Dubai: Consumers buying lab-grown diamonds as prices drop sharply

Consumers have accepted lab-grown diamond (LGD) as a jewellery product but the initial euphoria has faded resulting in lab-grown diamond prices dropping sharply in the past year, industry executives said at a conference in Dubai on Monday.

Anish Aggarwal, Co-founder and Partner, Gemdax, said LGDs are no longer untested products, therefore consumers have embraced them.

“We are seeing prices and margins erode at the wholesale level. We see some retailers offering heavy discounts and some even talking about leaving the industry altogether. This is an early-stage industry, therefore, business models can evolve and the entire industry chain may reshape,” Aggarwal said during the inaugural edition of the Lab-Grown Diamond Symposium hosted by the Dubai MultiCommodities Centre (DMCC).

Dozens of LGD growers, wholesalers, retailers and other industry players from the UAE, Middle East, India, China, the US and Europe participated in the conference.

Accounting for just two per cent of the overall diamond industry, the lab-grown diamond popularity has been growing with India emerging as a major player in this field. Recently, Indian prime minister Narendra Modi gifted US president Joe Biden and First Lady Jill Biden a 7.5-carat lab-grown diamond during his visit to the US.

Ahmed bin Sulayem, executive chairman and CEO, DMCC, said LGD’s global demand has risen rapidly, driving consumer interest and disrupting traditional models.

“The rise of LGD in recent years has been truly remarkable. In 2022, UAE had imports and exports of over $1.5 billion, up by 126 per cent per cent over the previous year. We expect this growth will continue as LGD trade becomes more established,” he said, adding that one of the main reasons for the high demand is their price points making them accessible to a larger consumer base.

Price drop

Toby Cruse, general manager, Rough Diamonds, Diamond Foundry, pointed out that LGD prices have dropped to one-fifth in four years.

Some industry executives claim that the prices of LGD have dropped by nearly half.

While speaking during a panel discussion, Dr Snehal Patel, CEO, Bhanderi Lab Grown Diamonds, said the price reduction of diamonds is a major hurdle for manufacturers in the last year.

“Market is not getting stabilised, so ultimately jewellers and retailers are in a dilemma that should we keep the stock, should we buy a lab-grown diamond and make jewellery and sell it to retailers. The entire supply chain is disturbed. This is the major issue we are facing in the past year,” Patel told the audience.

Liang Weizhang, senior strategy advisor, Crysdiam Technology Co., blamed improper market and huge production for the price decline in the past year.

“Technology has brought disruption to the diamond jewellery industry so we are also seeing the challenge of price decline… We didn’t do marketing well and the industry can’t handle huge production,” added Weizhang.

Hasu Dholakiya, founder, Craft Lab Grown Diamonds, was more optimistic and called on industry players to come together to control price decline.

“Margin is there so players will not leave the industry. Retailers are happy with the product, but it is not time for growers to sell themselves but come up with joint ventures with manufacturers, retailers or wholesalers. That way we can maintain price and demand,” he suggested.

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