The Natural Diamond Council (NDC) is concerned that “a minority” of lab-grown diamond companies are using “bad statements that are untrue” to create mistrust about mined diamonds.
“That’s (bad statements) damaging for the lab-grown diamond industry and natural diamond industry. Most responsible lab-grown diamond manufacturers don’t want that to happen. They rely on the natural diamond industry to build the desire (among consumers),” said David Kellie, Chief Executive Officer (CEO) at NDC.
Some lab-grown diamond companies are spreading “malicious information” that is damaging to the whole industry, NDC has begun to take action through the Advertising Standards Council of India, he said.
“We have just had a very successful outcome with our first complaint, but we have several other complaints that are there. We hope that through that process, this will stop those making false, damaging statements against the diamond industry and act as a deterrent for others,” Kellie, who was recently in India, told businessline in an online interaction.
No impact on China, India
On the impact of lab-grown diamonds on mined diamonds, the NDC CEO said lab-grown diamonds have had a negligible impact in India and China. “They haven’t really penetrated into these markets in any kind of scale. So, the US market is the singular market where lab-grown diamonds have penetrated. It’s an interesting market because there is a high consumer awareness of them. It’s very much a status-driven market,” said Kellie.
People in the US like big diamonds and get it as cheaply as they can. “So lab-grown diamonds fit with that. The big challenge with that is retailers are now finding that it’s uneconomical to sell them because of the huge decrease in the prices,” he said.
A consumer who may have walked in with $5,000 to spend doesn’t spend that amount of money now. He/she can spend half of that if they want a lab-grown diamond. “That’s disastrous for the retailers. So there’s a huge shift happening in the US. That is why now the retail model doesn’t work for lab-grown diamonds,” said the CEO of NDC, originally the Diamond Producers Association when it was founded in 2015.
Short term volatility
There is a big shift back towards natural diamonds. It will make retailers in India and China much more cautious about selling lab-grown diamonds because of the impact they have seen in the US retail market, he said.
The US accounted for more than 50 per cent of natural diamond polished wholesale demand globally in 2023, followed by China and India with a combined 25 per cent share of global polished wholesale demand.
On the current situation in the diamond industry, he said it was like most natural resource markets suffering from “some kind of short-term volatility”. “We are going through a downturn at the moment within the industry that comes off two incredible years in 2021 and 2022 when we had record highs. Probably, China hasn’t really recovered after Covid,” Kellie said.
The industry was right to anticipate that when China opened up after Covid the market would boom like it has done in the rest of the world. But it didn’t happen, which led to obviously higher inventories within the industry.
Biggest single issue
“So the biggest single issue has been the challenging economic situation in China …,” said the official of NDC, which is a not-for-profit organisation having offices in New York, Mumbai and Shanghai, besides a few people dotted around Europe.
On some of the diamond companies in India announcing a holiday period of over a week, Kellie said this was to balance the supply and demand situation in the market. “The situation affects every part of the supply chain. If there’s a requirement to reduce the supply to match the demand, that impacts everyone from the diamond producers to the manufacturer, the cutters, the polishers as well. So yes, it is painful, but it’s necessary to balance out the supply and the demand,” said the CEO of NDC, which is funded by diamond producers.
He said everyone in the industry is now looking to see how the festival and holiday seasons perform in India and the US. This is to particularly see what the level of confidence is in the market towards the end of the year, he said.
On the other hand, the NDC team “has been in conversations” with the retailers. “I think the feeling is that they’re feeling more positive about the holiday season, the festival season ahead of the year. Obviously there’s always factors that can change that, but that’s as it stands at the moment,” Kellie said.
No US polls impact
The US market is a split one. The high end of the market is doing well. “The consumers there are buying from wealth and wealth is doing well. Stock markets are at record highs, so those consumers that have wealth are in a position to buy those,” he said.
Consumers who buy from income are “more challenged” because inflation has affected the money in their pockets. “So in the US, which is more than 50 per cent of the world’s diamond market, we have this position by which the market is split between the high-end and the mid-tier,” the NDC CEO said.
Though US Presidential elections are scheduled in November, Kellie said he did not think it would have an impact on the economy there. “Everyone is feeling positive. I think cautiously positive would be the best way to describe it,” he said.
Record gold prices impact
On the impact of gold prices rising to record highs this year, he said the precious metal was a unique commodity and no other product in the world behaves like gold does.
This is for two reasons. One, it is an investment asset. In India and China, it affects the jewellery industry. “It is a very unique category. I think diamonds don’t work in the same way, although they retain their value in the same way, and over history have proved to be a good investment,” said the NDC CEO.
Diamonds are bought for their beauty with people knowing in the back of their minds that they are a good investment as well. “... but it doesn’t behave like gold. I see very different mindsets as to why people buy them (diamonds),” he said.
Opportune time
On whether this is the right time to buy diamonds, Kellie said though prices are low currently, they could start rising the next few months. “If you want to be opportunistic (in buying), you know buy at the bottom and take advantage of it,” he said.
Stating that NDC’s focus is on Gen Z or younger generation and millennial consumers — mainly women, Kellie said since they are hooked on to their phones, the council targets them through YouTube and Instagram in India. In other markets it is TikTok and in China, it is Weibo and WeChat.
“Through these mediums, we are able to communicate the values of natural diamonds. It (Gen Z) is really showing great interest and they want to be the latest in the fashion stake,” the NDC CEO said, adding that in India, the engagement ring market is growing.
For the current festival period, NDC — which has its members De Beers, Petra (South Africa), Moroa (Zimbabwe), Rio Tinto (Canada) and Bostwana-government-owned Okavanga diamond Company — will be running campaigns shortly. “We can’t announce that just yet. But it’s about showing up every day in a really engaging, inspiring way on the social media platforms,” said Kellie.