JCK Lab-Grown Section Shows Rising Demand

RAPAPORT... At JCK Las Vegas, lab-grown-diamond exhibitors havemushroomed nearly as much as opinions about the stones themselves. Toaccommodate growing market needs, organizers debuted the Lab-Grown DiamondNeighborhood at the 2018 edition of the trade fair."There may have been exhibitors that had lab-grown in theshow in earlier years, but they weren't grouped together in a neighborhooduntil 2018," says Sarin Bachmann, event vice president for JCK and Luxury."Lab-grown diamonds are a growing segment, and it became important for ourbuyers to have clear delineation of the category." This is why the show added a 6,400-square-foot designatedsection for 29 lab-grown exhibitors to display both loose stones and finishedjewelry last year. It's also why the area increased its footprint by 40% thisyear, with nearly double the number of participants. 'They're not going away'Proponents of lab-created diamonds see opportunities for thestones to share case space with mined ones, as lab-grown constitutes anotherway for consumers to spend discretionary dollars on jewelry as opposed to otherproduct categories. Indeed, lab-created diamonds helped fourth-generationjeweler Pia Aiya's family business stay afloat during the recession."Lab-growns came out of need but grew into something more," says the AiyaDesigns director of operations. "They are another avenue or tool." Raj Vaidya, owner of six-month-old DiamSpark Lab GrownDiamonds, agrees. "They're not going away," says Vaidya, whose parent companyhas been in the mined-diamond industry for 25 years. "The affordability of lab-growns has increased the public'sawareness of them," he adds. "And the industry is actually buying them inlarge-scale quantities - like 1,000 at a time. They are not on memo." Price may be the biggest factor in customers' purchasingdecisions - synthetic diamonds can cost a third of what natural ones do,according to interviewees - while sustainability and transparent sourcing areclose behind. Evolv, a division of longtime manufacturer Joseph Blank,dipped its toes in the lab-grown-jewelry waters in 2016, though sales have beenslow until recently. Now the business is every bit as viable as mined diamonds."There's less resistance from consumers and more from theindustry, though we continue to get gradual increases in requests for them,"explains CEO Douglas Blank. "Our company is 100 years old, and lab-growns arekeeping me busy and our phones ringing." Of course, the individual purchase figures can lookdisappointingly low compared to natural. "We just sold a 3.50-carat lab-grownstone for $13,000 that would have been $30,000 in a mined diamond," he relates.Demand for moreOf all the pros and cons, the most compelling argument forselling lab-created diamonds is that consumers are buying them. For Sehal Mody, chief operations officer at GoGreenDiamonds, the proof is in the sales. His firm - a four-year-old division of a40-year-old natural-diamond-jewelry manufacturer - has gone from making abouttwo sales a month 10 years ago to getting retailer requests for entireshowcases full of both loose lab-grown diamonds and finished jewelry. "Retailers are looking for bridal and fashion basics," hereports. The biggest impetus for sales? Lightbox. Before the De Beerslab-grown jewelry line emerged, many merchants were hesitant to embrace thisproduct category. Now sales are heating up, as is evident from the expandingLab-Grown Diamond Neighborhood at JCK. At press time, JCK Las Vegas was stillfinalizing plans for the section's further growth in 2020. Blank has alreadyrequested a booth double the size of this year's. "Lightbox really opened up the market," affirms Mody. Fenix, another lab-grown company, used virtual reality atits JCK booth to present the gems as a product that offered consumers a choice.In a five-minute experience, retailers could see the growing and cuttingprocesses for themselves - the latter carried out at a factory in India. "We're not looking to pick a fight about what's better ornot," says brand-builder Andrea Hansen, who aided Fenix with its campaign. "Butwe are well-equipped for volume, from 30 points to 3 carats and more.Lab-growns could dominate the fashion space." Bigger as they goThat speculation paves the way for the inevitable questionof what's next for synthetics. Many are saying bigger pieces of finishedjewelry, and definitely more sales - though how much more is anybody's guess. "The percentage of lab-grown sales may just be 2% now, butif 2% becomes 3%, then we've seen a 50% jump," says Kinish Shah, owner ofSplendid Lab Diamonds. A 27-year veteran of natural diamonds under Surediam,his company began working in synthetics three years ago. Of course, proponents of both types of diamonds exist andhave "diamond dreams," according to Hiren Goti, CEO of newcomer SkyLabDiamond. He says he doesn'tunderstand the negative opinions about lab-grown. "I don't know why people areso worried. You can't stop shoppers from buying what they want. It's theirchoice." Lightbox liaisonsMembers of De Beers' Lightbox team remained cool underquestioning at JCK Las Vegas as they addressed a packed conference room aboutthe company's lab-grown-jewelry product. That included queries about those whomight manipulate inscriptions on stones larger than 0.20 carats to deceivebuyers. "We're not here to police the rest of the industry," saidchief merchandising officer Sally Morrison, "but we could maybe work with theInternational Grown Diamond Association [IGDA] to help create standards for theoverall health of the sector and to not undermine consumer confidence." Lightbox CEO Steve Coe offered clear communication about themanufacturing process for the brand's fashion-forward pink and blue colors,which come in basic styles like studs and pendants. He also pointed to broader gifting opportunities likesweet-16 presents at retail prices ranging from $200 to $1,000. In addition, the stones aren't graded, which reinforces thefact that they're manufactured like other mass-produced items. "There's not onethat's better or worse than any other in the lineup," said Coe. Meanwhile, women of all ages and ethnicities have said theyfind the jewelry appealing and feel pretty wearing it, according to brandresearch and video testimonies. And Lightbox's $94 million investment in amanufacturing facility in Gresham, Oregon, which is slated to becomeoperational in early 2020, signals how important the US market is forLightbox's business.This article was first published in the July 2019 issue of Rapaport Magazine.Image: Lab-grown-diamond companies' booths at the 2019 JCK Las Vegas show. (JCK Events)