TREND - LAB GROWN DIAMONDS

TREND - LAB GROWN DIAMONDS

1. MACRO TRENDS

   • PESTEL ANALYSIS
     • POLITICAL
       • government roles towards policies and regulations ????
       • British consumers are worried about their incomes post Brexit "15% think it will have an extremely negative impact and 36% think that it will be somewhat negative (AcademicMintel,com. 2018). Therefore the price point of lab grown diamonds seem viable.
       • Declining Supply From 2020 Onwards. This is also the time when most of the existing mines would start facing a crisis in diamond discovery and subsequently, output. Unless groundbreaking discoveries happen in the near future, diamond supply is expected to reduce from 2020 onwards.
     • ECONOMIC
       • assesses potential changes of : interest rates, exchanges and unemployment rates, inflation, regulation of an economy
       • potential disruptive threat to the $80 billion global diamond industry. it will have a profound downward pull on the prices that the natural-diamond marketers can command. “Lab-made diamonds are the result of a technological process which means their prices will drop like any other technological innovation, an effect described by Moore’s Law (Forbes, 2018).
         • as the prevalence of lab-created options increases in the market, their wholesale rates could drop 20-40% - due primarily to the prospect of unlimited supply and increasingly lower production costs,”
           • lab created diamonds draw their value from natural diamonds. The economic principles of price elasticity tied to supply and demand mean that the prices for the two diamond alternatives will forever be linked
             • less-expensive option could cannibalize sales of natural diamonds. (NY TIMES, 2018).
       • “Sales of lab-created diamonds, now estimated at $150 million, are expected to increase to $1 billion by 2020 and outpace mined diamonds, which have been in decline.” (Forbes 2018)
       • UNEMPLOYMENT - people who work in diamond mines and fields - sometimes their living depends on diamonds. Could have consequences for millions of people in the poorest countries of the world (Bates, 2018).
       • sales of lab, or as some critics describe them, "synthetic" diamonds are only 20% of the supply, they are expected to reach 10% by 2030 according to analysts at Citi (FT, 2018).
     • SOCIO-CULTURAL
       • changes of population demographics and cultures
       • Millennials represent a significant opportunity for the diamond industry, but have different shopping behaviors, and product interests. That suggests that dedicated marketing efforts are needed to target those customers effectively.
         • young diamond buyers are socially conscious and value quality and integrity. They want natural stones that are conflict-free and will happily choose laboratory-grown diamonds too
     • TECHNOLOGICAL
       • Highlights the revolutionary development of internet and rapid growth of composite materials
       • In the last 5 years there has been a breakthrough in terms of technologies and the reliability of equipment. - making the production of man made gems viable (FT, 2018)
         • Impossible to spot the difference between the two
           • modern screening machines can detect lab made gems namely by looking at growth patterns (Morgan Stanley, 2018)
       • "millennials are tech-savvy, well educated, and live on social media." So, he said, the key strategy for marketing to millennials will be the "use of social media and the internet" by "understanding and following their tendencies, speaking their language and feeding them information that is aligned with their lifestyle."
         • Consumers now expect brands to come to them where they are: be available on popular online platforms, and deliver when and how consumers want.
     • LEGAL
       • lab-grown diamonds are free from many of the ethical problems that blight the wider diamond industry. They are produced in laboratories where consumere enjoy proper health and safety standards and free wages.
         • They don't come from conflict zones and arent sold to fund military activity
       • Legislation related with the unemployment, competition, health and safety. Helps organizations to detect and understand risk related within the market growth /decline positions, situations and directions
       • impossible to tell the difference between a lab-grown diamond and a mined stone, but assuming equal quality the mined stone will trade at a significantly higher price. For a while diamond dealers have been concerned that unethical colleagues will be tempted to pass off lab-grown stones as mined ones. There is certainly nothing wrong with the decision to buy a lab-grown diamond, but it should always be a conscious decision, and so lab-grown diamonds should always be disclosed as such.
         • This equipment is available at the point of retail and manufacture
           • Jewellery Industry Associations like Jewellery Vigilance Committee (JVC) have been educating retailers and manufacturers regarding their responsibility to identify and disclose the origins (mined vs manufactured)
     • ENVIRONMENTAL
       • Influences the waste disposal and energy consumption
       • LAB-GROWN DIAMONDS REQUIRE LESS ENERGY TO PRODUCE THAN DO NATURAL DIAMONDS. THESE ENERGY SAVINGS ARE GOOD FOR BOTH THE ENVIRONMENT AND FOR CUSTOMERS’ WALLETS
         • one of the largest producers of natural diamonds uses an average of 80.3 kilowatt hours per carat over all of their mining operations, while anywhere from 20-28 kilowatt-hours per carat is required to produce diamonds through the synthetic diamond labs whose energy usage has been studied.
           • Using less energy translates into using fewer resources such as oil and natural gas. It also means causing less pollution that can damage the environment over time.
             • An additional advantage for consumers is that less energy usage contributes to lower prices. On average, synthetic diamonds cost 30 percent less than do natural diamonds, making it easier for consumers to afford a real diamond for their jewelry purposes.
       • Synthetic diamonds, because they are grown in a lab, do not affect the physical features of the land. Instead of moving mountains of earth and large waterways, the lab simply places the starter carbon in a machine, where it grows into a diamond of the desired size. As a result, synthetic diamonds have a significantly lower impact on the plants, animals, and land features of the Earth.
       • lab-grown diamonds produced fully ⅕ the amount of carbon dioxide emissions. That diamonds grown in a lab produce many fewer emissions than do diamonds that rely on the extensive use of heavy machinery for their production.

2. 4 key q's

   • what are things 'trends' that present an opportunity to my business?
   • threat to my business?
   • responses to this trend?
   • future sighted scenarios for exploting this trend for a particular sector / target market?

3. DOES MY QUESTION LINK TO ATTITUDES AND BEHAVIOURS

4. MICRO COSMIC TRENDS

   • COMPETITORS
     • De Beers - Element Six Innovation centre in Britain
       • Lightbox Jewellery targetted at millennials made in a lab
         • prices are the number one driver of growth in this category 70%-90% less
           • offers choice
             • stones cost up to 70-90% less
               • traceable from lab-market, trackable serial no's from their point of origin
                 • free from conflict ,
         • Distinguished as "fashion jewellery" as they aren't "precious" like mined diamonds
           • De Beers taking a leadership position - MARKETING MUSCLE
             • Elevating it's mined diamond precious jewellery offering
         • uses a cheaper and more scalable process known as CVD, or chemical vapour deposition to create its stones
     • Chopard
     • Noor Fares
     • Stephen Webster
       • Huge focus on sustainability
   • SUPPLIERS
   • EMPLOYEES
   • SHAREHOLDERS
   • MEDIA
   • CUSTOMERS
     • "Socially Conscious" Millennials

5. THREATS

   • Lab grown diamonds will be mixed with mined diamonds and pollute the supply chain
     • unhappy consumers who no longer trust the diamond industry
       • This is why few retailers have embraced lab grown diamonds
         • there is not way to distinguish between lab grown diamonds and mined diamonds without using special equipment
           • This equipment is available at the point of retail and manufacture
             • Jewellery Industry Associations like Jewellery Vigilance Committee (JVC) have been educating retailers and manufacturers regarding their responsibility to identify and disclose the origins (mined vs manufactured)
         • consumer awareness will soon drive more retailers to offer lab grown diamonds
           • soon more retailers will offer lab grown diamonds and experiment with ways to position them within their merchandise offerings
   • The risk of further diamond commoditization
     • endless supply of lab grown diamonds
       • feels less like an heirloom more like an heirloom
       • what will the impact of mass production be
         • recycled diamonds are a more eco - friendly option than lab grown diamonds
   • There is a push back against cultivated diamonds with the "real is rare" campaign