Place Vendôme Executives Remain Cold to Lab-grown Diamonds
As emerging players position themselves increasingly in the high-end segment and heavyweights like Pandora eschew the use of mined diamonds in their designs, the lab-grown diamond market is heating up by the day.
Touted as a more sustainable alternative to mined diamonds, lab-grown gems are also gaining traction against a backdrop of sanctions against Russia, a leading supplier of natural diamonds, and as rough diamond production continues to decrease, falling to 111 million carats, with a 5 percent decrease per year since the 2017 peak of 152 million carats, according to a 2021 Bain study on the global diamond industry.
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But leading jewelry executives remain skeptical, noting that the segment poses many problems of its own, not least the energy used for their creation, depending on the location where they are made.
More than 50 to 60 percent of the world’s 6 million carats of lab-grown diamond production is manufactured in China using high-temperature, high-pressure technology, with India and the U.S. emerging as major production centers favoring chemical vapor deposition technologies.
“Lab-grown diamonds raise their own issues,” said Cyrille Vigneron, chief executive officer of Cartier.
“On the one hand, we know the end customer is not completely ready for them, and on the other, the transparency of the production chain is not yet fully there. So we are not ready to consider them, knowing that the question of customer perception could also impact the symbolic value, and can ultimately be quite negative for the value given to diamonds overall,” he added.
Van Cleef & Arpels CEO Nicolas Bos likewise cautioned against marketing lab-grown diamonds solely on an ecological narrative, which in his opinion amounted to false advertising.
While lab-grown stones may not find their way into the house’s designs, “they can provide very interesting creative opportunities [without] pretending to be a green alternative to the ‘bad people of the industry,’” he said.
“It’s part of technology but it’s not a replacement. There are ways to use [them] that are not against traditional [jewelry]. It should be a different stream,” he continued, pointing out the possibility of growing diamonds in shapes not found in nature.
Though De Beers launched its lab-grown diamond offshoot Lightbox in 2018, LVMH Moët Hennessy Louis Vuitton became the first major luxury player to invest in the segment by taking a minority stake in Lusix, an Israel-based producer of lab-grown diamonds.
Its Tag Heuer watch brand used Lusix diamonds on its showpiece Carrera Plasma timepiece, unveiled at the Watches & Wonders show in Geneva last March, touting the design as “truly revolutionary.”
But Louis Vuitton chairman and CEO Michael Burke said he was not ready to switch away from natural diamonds anytime soon.
“There are many issues, which is why it’s a good thing that LVMH is dipping a toe in it because we need to know what’s happening. We need to stay abreast of all the progress, but it is very energy-intensive. In some aspects, the carbon footprint is higher than responsibly mined stones, so we have to be careful of that,” he cautioned.
A 2021 study between lab-grown diamonds and mined diamonds published in the Basel-based MDPI journal found that considerations like energy, size of the diamond, machine used and conditions present affect the validity of catchall eco-claims.
“There are numbers out there proving either way,” said Peter J. Ravenscroft, a veteran of the diamond and mining industry who founded the diamond brand Maison Mazerea.
Not least because calling lab-grown stones sustainable on the sole basis that they do not require extraction is “simplistic” given the implications on the livelihood of communities depending on diamond mining, he continued.
Looking further, Ravenscroft believes there will be “a bifurcation in the market” where lab-grown stones “have a very valid place in the market,” depending on whether or not the consumer is receptive to the “mystery and mystique” of the billion-year origin story of mined diamonds.
“There is a very strong market for people who would prefer to buy a lab-grown diamond, and I fully understand that [but] there will always be people who want natural beauty. If you’re talking about diamonds that you’re going to pay a couple of million euros for, you won’t be doing that for a synthetic diamond,” Ravenscroft said.
But this lack of enthusiasm may also be down to an apples-to-pears comparison, especially when it comes to sizes. Medium to large diamonds accounted for 25 percent of the production of volume in carats, but around 70 to 80 percent of the dollar value of the market, according to the Bain report.
Meanwhile, the largest lab-grown roughs have just breached the 150-carat mark. The International Gemological Institute analyzed and graded a 30.18-carat emerald cut with an H color and VS2 clarity to be the first polished lab-grown diamond to exceed 30 carats.
With investment pieces and stones — 79-carat diamonds in particular — taking pride of place at recent high jewelry presentations in Paris last July, technological advances that make growing larger quantities and sizes possible would also bring the price per carat of lab-grown diamond down, said Chaumet CEO Jean-Marc Mansvelt.
“A number of people come to us to invest. What is important is seeing where clients stand and what they expect when buying at Chaumet, [which is] a stone that will hold its value throughout their lives, and even through generations,” he continued. “The key is not misleading the client.”
For all the conversations around them, “in a way, lab-grown diamonds are still in their infant stage,” noted Charles Leung, chief executive officer of Fred.
The Parisian jewelry house is “open to explore more about lab grown diamonds in the future,” as an increasing number of clients, especially in younger demographics, look at diamond jewelry as a fashion choice rather than an investment. This “will undoubtedly disrupt the industry,” he continued.
But there is an even longer-term vision. Keeping in mind house founder Fred Samuel, who had looked to cultured pearls as natural ones were becoming scarce, Leung pointed out that “one day, there might be no more new diamond mines on Earth. We will have to adapt.”
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