Lab Grown Diamonds (LGDs) are slowly making inroads into the Indian market, but it remains to be seen as to whether Indian consumers are ready to accept them as real diamonds. Globally, they have gained acceptance in a big way, particularly in the US. However, here in India, the going has not been so easy for LGDs.
LGDs were introduced in India in 2004, and have evolved from being only yellow stones to clear white and now available in all fancy colours. According to GJEPC, India accounts for about 15% of the global production of LGDs; exports of polished lab-grown diamonds stood at $1.3 billion this year, nearly double compared to $636.25 million in FY 2020-21. In the domestic market, the major buyers are space, research and industrial equipment industries, with jewellery manufacturers accounting for only about 2% of the pie.
As per a WiseGuy Survey Report, globally, the LGD jewellery market is growing at the rate of 28% annually, while the LGD segment of the Indian gem and jewellery industry is growing at the rate of 105% annually. GJEPC has estimated that the LGD segment has the potential to grow to Rs 40,000 crore, from the current Rs 10,000 crore in the next five years.
HOW READY I S THE INDIAN
CONSUMER?
LGDs came into India in
2004, when Fiona Diamonds
was founded. The company
started its business in LGDs
in the year 2007, and opened
its first outlet in 2013 in
Mumbai. Parag Agarwal,
Founder & CEO Fiona
Diamonds, says that in his
experience “the Indian
consumer is not yet aware
about LGDs, so acceptance
will come after awareness.”
Ishu Datwani, Founder,
Anmol Jewellers, describes
the psyche of the consumer
when he says, “In my opinion, people who prefer real diamonds prefer them for their rarity and timelessness. Real is rare, and therefore precious. This segment is going to stay loyal to the real diamonds as they won't consider LGDs as real diamonds. However, there is also a segment that will buy LGDs. This category is the one that wants to enjoy wearing diamonds but either doesn’t have the taste for, or the budget for real diamonds. The value of LGDs has been depreciating over the past five to seven years, whereas real diamonds have always gradually appreciated. Both categories cater to two different markets. As far as Anmol is concerned, we believe real is rare and will always cater to the consumers of real diamonds. If one had to make a comparison, it’s like some consumers would only buy real, original and authentic high-end branded bags and then others who would buy the first copies.” According to Shivika Poonglia Patel of Itara Jewelry, Mumbai, “The educated Indian consumer is evolving and on par with the western consumer in this aspect. So, definitely, they are looking for products that are newer, more in line with environmental concerns and on price points. Millennial consumers are aware and conscious of their purchase like never before, and have reached a point where decisions are based on modern global values of environment suitability and cost effectiveness. The Indian consumer is ready for LGDs, as this is a product that is environment-friendly and conflict-free, looks and is the same as a mined diamond, but is also available at an attractive price.”
A.V.R. Siddhanth, Director at AVR Swarna Mahal Jewellers, says, “Last year this time around, I was not convinced. However today, I can say with full confidence that the Indian consumer is more than ready. Earlier we were hesitant to launch LGD jewellery and wondering if we should go ahead or not. But our customers gave us the confidence and our first sale was a whopping 150 carats. We literally didn’t have any LGD stock when we received this special order. Once we sold 150 ct, we gained confidence to launch our own LGD brand, Evaglow. It has been four to five months since we launched LGDs and the entire merchandise was sold out and this is a testament to the fact that Indian customers are ready for LGDs.”
DEFINING THE CONSUMER
According to Shashikant
Dalichand Shah, Chairman
of the Lab Grown Diamond
& Jewellery Promotion
Council, “The Indian woman
who is aged 45 and above will
not accept this category of
diamond, as she has known
and touched a real diamond.
However, if that woman was
essentially an A+ or HNI
category of client, it would be different. The global profile
of the lab grown consumer is
of a lady who is aged 18 to 35
and falls in the B+ category,
employed in the IT sector
or is service-oriented. The
population of B+ consumers
globally falls in the range of
about 55%. However, in India
the population of 18 to 35 is
mostly of couples and ranges
about 60% of the population. So, if this category is accepted
by them, the kind of demand
that would arise keeping the
population of consumers in
mind would be unprecedented.”
According to The MVEye
research findings, the core
consumer groups buying
lab-grown diamonds, or the
global next generation of labgrown
diamond buyers, are
25- to 38-year-old millennials
in the first segment who are
already aware of LGDs. The
second segment includes 25- to
38-year-old millennials who haven’t heard of LGDs, but
are easily convinced to learn
more. The third segment
includes upgraders aged 55
and above, looking to upgrade
their wedding rings. There
is an interesting three-anda-
half segment also of selfpurchasing
females of all ages.
Talking about her
experience, Patel says, “A lot
of our natural clients have
converted into lab grown and
my business is pretty much
100% lab grown now. There
is enough demand for me to make an independent business
of it on my own. Conversion
will take time, but will surely
happen as far as this group
is concerned. Once this
group reaches an age where
they can make purchase
decisions themselves, it will
open up an entire new world
of consumers. A lot of our
current customers are younger
working individuals, and of
course there are people who
are old timers as well, who
have adapted to this product
but there is so much potential
in the younger lot.”
profit that is in the turnover
will be in percent format.
So, in natural diamonds, the
turnover is naturally two to
three times because people
who purchase will come once
to make a purchase, not visit
often. In LGD, the lobby will
be greater, the turnover will
be more, and the business will
be over six to seven times, so
your profit will be more.”
According to Agarwal “The major hurdle always
is awareness and reach.
Currently, there is no
awareness regarding LGDs in
the market. Retailers do not
educate their customers about
it since they are worried about
selling their inventory of
natural diamonds where they
have already invested heavily.
If you go back to the late
1990s, even natural diamond
aspiration and awareness
was not much. But then De
Beers asked each sight holder
to launch a consumer brand
because of which aspiration and awareness grew. We need
more and more brands to
come up with LGDs to spread
awareness. Transparency
and transfer of information
is very important while
creating awareness. And all
this should be backed up with
the right merchandise of
products in each category of
jewellery, like rings, earrings,
pendants, etc. The mindset of
consumers has to be kept in
mind as they are always going
to compare the pricing of
the same product in natural
diamonds.”
People are moving away from the concept of ‘diamonds are an investment,’ says Patel. “A lot more focus is on wear-ability. LGDs offer Indians the opportunity to not only purchase a real diamond, but wear it and flaunt it every day. At Itara, we try to integrate diamond jewellery into everyday life, especially with the designs that we offer. A lab grown product is so versatile, gives people the opportunity to wear diamonds, at the same time be sustainable.”
Adds Pooja Sheth Madhavan, MD & Founder of Limelight Lab Grown Diamonds, “Awareness about LGDs is spreading fast in India. Consumers are now more educated about these real, non-mined diamonds. The unique and independent personality of lab grown diamonds as a sustainable and environmentally friendly, yet affordable gemstones, is extremely well accepted in the millennial consumers and is increasingly reflecting in the sales of lab grown diamond studded jewellery across India.”
LGDs also provide more options to retailers, as well as consumers. Says Siddhant, “Thanks to LGDs, we can have a wide range of design options in solitaires, unlike before. A jeweller can showcase 20-pointers to 7-carat solitaires, giving customers a chance to touch and feel real diamonds and increase the possibility of sales. Because of LGDs, we can have a bigger stock and an attractive range of jewellery in fancy coloured diamonds as well. The entire diamond studded industry can benefit as a majority of lab grown diamonds are grown in India and we have personally witness ed a huge demand.”
The war between Ukraine and Russia has created a shortage of rough stones. LGDs have provided respite by being readily available. Says Siddhant, “We don’t want to go against mined diamonds. There is nothing that can replace mining and naturally mined produce. Lab grown diamond is just a choice, it is another option available, like cubic zirconia, so there is another choice for a real diamond available now and it does not require the expenditure of mining and labour, so it is cost effective, and environmentally sustainable too.”
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