Forbes India Gem of an Idea R.N. Bhaskar ,07.19.10, 06:00 PM EDT Cultured diamonds could not only create a new market segment in India, they could even shake up the natural diamond trade. Article Controls email print reprint newsletter comments share del.icio.us Digg It! yahoo Facebook Twitter Reddit rss Lab-grown diamonds are finding many takers among consumers and merchants alike. How would it affect the industry if they were to catch on in a big way in this jewelry-crazy nation? Foreign companies are eyeing India as a lucrative market. Apollo Diamonds and Gemesis, both headquartered in the U.S., announced in 2004 that they will sell cultured diamonds. Gemesis is now entering India. The Big Tumble The direct heat of the entry of cultured diamonds will be faced The entry of lab-grown diamond dealers could reduce that market share even further and faster. Consider the facts. In 2000, the Indian industry used to cut and polish eight out of 10 stones; this year, they still cut and polish 11 out of 12 stones, according to figures given Worried about the entry of cultured diamonds. no new diamond mines have opened up. Mines have cut their output to 70% of earlier levels. India has yet to commercialize its diamond mines, which Rio Tinto and De Beers are believed to have identified. It is in this vacuum that Indian diamantaires hope to create a brand for their own diamond-studded jewelry. Since this will require deep pockets, one can expect some of the largest diamantaires in India to take the first leap. Gemesis can produce several thousand carats of cultured diamonds a year. Company sources talk of sales of a little under $100 million in 2009. But they claim growth of over 30% year on year. Market sources reckon that costs have now come down to well under 60% of the cost of earth-mined diamonds. Read All Comments In fact, the industry expects De Beers itself to start producing lab-grown diamonds and to market them through its subsidiary, Element Six. While no word on this move has been forthcoming from De Beers, many believe that the lower cost of production and the absence of environment damage could persuade it to promote lab-grown diamonds very aggressively soon. “There is a vacuum in the diamond market today, and that spells a very big opportunity,” says Shashikant D. Shah, a diamond-marketing consultant. Market Dynamics Martin DeRoy, vice president of marketing, Gemesis, talks about the way these cultured stones are now being marketed. “Both have the same brilliance, sparkle, fire and scintillation. In other words, both are diamonds.” He believes that these diamonds will play a substantial role in the gems and jewelry business. “We think it will be like cultured pearls–which had to wait for almost 50 years before becoming acceptable. But in our case, we may have to wait for less than five years.”This is why Indian diamantaires have become increasingly willing to work with cultured diamonds. “They have begun to realize,” explains Shah, “that they do not have to depend on De Beers for the supply of roughs, and then on U.S. retailers for purchasing the cut and polished stones.” It is at this stage that a $12 billion diamond market becomes a $140 billion jewelry retail business–where the actual value of precious metals may be just half the retail price. Considering that diamond studded jewelry is the largest segment of this industry–worth around $70 billion at the retail level (2005 estimates) and growing at a CAGR of 5% since 2000–that is a sizable market. Diamonds: Botswana’s Best Friend Ford’s Brand Equity in China In Pictures: Global Bling Ford’s Brand Equity in China Read All Comments
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