 
   Jean-Marc Lieberherr, CEO of the DPA, believes only natural stones deserve to be called “diamonds,” and he aims to shape both public and industry opinion with that claim. While synthetics are chemically identical to their natural counterparts, the value of a diamond comes from its billion-year history, he argues. 
   “The fascination that man has had with diamonds started well before diamond marketing started,” says the former Rio Tinto executive. “There was always a mystery around the origins of a diamond, something divine about it. They’re beautiful and hard, but were always much more than that.”

Get real
   Synthetics, Lieberherr maintains, are reproductions of the real thing, but cannot claim to be the same product. “To suggest that is to suggest that a diamond gets its value from its molecular structure,” he asserts. 
   Defending the natural-diamond trade is one of the raisons d’être for the DPA, which a group of leading miners set up in 2015 as a marketing body to enhance consumer demand. So far, its “Real Is Rare” video and print campaigns in the US have tapped into millennial consumers’ desire for natural and genuine products. The organization expects to intensify the US print efforts in the fourth quarter, and to launch campaigns in India this month and China next year. 
   As for policing the trade itself, the DPA is setting up a testing program to evaluate synthetics-detection machines. It is also a founding member of the International Diamond Monitoring Committee, which launched in July at the India International Jewellery Show (IIJS) in Mumbai. The committee works to ensure that natural and synthetic diamonds stay separate throughout the pipeline.

Conflicting views
   There are, however, threats to the natural-diamond business. Synthetics companies aim to attract consumers by offering lower prices, and claim to be selling a more sustainably sourced product. Suppliers such as Diamond Foundry — which counts Blood Diamond star Leonardo DiCaprio among its investors — have attempted to paint natural diamonds as unethical, and lab-created stones as the alternative for the socially conscious. But these claims lack basis, Praveenshankar Pandya, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), said at IIJS. 
   “Natural diamonds are a much greener product,” Pandya argued. “Conflict diamonds are no longer an issue. [The industry] supports millions of jobs and livelihoods.” 
   Industry figures’ efforts to communicate the dangers synthetics pose to the trade are still at an early stage, but are showing signs of success, says the DPA’s Lieberherr. 
   “I’ve seen more and more people [in the industry] concerned about the declining value of synthetics,” the marketing chief observes. “It’s important we talk about our great product. I’m seeing a change.”

What’s in a name?

When a customer enters a store and asks if a synthetic diamond is “real,” how do you answer? That’s essentially what the trade is trying to determine when it debates what makes a diamond a diamond.
   For Jean-Marc Lieberherr of the Diamond Producers Association (DPA), a block of carbon is only a real diamond if it was formed underground. It’s this story of a billion years or more that has fueled the industry — and sometimes supported entire economies — with the aid of effective marketing, he argues. “How could that have happened if [a diamond is just] a piece of crystallized carbon?” he asks. 
   Guidelines from the International Organization for Standardization (ISO) as of 2015 seem to support this, defining a diamond as having been “created by nature.” Synthetic diamonds, meanwhile, are an “artificial product” that must be prefaced with a term such as “synthetic” or “laboratory-grown,” despite having the same molecular structure. 
   Tom Chatham, CEO of Chatham Created Gems & Diamonds, takes issue with labeling lab-grown stones as artificial. 
   “Lab-grown diamonds are identical to natural diamonds,” asserts Chatham, a founding member of the International Grown Diamond Association. “End of chemistry lesson.” 
   On the other end of the spectrum, some industry groups prefer to drop the term “natural” altogether, on the basis that all mined diamonds are natural. However, this practice doesn’t help retailers communicate with consumers, even if it makes sense to marketing theorists, argues former London Diamond Bourse president Harry Levy. 
   “We have to use the language the people understand, not our language,” Levy insists.

What retailers really think

“There’s growing awareness [in the industry] that you need to be careful before you embrace the synthetic-diamond category — that you do it in a way that will not impact your high-value natural-diamond business,” says the DPA’s Jean-Marc Lieberherr.

So how do retailers feel about selling lab-grown stones?

61% of retailers will absolutely not sell synthetics over the next 12 months, according to a June survey conducted by 360 Market Reach on behalf of the DPA.

Of those naysayers, 45% fear stocking lab-grown diamonds would hurt their company’s reputation, while 36% cite a lack of consumer interest, and 25% are concerned about lowering the average value of customer transactions.

If you add those who said they were “not likely” to sell synthetics in the coming year, you get a large majority, the DPA reported.

The 250 sales associates, jewelers and sales managers at chains and independents who took part in the survey generally had strong awareness of synthetics but shaky knowledge of how they are made. Many did not know it only takes a few weeks to culture a diamond.

Article from the Rapaport Magazine - September 2017. To subscribe click here.