The diamond industry failed to understand consumers and anticipate the rise in popularity of lab-grown diamonds, said Fergus James, owner of Dubai-based jewellery brand Fergus James.
In a recent episode of the AB Majlis podcast, Senior Reporter Tala Michel Issa spoke to jewellery brand owner Fergus James about the changing dynamics of the industry.
James founded his Dubai-based brand 11 years ago after noticing a significant price difference between diamonds sold in the UK and Dubai. He initially dealt only with natural diamonds but began offering lab-grown diamonds in response to customer demand around four years ago.
Lab-grown diamonds’ price dynamics
At the time, lab-grown diamonds were around 15 to 30 percent cheaper than natural diamonds. However, James observed that “the bigger the diamond, the more expensive the natural, the bigger the saving” for lab-grown. He provided the example that a typical one-carat natural diamond may cost $6,000-7,000 versus $2,000 for a lab-grown equivalent.
“We started getting inquiries for lab-grown diamonds, and we dealt with those on a purely reactive basis. And what we found very quickly was that given the price differential, or the difference in utility, people would choose lab-grown,” he said.
“There was a point at which consumers thought: wow, I can’t justify spending this on natural anymore. I will go for lab options.”
James noted that “chemically physically, visually, they’re identical” aside from their origin. He stressed that certification houses like GIA grade both types of diamonds identically and that even experts would struggle to tell them apart visually.
“The analogy I like to give is you’re looking at two kids, same age. One is an IVF baby and one’s natural. It’s the same thing. the only difference is the way it’s cut.”
When De Beers launched its lab-grown brand Lightbox a few years ago, James felt they “completely forgot” how to market and brand it effectively. De Beers had aimed Lightbox at younger consumers but provided little marketing framework, so “consumers just did what they wanted.”
Meanwhile, plummeting lab-grown prices created a “perfect storm” that accelerated their uptake. James observed natural diamond prices rising significantly during COVID due to mine closures, while lab-grown diamond prices were “slashed massively.” This 60 to 70 percent saving on lab-grown versus natural became impossible for consumers to ignore.
James shared that customers now view lab-grown diamonds as the obvious choice based on “buying utility.” Wealthy clients including celebrities and Premier League footballers have proven just as likely to choose lab-grown for the savings, contrary to expectations.
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