Young Shoppers Take Shine to Lab-Grown Diamonds

Pandora’s abandonment of mined diamonds has apparently not hindered its standing with younger consumers.

Speaking to the Financial Times (FT) Tuesday (May 7), Alexander Lacik, CEO of the mass-market jeweler, said younger buyers helped fuel a boom in lab-grown stones that had led to a decline in sales of mined diamonds, and helped the company best its luxury rivals.

Lab-grown diamonds are opening up the industry to new consumers, he said, as these stones are usually about a third of the cost of the alternative.

“People are discovering that a diamond is a diamond. It’s a different value proposition, and people are voting with their wallets,” Lacik told the FT. “Older customers are more wedded to mined diamonds. Younger ones are more open to lab-grown.”

The report notes that Pandora became the first major jeweler to move to a lab-grown-diamond-only strategy in 2021 as it pushed to expand its offerings beyond the charm bracelets and necklaces for which it had been known.

The company nearly doubled its sales of lab-grown diamonds in the first quarter, increasing revenue by 87%, the FT said.

Gen Z’s embrace of lab-grown diamonds makes sense in light of PYMNTS Intelligence research showing that this age group — more so than other younger consumers — is most likely more likely to point to buying an expensive retail product as their main financial goal than to mention paying for an upcoming event or show.

“In fact, consumers in this group are seven times as likely to prioritize the former as the latter,” PYMNTS wrote last month.

By contrast, millennial and bridge millennial consumers were the most likely to list paying for an event or show as their top goal.

“By 2030, barely five years from now, Gen Z will represent a third of the workforce. Their disposable income is projected to increase by sevenfold and their spending by sixfold as their incomes rise and they begin to benefit from the $90 trillion transfer of wealth headed their way from parents and grandparents,” PYMNTS CEO Karen Webster wrote recently.

“For that reason, Gen Z is the generation that all businesses are courting — they are their future workers, customers, business partners and investors.”

At the same time, this age group is also struggling to make ends meet, with 59% of Gen Z consumers living paycheck to paycheck, despite half of them not paying rent or mortgage.

“With such a financial cushion, the question remains as to why these young adults struggle to live within their means,” PYMNTS wrote last month. “One answer: Gen Z consumers cite splurging on nonessential items as a top reason for their financial lifestyle.”

Source: pymnts.com

Brilliant Earth Reports Record Revenue for 2023

Brilliant Earth’s sales grew 4% year on year to $124.3 million in the fourth quarter amid a record number of orders.

The 18% increase in individual orders offset a 12% decline in the average value per sale during the three months that ended December 31, the retailer said last week. Net profit for the period fell 69% to $1.9 million.

Engagement rings were one of the top sellers for the company, with demand for those above $10,000 increasing year-on-year in the fourth quarter, Brilliant Earth CEO Beth Gerstein said last week in an earnings call, transcribed by Seeking Alpha. The average sales price for engagement rings was up 4% year-on-year during the three months.

Additionally, new campaigns featuring celebrities and influencers brought in consumers. The launch of Brilliant Earth’s Sol collection, in partnership with Emmy-nominated actress Camilla Morrone, proved popular, with productivity “far outpacing” that of prior collection launches, Gerstein explained. The company’s new lab-grown Capture collection, made with synthetic diamonds manufactured using 100% renewable energy, also “resonated strongly” with consumers, it said.

For the full-year, sales rose 1.5% to $446.4 million, while net profit dropped 75% to $4.7 million.

Brilliant Earth expects sales for the first quarter of 2024 to reach between $96.5 million and $98.5 million, ranging from a decrease of 1% to growth of 1%, chief financial officer Jeff Kuo noted on the earnings call. For the full year, net sales are anticipated to rise 2% to 5% to between $455 million and $469 million.

Source: rapaport

Are Lab-grown Diamonds Sustainable?

Human-made diamonds come with an appealing claim: Manufacturers say the stones are produced ethically using renewable energy. But many of the products do not meet that claim or their producers do not confirm the electricity sources they use. And, laboratory diamonds require a lot of electricity to produce.

In the United States, lab-grown diamond sales increased 16 percent in 2023 from 2022, says Edahn Golan, an industry expert. The stones cost much less than natural diamonds.

Bario Neal is a jewelry store in Philadelphia, Pennsylvania. It uses lab diamonds. All of the stones are either made with renewable energy or neutral use of energy through the carbon credit system. Credits pay for activities like planting trees, which capture carbon.

Social media posts show Millennials and Generation Zs proudly explaining the purchase of their lab-grown diamonds for sustainability and ethical reasons. But the sustainability of production is questionable. A high number of manufacturers are not transparent, or open, about their operations.

Many of the manufacturers are in India, where about 75 percent of electricity comes from burning coal. The companies use words like “sustainable” and “environmentally-friendly” on their websites. But they do not release reports on the environmental effects of their operations.

Cupid Diamonds, for example, says on its website that it produces diamonds in “an environmentally friendly manner.” But it did not answer questions about the sustainability of its operations.

Solar energy is quickly expanding in India and there are some companies, such as Greenlab Diamonds, that use renewables in their manufacturing processes.

China is the other major country producing laboratory diamonds. The largest makers did not return requests for comment. They also did not release details about their electricity source.

More than half of China’s electricity came from coal in 2023.

Paul Zimnisky is a diamond industry expert. He said few companies are honest about their supply chains and their use of renewable energy.

Zimnisky said a lot of companies claim to make an “environmentally-friendly product when they aren’t really doing anything that’s environmentally friendly.”

How it is made

Lab diamonds have been in production around seventy years. Producers treat carbon to high pressure and high temperature. The idea is to copy the natural conditions that form diamonds underground. But, nature spends at least one billion years to make a diamond. Lab diamonds are complete in a few weeks.

In the past, the stones were used mostly in industries like stone cutting, mining and dentistry tools.

Over time the laboratories, or foundries, have gotten better at making stones. Production costs have dropped as technology improves.

Companies now can manufacture as many stones as they want and choose their size and quality.

Diamonds, whether lab-grown or natural, are chemically identical and entirely made out of carbon. Experts can identify between the two using lasers to examine their atomic structures.

Marketing battle

The lab diamond is competing in the same market as natural stones. Worldwide, lab-grown diamonds are now 5 to 6 percent of that market. And, the public battle for customers has begun.

The natural diamond industry and some experts argue that lab-grown diamonds will not hold value over time.

Zimnisky predicts that natural diamonds will continue to sell in the thousands and tens of thousands of dollars for engagement rings.

And the human-made stone?

“Five to ten years into the future, I think there’s going to be very few customers that are willing to spend thousands of dollars for a lab diamond,” he said.

Page Neal said she co-founded Bario Neal in 2008 to “create jewelry of lasting value that would have a positive impact on people and the planet.”

She added: “We want to only work with materials that we feel like our clients would be proud to own.”

I’m Dan Novak.

Dan Novak adapted this story for VOA Learning English based on reporting by The Associated Press.

Agape Diamonds Receives Warning over Lab-Grown Disclosure

A US advertising watchdog has called on e-tailer Agape Diamonds to make the origins of its synthetic and simulated stones clearer.

The recommendation came from the National Advertising Division (NAD) of BBB National Programs — a nonprofit that helps businesses self-regulate — after the National Diamond Council (NDC) challenged Agape’s claims, the NAD reported last week.

Agape’s promotional material, including how it was presenting products for sale on its website, did not clearly and conspicuously disclose the origins of its stones, the NDC had argued, according to the NAD. As such, the council claimed, the online retailer and lab-grown manufacturer was violating the Federal Trade Commission (FTC) guidelines on jewelry marketing.

Agape changed its advertising across its website and social media in response to the NDC’s complaint, and the NAD declared the company’s modified disclosures effective and consistent with the FTC rules. However, other online advertising lacked “clear and conspicuous” origin disclosure, the watchdog said.

Race to the Bottom? Retailers’ Lab-Grown Doubts

The NAD urged Agape to rectify this by including words such as “simulated” or “lab-grown” immediately before the words “diamond” or “stone,” with “equal conspicuousness so as to clearly disclose the nature and origin of the product and the fact that it is not a mined gemstone.”

Agape and the NDC were unavailable for comment on Sunday. In its advertiser statement to the NAD, Agape said it was “committed to accurate and truthful advertising, as recommended by NAD and as codified in the federal regulations and enforced by the FTC.”

Source: Diamonds.net