The global Coronavirus pandemic has taken a huge toll on all industries including Gems and Jewelry. With countries sealing their borders, cities under lockdown and an economic meltdown with businesses forced to remain shut, no one knows how long these uncertain times will last. Restriction on movements has led to cancellations or at best postponement of major jewelry trade shows.
Various jewelry businesses are taking some measures to tide the crisis including ‘Spring Sale’, free shipping, unique marketing messages, focus on online sales etc. Even the traditional mined diamond industry is toying with online trading to conform with the ‘Social distancing’ advisory. However, none of these seem to be working.
Between 10th and 20th March, retail sales of gems and jewellery in India have plummeted an estimated 80 percent, according to All India Gems and Jewellery Domestic Council (AIGJC). Production and exports of gold and gold jewellery is already witnessing almost 50 percent drop in March. Gems and Jewellery exports from India saw a 20.26 % fall in February 2020 compared to last year. Moreover, while India remains an export hub for polished diamonds since majority of mined diamonds globally are processed in India, exports of cut and polished diamonds declined by 40.66 percent in February YoY.
Amid the fear and chaos, splurging on luxury in these turbulent times is definitely not on top of anyone’s agenda. Coronavirus outbreak had added to the woes of diamond industry that was already suffering from various crisis since last few years, with many players even staring at a catastrophe. 2019 earnings of diamond mining major De Beers fell by 87% as the average price of the gems declined by 20 percent.
In such a scenario, Lab-grown diamonds are shining bright. Exports of Lab-grown diamonds from India increased by 60 % in February 2020 year-on-year. According to India’s Gems and Jewellery Export Promotion Council (GJEPC), between April 2019 and February 2020, total exports of Lab Grown Diamonds rose by 108% compared to same period last year. In comparison, overall exports of polished diamonds fell by 19% in the same period.
While there are several value propositions including conflict-free, environment friendly, socially conscious among others that give Lab-grown diamonds the upper hand, this time the primary reason of Lab Grown Diamonds striking over mined diamonds may be basic economics. Depending on the size and shape, LGD are 20-80% cheaper than mined diamonds. According to analysis by New York-based diamond industry analyst Paul Ziminsky, Lab-grown diamonds are currently selling for 45-55% less than equivalent mined diamonds.
At the time when people are hoarding onto cash for essential commodities, those who still need gems and jewelry would rather opt for the alternative that provides better economic value. And hence, Lab-grown are outperforming the market.
Ziminsky also estimates that Lab-grown diamonds produced for jewellery will be around 5 million carats this year, 35% more from last year.