Bharat: Will Other Bourses Now Embrace Lab-Growns?

The tide is turning for lab-grown diamonds. The world's biggest bourse, Bharat, in Mumbai, India, voted earlier this week to allow them back on to its trading floors. Members overturned a ban introduced five years ago to prevent them being mixed in with mined gems. Technology to distinguish one from the other has come a long way since 2015, and so has the willingness of diamantaires to embrace a product that is cheaper to produce and more profitable to sell.  Only last month De Beers, creators of the modern diamond industry, opened its $94m Lightbox factory in Portland, Oregon, USA, which will soon be producing 200,000 carats a year of polished lab-grown gems. It has a super-simple pricing policy - $800 per carat, any diamond, any size, any cut. Lab-growns currently account for about three per cent of all gem-quality diamond sales worldwide (2020, Statista) and that figure is forecast to reach 10 per cent within a decade. The Bharat Diamond Bourse has recognized which way the wind is blowing. If it doesn't join the lab-grown revolution, it will become irrelevant as diamond traders will simply take their trade elsewhere. So is BDB setting a precedent? Can we expect Antwerp, Ramat Gan, Dubai and others to embrace lab-growns any time soon?

For what it's worth I think there's only so long a diamond bourse can bury its head in the sand. Young people now buying engagement rings are very different from their parents' generation. They have never known life without a cell phone and a laptop. They trust technology because it makes everything possible. And so they value "clever" - growing a diamond in as little as five days - over "endeavor" - shlepping it out of the ground at great expense in some remote wasteland. The objects that add value to their lives are mass-produced, testament to mankind's ingenuity.  The "copy and paste" principle is universally applied.  It's not just a matter of reproducing text from a document.  We live in an age where a 3D printer can churn out countless copies of whatever you want, where crops are genetically-modified for maximum yields, where scientists can clone a whole flock of Dolly the sheep.

Labs are now the place where we can grow meat.  Chicken cells grown in bioreactors went on sale in Singapore for the first time earlier this month and there will doubtless come a time when meat produced in bioreactors becomes as cheap as meat produced in fields. Labs are also, arguably, the place where humans are grown. Eight million babies have been born by IVF since Louise Brown became the first "test-tube baby". If we can grow animals and people, why not diamonds? Eighty years ago just one bride in 10 wore a diamond engagement ring. De Beers spotted an opportunity and exploited it. They even went on tell the groom he should spend a month's wages on it. But today's young diamond buyers haven't been exposed to such campaigns. De Beers' grip on the market has weakened and its unbranded "a diamond is forever" campaign belongs to another era.  Today's young diamond buyers don't buy the carefully-crafted marketing illusion that diamonds are rare. They want the sparkle, not the sentiment. And preferably without the inevitable damage to human lives and the environment that comes with a huge mining operations.

The price differential between lab-grown and mined diamonds widens with each passing year and the cost of producing them is tumbling. Their market share is increasing by as much as 20 per cent a year, according to research for the Antwerp World Diamond Centre. Signet, the world's largest diamond retailer, is on board with lab-growns, half of independent jewelers in the US are selling them - and at considerably higher margins than mined stones (MVI Marketing).  It's not hard to see why the average consumer would see a lab-grown diamond as a win-win. The only downside, if it is a downside, is that they're buying a new stone, rather than one that can boast a billion or more years of history. As far as they're concerned, paying half-price for something that's chemically, physically and optically identical to a mined gem will seem like a pretty good deal. The diamond establishment understandably places great value on the sentimental back story to a diamond that started life 100 miles below the earth's surface. But that's not a message that your typical Zoomer/Generation Z (anyone born 1997-2012) wants to hear. King Canute failed to stop the tide. Bourses should look to the future.

Have a fabulous weekend, and a fabulous 2021!