Can Lab-Grown Diamond Startups Survive?
As I love learning about diamonds and sharing what I know with my readers on this site, I try to keep up to date on these gems whenever they come up in the news. Today I was browsing through Google News and I came across this article off of Yahoo Finance that discusses the viability of lab-grown diamonds.
Artificial diamonds have always been a pretty controversial subject in this industry, where mostly everyone takes a side – whether they are inferior or if they are as good as the real thing. This article I found provided some pretty interesting viewpoints, as well as illustrates a shift in opinion from some of the industry’s biggest names.
Are Lab-Grown Diamonds a Threat to Big Diamond?
The article starts off by correctly stating that in the beginning, diamonds that were made in a lab weren’t seen as much of a threat to the big companies in the diamond industry.
Everyone wants a real diamond, not a fake, was the thinking.
However, due to their lower price points, as well as the increased sophistication of the technology to create something that looked just like the real thing, their popularity began to rise. This couldn’t be more evident than when De Beers, one of the longest-running names in the diamond business, announced that they would start to offer lab-grown diamonds. Previously, they had referred to them as inferior.
Due to economies of scale, De Beers will be able to sell their artificial diamonds at even lower price than the other smaller companies that create them. The crux of the article is the question of whether or not the smaller players should be worried about this. An interview with a founder of a lab-grown diamond startup, Clean Origin, doesn’t think De Beers’ strategy will work. He claims that, despite reports to the contrary, prices for these kinds of diamonds are not coming down, and he actually has to turn away customers. There is much more demand than there is a supply of lab-grown diamonds, which keeps prices at a steady level if not increasing.
Furthermore, the price to produce a lab-made diamond has decreased at the same time. It used to cost around $500 per carat to produce previously, and now is around $300 per carat. This is increasing the margins for manufacturers of these gems and allowing them to increase their production to as much as their capacity can take, if not expand their operations. The fact of the matter is, despite De Beers entering the market for lab-produced diamonds, there is even less barrier to entry than before for the smaller producers and an even more lucrative business than ever.
I have already given my thoughts on lab-grown diamonds in this post, but am curious to see what my readers think. Do they measure up to the real thing? Is a natural diamond a requirement for you, or your partner? What would make you choose one over the other, other than the price? Leave your thoughts in the comments below!
