"Yes but, Natural Diamonds hold their resale value…labs don’t"

This is the Lei è Engagement Ring Journal.

Discover how to maximise your budget, decode the diamond industry, and ensure a smooth consultation experience.

You will begin to notice a strong uptick in the frequency and velocity of the arguments looking to impede the rise of lab-grown diamonds.

And I am going to explain why rationales to avoid labs such as 'they don't hold their value' are complete and utter bollocks. There are many fine reasons to choose a natural diamond over a lab. This just isn't one of them.

Firstly, we properly need to understand both the motivation and the effectiveness of the two largest marketing pushes in the diamond industry to be able to accurately identify the incentive behind this latest movement.

1. Diamond Scarcity; employed by De Beers in the early 20th century to create the perception that diamonds were valuable due to their scarcity, despite their actual abundance.

2. 'A Diamond Is Forever'; one of the most iconic marketing campaigns in history was launched by De Beers in 1947. They introduced the slogan "A Diamond Is Forever," emphasizing the idea that diamonds were synonymous with eternal love and commitment.

From 1939 to 1979, De Beers’s wholesale diamond sales in the United States increased from $23 million to $2.1 billion. Over those four decades, the company’s ad budget soared from $200,000 to $10 million a year.

I was amazed by the potency of these campaigns and to learn that this wasn’t an organic, behavioural market shift - but a highly purposeful, penetrative strategy that was absorbed wholesale by the global wedding industry.

The Atlanic, writes of the Ayers strategic implementation of the ‘A Diamond Is Forever’ campaign;

I am sure you can appreciate the eagerness to preserve the historic trends of natural diamonds, by managing the perception and therefore the impact labs have on the engagement ring market.

I believe this latest argument is yet another push by the diamond industry to buckle the knees of the recent lab climb. When all other parts are equal, the final decision may be swung by this 'resell value' pitch.

So let’s pick it apart…

I want to touch on one key point first. I don't believe there is a disingenuous intent of those jewellers who parrot these arguments. I'm sure that they feel that this is a very strong case for natural over lab. It's been hammered into us, top down, and there is very little nuanced discussion on the topic. It’s been gobbled up hook, line and sinker.

One fact that we have often spoken about in regards to the jewellery industry is the archaic and slow-moving ideologies and beliefs that go generationally unquestioned. Many of these ingrained 'truths' are answered as 'oh, that's just the way it works,' or, (and this is by far my biggest gripe with the industry) jewellers will often prescribe a principle that is held by the industry NOT the consumer.

By which I mean, they will say "that's just the way consumers want it…".

Really? Have they told you this? Or are you regurgitating what your supplier told you?

Once we began to speak to our customers, we were able to unravel many of these dated focal points and provide significant value by servicing what they really cared about.

This is what led us to suggesting lab-grown diamonds as a great option for your engagement ring.

Anyway, I don’t want this to turn into some personal tire pumping. I’m not on my high horse. It’s just providing some contextual reasoning for why we often have these counter-industry points of view.

That covers motive; now let's dive into the weak premise that is guided by an industry validation NOT a consumer focus.

We are told by jewellers, 'Yes, but lab-grown diamonds don't hold their value…'. Now, let's linger on this point for a while.

Firstly, this misdiagnosis of ‘value’, stinks.

If we were to loosely borrow from Maslow and use his hierarchy of needs as a structure; where do you feel the question of, 'how much will I get for this ring when I sell it' will sit? Here are the other variables in play when shopping for an engagement ring:

• Design aesthetics

• Symbolism

• Brilliance & sparkle

• Durability

• Provenance; sustainability and responsible sourcing

• Cost

Now, try to slot in the 'resale value' as a key factor in the purchasing decision…

In all honesty, can you even put it above any of these, let alone as the most important component?

It's hard enough for most people to grasp the long term importance of a low-interest term deposit - let alone believing that resale value is going to be a driving force for a couple's engagement ring, which requires them to comprehend the end of their relationship and thus the best investment for that stage of life. Ridiculous.

If this was a key aspect of the purchasing decision, then luxury or premium pricing for any other depreciating asset wouldn't exist. Luxury cars that almost halve the second you drive out of the warehouse. Wedding dresses that are worn once. Any other item at your wedding. No need to beat a dead horse here, we could continue to list items till the cows come home.

If this concept was true, you’d have two types of consumer products;

1. Purpose only. No bells and whistles. Just pure functionality

2. Appreciating assets. Things that are a good Store of Value.

But it’s not. The spectrum of why we choose one item over another, is vast. Some are highly irrational and emotionally based. Others are purely practical.

So let's assign value to these considerations mentioned above.

I believe our couples do and should place their value in areas that are shared between both natural and lab-grown diamonds. Let's try it out…

1. Design aesthetics; of course. Extremely difficult for even the most experienced jeweller, let alone the end consumer, to tell the difference between a lab and natural, therefore it contributes equally to the design aesthetic of your ring.

2. Symbolism; of course. This is intrinsic significance between the couple that the engagement ring plays a role in; however, it has nothing to do with the mining process of the stone of choice. It's symbolising love and commitment through the gesture itself.

3. Brilliance & sparkle; this is a function of

   a) the cutting style and is therefore natural and lab-grown are equally subjected to the same qualities of this process.

   b) and, the internal clarity - which is graded the same if its a natural or lab.

4. Durability; both sitting at a 10 on the Mohs scale, they represent the same level of durability.

5. Provenance; sustainability and responsible sourcing. This is a longer discussion that we have written extensively about (read here), however, we believe it is a more sustainable and ethically responsible option for the consumer. *Not by much at this stage of the game, however, it is at the very, very least equal to a natural diamond.

6. Cost; the current price advantage is undeniably very beneficial for the couple to choose a lab-grown diamond. In investing, there is a concept known as 'discounted cash flow' which discounts your investment by a certain rate as time goes by, because money you have today is more valuable than money you have in the future - as you have the ability to use it today. You are likely going into a period of your life with many large new expenses. Wedding, honeymoon, family home, kids… So it can be extremely valuable to couples to be able to keep costs down on the engagement ring and allocate it elsewhere.

7. Resell Value; yes, natural diamonds will fetch a higher value once you decide to sell your engagement ring. Obviously, at a far lower price than what you purchased it for, as it doesn't take into account goodwill and brand margin. Remember, you are not 'investing in diamonds' or looking for a Store of Value; you are purchasing a consumer product.

Alright, so… I think I need to go into bat for natural diamonds for a second, as I don't want this counterbalance argument to completely offset our stance on the two alternatives. I'm in no way demonising the choice of a natural diamond. We still use naturals in 90% of our designs. They are an amazing mineral, and I totally appreciate the stance of wanting an earth-created beauty in your engagement ring.

We have been more vocal than most when it comes to pushing labs as an amazing option, for one reason only… If this is your first time reading one of our articles, this statement will mean nothing to you, but bear with me.

The reason is; ‘gemstone and diamond arbitrage’.

We ask ourselves; where can we find unrecognised value in the jewellery industry and pass those benefits onto our customers? Our mission statement needs to be repeated, for the final wrap-up;

These limitations are often perpetuated by the industry elite. We're here, in a small bespoke studio in Sydney, shining an important light through for our customers. That won't change.

Organise a time below, to either come by the Lei è studio or book in a virtual consultation.