Since the Lab Grown Diamond Council debuted last year at JCK Las Vegas, the group has spent much of its time considering the finer points of sustainability. Determined to make good on its goal of developing a sustainability mark program that’s open to the entire diamond category, the nonprofit has worked with Emeryville, Calif.–based SCS Global Services to define what words such as eco-friendly actually mean in the diamond trade.
“Without a data-driven support for that term, it’s an empty term,” says council president Chris Casey. “We should be defining it so people have a complete understanding of what they’re really saying.”
Casey recently spoke to JCK about how he and chairman Michael Barlerin are making “slow and steady progress” on their lofty goals, including a wide-ranging educational initiative that includes a glossary of terms that can be used to define and promote lab-grown diamonds.
“There’s a buzz, but a lot of the buzz is inaccurate,” Casey says. “Everything we do needs to be fully compliant.”
How is the sustainability standard coming along?
The preliminary standard is complete. Five growers have submitted for review under this first preliminary standard. And the timeline hopefully has us making an announcement of compliance by JCK Las Vegas. It’s incredibly nerdy at one level. The standard is 83 pages long. Our view is that unless it’s done by a true third-party person, all it is is different parties throwing dirt at each other. SCS has been [a third-party certifier] for 35 years.
How many growers are there in this world and therefore eligible for compliance?
That’s the magic question. There are a couple reasons why we can’t answer it. Some companies are distributors that claim to be growers, so who’s actually making them and who’s marketing them? The second part is that there are subsets of growers. Nobody really knows the number of Chinese actors. The big quality players out of China are known. But that whole secondary market of smaller or large producers that are producing lower-quality HPHT goods—we have no sense of that market.
Are most growers interested in getting certified as sustainable?
It depends on the marketing intent of the company. Go into Home Depot and look into flooring products: Some are marked “sustainably farmed and produced” and some are not. It’s a market segmentation strategy. For some players it’s critically important from a business philosophy point of view to be sustainable and to respond to consumer needs.
We know in the lab-grown world there are customers who’d appreciate a third-party verification of sustainable goods. And by the same token, some customers are going to buy on a value proposition and the salesmanship of the retailer, and for those people a sustainability mark probably doesn’t make sense. It’s not mutually exclusive for the supplier; they could be both. But we firmly believe there is a market for goods that have been sustainably produced.
What’s next on your agenda?
There’s a clear need for realistic, updated education. To the council, that means working on three projects. One is working with retailer-owners: “Here’s the category, here are the margins we’re seeing”—so they can make fair decisions on whether this category is correct for them.
The second one is retail associates. Some of this is very basic. “What’s the difference between CVD and HPHT?” That information is not always filtering down to the associate. Many times we encounter customers who are very well researched about lab-grown diamonds. We’re creating a sales associate program online. You can click through it and certify that “I’ve completed the Lab Grown Diamond Council sales associate program.” We’re targeting the end of April. Targeting is definitely a word in there.
The third element is creating a common glossary we can all use.
How do you go about doing that?
Painstakingly. We’re working with someone who’s spent time in the industry writing. Then we get a sense of what’s being used online. We’ll do a first pass internally. Then we’ll have a group of companies, from retailers to growers, come in and help us work toward common definitions. The tricky part of that is, there is no compliance mechanism. Anyone can still say anything they want. But our goal is that we can work together to call each other out on it.
We’ll work on expanding a set of terms for the industry on CVD techniques, treatments, issues that bring it to a greater level of detail. We’re looking to get all three legs of the education piece by the end of April.
What else is on your plate?
We’ll be collecting data that will start to answer some of the issues out there: Are retailers really making better margins on lab-grown? Is the wholesale price continuing to decline at an incredible rate? What are sales by category? Many of us believe that lab-grown should have a fair share of the center-stone market, but there’s finished jewelry that may provide a more meaningful opportunity over time. I know a grower who says, “Why would a tennis bracelet ever be anything but lab-grown?”
And then we’re also working on this question of residual value. Here’s our position: The story on lab-grown diamonds is they’ll have no value because the technology will continue to increase at such a rapid rate that we’ll make these things for pennies on the dollar. So why would you sell an old one? We’re supporting secondary market initiatives and trading platforms—a trading platform indicates there’s an underlying pricing for these goods. We see this as a key need. So the research will look at what’s going on at retail and what’s supporting the underlying valuation of goods.
How do you see the lab-grown category in, say, five years?
Our very firm position is this is simply an opportunity to develop a new category in the marketplace. There’s no doubt it will take market share from existing categories, and there’s a value proposition about why that should expand. But it’s also a product that has the ability to expand the fine jewelry category. For many years, we’ve talked about bridge jewelry and that transition from non-fine to fine. We think this category has the ability to do that.
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