The diamond and jewelry industry needs to respond to lab-grown diamonds in a way that will differentiate the natural product. While the industry is set to debate the challenges presented by lab-grown diamonds in the coming weeks, it should accentuate the underlying value of natural diamonds as a means of fending off rising consumer interest in lab-grown goods.

While lab-grown – or so-called synthetic – diamonds may be a more affordable alternative, natural diamonds represent the opportunity to express the diamond dream – the idea that real diamonds symbolize real love.

The upcoming seminars separately hosted by the World Jewellery Confederation (CIBJO) in Moscow, the Accredited Gemologists Association (AGA) in Las Vegas and the World Federation of Diamond Bourses (WFDB) in Antwerp, ought to brainstorm around that idea. These organizations should be credited for putting the issue on the agenda to gain a better understanding of the market for synthetic diamonds.

It’s important to stress that lab-grown diamonds are a legitimate product. While they received bad [trade] press recently for undisclosed synthetics being mixed in parcels of natural – mainly melee – small diamonds, fully disclosed lab-grown diamonds do have a place in the market. In fact, producers and distributors of lab-grown diamonds are encouraging disclosure as much as those in the natural diamond market.

They too need to differentiate their product in order to enable their multi-layered marketing appeal. Thierry Silber, CEO of Diamaz International, an Antwerp-based distributor of lab-grown diamonds, outlined a number of talking points used when marketing these goods.

To begin with, he stresses that a lab-grown diamond is a diamond that is certified — with the only difference to a natural one being its point of origin. Indeed, it has been well documented that they are created from the same material and are produced under simulated conditions that mimic the creation of mined diamonds.

In his marketing efforts, Silber says he focuses on giving consumers a choice. In particular, he notes that lab-grown color diamonds present a growth opportunity for retailers given the enormous price difference to natural fancy colored diamonds. For example, he estimates that a certified nice-quality, round, 0.50-carat vivid pink, lab-grown diamond would be priced at around $3,500 per carat whereas the equivalent natural stone would cost in the region of $80,000 per carat.

“That presents a tremendous growth opportunity to retailers as suddenly, high-quality color becomes affordable,” he stressed.

Silber estimates that a commercial-quality round, lab-grown white diamond can sell for 50 percent to 60 percent cheaper than its natural equivalent. The more expensive the natural diamond, the bigger the difference in price, he explains.

However, when presenting to consumers, the emotional message is emphasized more than price, as the sales pitch for lab-grown diamonds further highlights that they are environmentally friendly and socially responsible, thus targeting evolving consumer values.

Silber notes that the concept is much more accepted by consumers than by jewelers or the trade. With the proper education, he reports that consumers have been very accepting of lab-grown diamonds, particularly as the new generation is excited by technological developments and innovation.

Jewelry designer Reena Ahluwalia emphasized the technological component when she launched what she claims is, “the first-ever designer jewelry brand that exclusively features lab-grown diamonds and merges it with wearable technology and fashion.” The ‘Moments Collection’ from ‘Nurture by Reena,’ which will be unveiled at the upcoming JCK Las Vegas show, “celebrates the changing consumer values of today,” she explained.

The ‘innovative, environmentally friendly, socially responsible and affordable’ pitch is certainly appealing to today’s consumers. However, while the market is growing, it’s still relatively small and Silber dismisses that it poses a threat to the natural diamond market. Rather, he believes that two markets will develop. “If lab-grown diamonds could capture 10 percent to 15 percent of the natural diamond market, it would represent an enormous potential for the lab-grown market,” Silber said.

Still, the natural diamond industry should not be complacent. While it may not pose a threat, lab-grown diamonds represent competition that should force the natural industry to prove that it has a superior product.

Harry Levy, president of the London Diamond Bourse, emphasized the point in an interview with Ya’akov Almor, an industry consultant, which was recently published by Rapaport News.

“Our prime directive is to protect the trade in natural diamonds and our industry leaders should produce arguments as to why natural stones are better than synthetic ones,” Levy said. “One powerful argument is, of course, that natural diamonds are rare, can only be mined once and that each and every stone is unique due to its provenance and characteristics…the supply of synthetic diamonds is limitless! Natural diamonds have aesthetic, emotional and historic value, while synthetic diamonds have none of these.”

It seems that most agree with that sentiment, including those operating in the synthetics space. Each market accepts the need to differentiate one from the other, both in their disclosures and in the way their diamonds are marketed.

While the synthetic diamond industry recognizes its appeal, it’s worth emphasizing the value of natural diamonds.

Martin Rapaport, chairman of the Rapaport Group, explained that as a conspicuous consumption product, a diamond is naturally more desirable the more expensive it is. “Branding brings that out as it’s about maintaining the diamond dream,” Rapaport explains. “Natural products are worth more but you’ve got to sell them. If you have something sexy, you have to sell it.”

While cheaper price-points offer a competitive advantage to synthetics, the significantly higher prices of natural diamonds underlie their value. Just because synthetic diamonds are less expensive doesn’t mean that everyone is going to buy them. Furthermore, people who buy synthetics arguably do so with the view of one day buying a natural one.

After all, no consumer wants to buy a cheap diamond, as he knows it will project the value of his love. Ultimately, it’s the diamond dream that differentiates synthetics from natural diamonds. As Rapaport put it recently, the idea is that Real Love = Real Diamonds™ (see editorial “Sinthetics” published in Rapaport Magazine – December 2013). That in itself is a sexy message that should be emphasized by the trade, and cannot be simulated.