LONDON, United Kingdom — Until recently, the mining giants that control the global diamond trade were openly at war with upstart companies peddling gems grown in labs. Their “Real is Rare” campaign sought to convince consumers that only diamonds pulled out of the earth deserved a place on their fingers and around their necks. They introduced cheaper jewellery lines to target a younger audience, who might be tempted by low-cost lab-grown gems. Their lobbyists urged regulators to restrict the marketing of synthetic stones.
And then, in May, De Beers, the world’s largest diamond producer, announced its own lab-grown jewellery brand. Lightbox launches online sales later this month, and De Beers is throwing its full global heft behind the enterprise, including construction of a $94 million facility in Oregon that by 2020 will produce 500,000 synthetic carats per year, or about 10 percent of last year’s global production of gem-quality lab-grown stones.
The white, pink and blue Lightbox diamonds are currently manufactured at De Beers’ Element Six manufacturing facility in the UK, and assembled into jewellery in Thailand. Lightbox diamond jewellery will sell online for $200 per quarter-carat, roughly 10 percent the cost of a natural stone - and as little as one-fifth the price of competing synthetics.
“For some people it was a bit of a head-scratch moment,” said David Prager, De Beers Group executive vice president of corporate affairs. “But it’s a space we’d been watching and researching for some time. Instead of sitting on the sidelines grumbling about the way synthetics were being marketed, we saw an opportunity to compete and hopefully lead by offering something new.”
The world’s largest diamond miner’s entry into the lab-grown diamond market is a clear sign that synthetics, first developed in the 1950s, are hitting the mainstream.
Diamonds are made in labs by subjecting “seeds” to intense pressure and heat in order to mimic the conditions in which they are created underground, or through a process where carbon atoms are grown inside a gas chamber. They are chemically identical to mined diamonds, a truth that factored into the US Federal Trade Commission's July decision to drop the word “natural” from its official definition of what constitutes a diamond, allowing synthetic manufacturers to market their products as "real" diamonds.
The ruling should boost growth for lab-grown gems. Independent industry analyst Paul Ziminsky predicts sales will grow from $1.9 billion this year — about 2 percent of the diamond jewellery business — to $5.2 billion by 2023.
The fight is now moving from marketing regulation to price. Lightbox prices follow a linear strategy - a quarter-carat costs $200, a half-carat $400, and a full-carat $800. Natural diamonds, in contrast, are exponentially more expensive the bigger they get, because larger stones are rarer. Lab-grown stones followed a similar pattern, though synthetics are generally cheaper than mined diamonds.
Since the Lightbox announcement, the average price of lab-grown diamonds relative to natural stones, already on a downward trajectory, has tumbled from a 32 percent discount in the second quarter to a 45 percent discount in recent months, according to Zimnisky.
And Prager hints that prices are yet to hit rock bottom. “Look at any other sector — flat screen TVs, smartphones — as technology and efficiency improve, you see what happens to price.”
Martin Roscheisen, chief executive of Diamond Foundry, the largest lab-grown diamond producer in the US, said his company can compete with De Beers by focusing on “unique” lab-grown diamonds larger than one carat, which he said are technologically more difficult to grow.
“We welcome De Beers’ move into the market; it legitimises the category and is a sign that man-made diamonds are here to stay,” he said. Founded in 2012, the San Francisco-based company aims to produce one million carats of lab-grown diamonds next year, aided by investment from the likes of Leonardo DiCaprio and Miroslava Duma.
Other lab-grown players have raised concerns that De Beers, after failing to drive them out of business, is forgoing profits to undercut competitors.
“De Beers isn’t stupid,” Tom Chatham, chief executive of synthetic diamond and gemstone company Chatham told Bloomberg earlier this month. “They know how to grow diamonds, but this equipment is not cheap.”
“It’s priced based on production costs,” counters Lightbox chief marketing officer Sally Morrison. She said Element Six has produced lab-grown diamonds for industrial and detection purposes since the 1960s, resulting in greater efficiency. “Of course we want to make a profit, but the right and transparent thing to do is base it on the cost of manufacturing, not based on a discount to the natural diamond price curve.”
While other lab-grown diamond brands have targeted a bridal demographic, Lightbox is decidedly not for romance. Engagement rings account for 27 percent of global diamond jewellery sales. Notorious for their high mark-up, they’re the bread-and-butter for jewellers such as Cartier and Tiffany (neither of which sells lab-grown diamonds) and, indeed, De Beers.
De Beers’ research has shown that consumers want synthetic diamonds to complement their outfit, but not to mark a meaningful life moment, Morrison said.
“It’s an accessory, like shoes or a purse,” said Morrison. “It’s for fun, smaller moments — not for milestone occasions.”
Diamond Foundry cites contradictory research published by MVI Marketing (of whom it is a client) in May, which found that almost 70 percent of millennials would consider a synthetic diamond engagement ring - an increase from 55 percent in 2016.
De Beers is drawing other lines between Lightbox and rival synthetic-diamond sellers. Unlike most lab-grown diamond producers, Lightbox doesn’t certify its stones. The Gemmological Institute of America’s Synthetic Diamond Grading report classifies synthetic diamonds only as “colourless” or “near-colourless”, but other institutes will grade them according to the traditional colour bands, ranging from D to Z, where a higher colour rating carries a price premium.
Diamond Foundry offers a certificate for every diamond, detailing its grading according to the traditional “four Cs” (carat, colour, cut and clarity). It lists a 1.03-carat brilliant-cut, J-colour, VS1 synthetic diamond set in an 18kt gold six-prong setting for $3,509. A similar design at Tiffany & Co would set you back £11,500 ($15,115).
Many lab-grown diamond brands market themselves as a sustainable alternative to natural diamonds, created with a smaller carbon footprint and without the environmental and societal costs associated with mining.
De Beers, which still generates the vast majority of its revenue from mined diamonds, isn’t taking that approach.
“We don’t claim that the process is eco-friendly,” said Morrison, pointing out the huge amount of energy used to produce synthetic diamonds.
Diamond Foundry’s tagline, in contrast, is “Real. Unique. World Positive.” Its San Francisco plant is powered by renewable energy and it has been certified as carbon neutral by Natural Capital Partners. It website presents data on the environmental footprint of mined and man-made diamonds, concluding that “[lab-grown] diamonds require an order of magnitude less energy to make than mined diamonds require to harvest”.
Diamond Foundry doesn’t use the term “lab-grown”; it prefers to call its stones “above ground” diamonds and refers to its manufacturing plant as a “foundry.”
Lark & Berry, a UK-based synthetic diamond jewellery brand, champions its “conflict-free” stones. Its pricing bears more resemblance to demi-fine diamond jewellery than Lightbox’s radically cheap offering. A 14kt rose-gold Lark & Berry pendant with synthetic diamond pavé totalling 0.20 carats sells for £1,250 ($1,640); in comparison, a 14kt rose-gold necklace by New York-based brand Catbird featuring 0.48 carats of natural diamonds goes for £1,000 ($1,300).
“It comes down to the design and quality,” said Laura Chavez, Lark & Berry’s co-founder. “If De Beers wants to rebrand itself as the Primark of jewellery through Lightbox, so be it.”
Despite the FTC ruling, the debate over what to call lab-grown diamonds rages on.
Lark & Berry markets its stones as “cultured diamonds,” a term the mined diamond contingent has lobbied against.
Jean-Marc Lieberherr, chief executive of the Diamond Producers Association, argues that “‘cultured’ refers to human intervention to a natural process, but there’s nothing natural about producing synthetic diamonds”.
In turn, lab-grown diamond producers argue that “synthetic” should be banned as it makes consumers believe their stones are fake. In the end, the FTC hasn’t banned either, which both sides have taken as a victory.
And the war of words between lab-grown and mined diamond manufacturers doesn’t end there.
“A diamond is more than a set of physical attributes that you can recreate in a factory,” said Lieberherr. “People don’t buy an atomic structure, they buy a product with an extraordinary origin, symbolic significance and an inherent value that will appreciate because it’s finite, rare and precious.”
Then there are those who argue that the inherent preciousness of a diamond is in itself a construct. It was a De Beers ad campaign that helped popularise the tradition of diamond engagement rings starting in the 1930s, and its marketing slogan, “A Diamond is Forever,” coined in the 1940s, is a cultural touchstone.
“The historical, emotional and symbolic significance we place on diamonds is in itself entirely manmade,” said Lark & Berry’s creative director, Katie Rowland. “That’s why it’s so funny as an argument against cultured stones.”