De Beers and the Lab-Grown Diamond Challenge

The iconic company De Beers is facing a new challenge from lab-grown diamonds. These diamonds, appealing to millennials and Gen Z, are 60-75% cheaper than natural ones, share the same chemical composition, and are visually indistinguishable without specialized equipment.

Market Statistics and Trends

• In a Deloitte survey, 52% of Indian respondents indicated they would consider purchasing lab-grown diamonds.
• The retail sales of lab-grown diamond jewelry reached $600-700 million last year, accounting for approximately 6% of the overall diamond jewelry market in India.

De Beers' Strategic Response

De Beers is responding by launching company-owned retail stores in India, aiming for 100 stores by 2030, starting with New Delhi and Mumbai.

• Introducing a new consumer-focused business model.
• Offering products from ₹20,000, contrasting their current high-value branding.
• Establishing the “Forevermark” brand and incorporating “Make in India” jewelry.

Business Model and Expansion

De Beers is transitioning from a B2B to a B2C model, planning to generate at least $100 million annually from these stores. Expansion is planned into Tier-II and Tier-III cities.

• Facilities include buyback schemes, exchanges, and monthly deposits for easier access to diamond purchases.

Focus on Authenticity and Certification

To address authenticity concerns, De Beers is offering certification services through its Institute of Diamonds in Surat and developing smaller machines for authenticity checks.

• Collaborating with the Gems and Jewellery Export Promotion Council to establish authentication standards for diamonds.

Market Outlook and Competition

Despite the lab-grown diamond trend, De Beers maintains a strong focus on natural diamond market growth.

• The natural diamond sector accounts for 10% of India's $80-85 billion gems and jewelry market, growing at 8-10% annually.
• The Indian market is projected to expand to $225-245 billion by 2035.

Consumer Preferences and Choice

• According to a Deloitte survey, natural diamonds are the second most preferred jewelry material after gold.
• Lab-grown diamonds account for 35% of purchases for everyday wear, 29% as gifts, and 22% for engagement rings.

Lab-Grown vs Natural Diamonds

Both diamond types share chemical and physical properties but differ in origin and production process.

• Similarities: Same chemical composition, hardness, brilliance, and indistinguishable by the naked eye.
• Differences: Natural diamonds form over millions of years; lab-grown diamonds are produced in weeks.