India’s LGDs are cheaper however pure diamonds will nonetheless be in demand

Demand for lab-grown diamonds in India has grown steadily, however naturally mined diamonds will not be dropping their sparkle any time quickly, business consultants say.

India at the moment has the world’s largest youth inhabitants. Increasingly millennial and Gen Z buyers have been captivated by the so-called LGDs due to their value level, analysts informed CNBC.

The value of a lab-grown diamond will be 5 instances cheaper than a pure diamond, however they’re each chemically an identical.

In line with Limelight Diamonds, certainly one of India’s largest LGD jewellery manufacturers, a pure diamond is priced at round $6,000 per carat whereas its LGD counterpart is simply $1,200.

Each are additionally graded primarily based on the 4Cs — readability, shade, reduce and carat — the broadly accepted customary traits to find out a diamond’s worth and high quality.

Gross sales of LGDs have skyrocketed as consumers in India who have been beforehand unable to buy diamonds on account of their excessive price now really feel they will enter the market. 

“Beforehand, lower than 5% of Indian ladies have been capable of afford pure diamonds,” mentioned Pooja Sheth, founder and managing director of Limelight Lab Grown Diamonds.

“However shoppers are feeling it is extra worth for cash to buy a lab grown diamond and there’s a large quantity of incremental demand from new purchases who’ve by no means purchased a diamond earlier than,” she commented.

India is at the moment the second-largest lab-grown diamond producer, behind China which accounts for at the least half the world’s manufacturing.

Edahn Golan, the CEO of Edahn Golan Diamond Analysis and Knowledge, mentioned he is optimistic the South Asian nation might quickly be No. 1.

China’s LGD market is larger by way of manufacturing, however it’s not sharpening as many gems as India, Golan defined. “The know-how that’s utilized in India is much extra refined, and has rather more room for enchancment over time sooner or later,” he informed CNBC in a telephone interview.

“China could make extra diamonds with the know-how they’re utilizing, however India could make extra, and make them higher.”

Limelight Diamonds has offered 10,000 carats value of LGD jewellery from April 2022 to March this yr, in line with the corporate. Sheth claimed the corporate has already seen practically twice as a lot gross sales from simply April to September this yr.

Nevertheless, Sheth identified that many consumers aren’t essentially spending much less when shopping for LGDs.

“Lab grown diamonds have supplied a buying improve. Though costs are cheaper, many aren’t lowering their budgets,” she mentioned.

“They’re both upgrading themselves with a much bigger rock, or shopping for a pendant and [a pair of] earrings with that.” 

A lot of the optimism surrounding LGDs in India will be attributed to Prime Minister Narendra Modi’s state go to to the White Home in June when he gifted First Girl Jill Biden a 7.5 carat gem that was made within the South Asian nation.

“The notion in the direction of lab grown diamonds all of the sudden modified and that actually altered the expansion of lab grown diamond acceptance within the nation,” Sheth mentioned.

“It is about opening up a complete phase of Indian audiences that haven’t been capable of buy diamonds earlier than.”

Regardless of a lot optimism, LGD consumers nonetheless view the jewel as an entry level to the diamond market and can most definitely buy pure diamonds after they have a extra buying energy in future, analysts informed CNBC.

“Lab-grown diamonds at the moment are the discuss of the day. However When you’ve got sufficient cash floating round, you will basically purchase a naturally mined diamond,” mentioned Tehmasp Printer, CEO of the Worldwide Gemological Institute.  

“Millennials and Gen Zs could go for a LGD after they need to get married, however change to a naturally mined diamond down the highway,” Printer informed CNBC.

“When you’ve got a Toyota, you will need to purchase a decrease finish BMW after earlier than you lastly get a [Mercedes-Benz] S-Class. It is a query of improve.” 

Paul Zimnisky, CEO of Paul Zimnisky Diamond Analytics, agreed.

The expansion of the LGD market won’t make a marginal shift on pure diamond gross sales, Zimnisky mentioned.

“Man-made diamonds symbolize round 20% of the whole business within the worth offered. It was principally zero 10 years in the past, so it has been rising quickly on a relative foundation,” he mentioned.

“However I believe it will be incorrect to say that is the first motive why the diamond value is softer this yr. It is principally a return to normalization.”

Zimnisky highlighted that spending on jewellery elevated when Covid restrictions have been lifted globally, pushing diamond costs to their peak in February 2022. 

Costs have come down by 25% since then, in line with Zimnisky’s International Tough Diamond Index.

Knowledge from the analytics agency predicted that demand for world diamond jewellery will fall to $81 billion this yr from $89 billion in 2023, which remains to be larger than $75 billion in 2019, earlier than the pandemic hit.

Nevertheless, Zimnisky cautioned that hassle might be not far away for LGDs if costs for the gem proceed to fall too due to how quickly they’re being produced.

“I believe the worth at retail is not reflective of how low the uncooked materials costs are and the retail value for the man-made diamond might actually proceed to go decrease … that is the danger for the lab diamond business,” he warned, predicting {that a} three-carat LGD solitaire ring might ultimately promote “effectively below $1,000.”