Lab grown diamonds have captured a significant share of the market, encompassing 10% of all diamond sales in the U.S. While the growing trend expands access and affordability, it poses a threat to the traditional diamond industry. Diamond industry expert Edahn Golan joined TheStreet to discuss how the lab grown diamond trend is disrupting the industry.
Full Video Transcript Below:
J.D. DURKIN: Let me ask you about lab diamonds. There’s been a controversy surrounding them. Some industry experts call lab diamonds a scam. But for people watching this interview who might not be fully caught up, what is your take here? And do you expect to see lab diamonds capture more of the market with time?
EDAHN GOLAN: Oh, absolutely. So let’s start from the basics. It’s a new product on the market that very quickly captured a very big audience. If we’re talking about the market in general in the United States, it’s about 10% of the market. It’s primarily an American product, and it needs to be said about 85% of lab grown sales are in the United States. The interesting area is that of once again bridal. Actually, the belief was that it’s kind of a low cost alternative and therefore it will be more of a fashion item. But what we saw is that many people in their late 20s, early 30s prefer, um, lab grown pardon me, engagement rings set with lab grown, and they are seeing sort of a double benefit by going that route. One, they can decrease their expenditure, they’ll spend a little bit less. And secondly, they can get a much bigger diamond. So, you know, there’s a little bit of a upmanship involved. So there’s a lot of reasons for couples, to be interested in that item.
J.D. DURKIN: How about the other side of that equation? I wonder what threat, if any, does the lab grown diamond industry or market pose to the industry writ large?
EDAHN HOLAN: So it’s actually an interesting question. One of the questions of the diamond industry asked itself at the get go was will it add to the category or cannibalize it? And the answer is to both is yes. If you are looking for something that is very low cost or if a large diamond is out of your ability to, out of your reach, then you’re definitely or so if you’re, you know, a teen, then you now all of a sudden can buy a diamond item. A but as you look as the perfect example really is the engagement rings that is cannibalization. There we’re seeing that people are switching, are choosing a lab grown item over a natural diamond.
The big question I think we need to ask ourselves is, what do we look like in the future? One of the things that we want out of our engagement ring is that it’s going to be a symbol of our long lasting love and something that is beautiful. So the beauty is definitely there. I think the question that it will focus on is, do I want a center stone that today I buy for, say, $3,000 and next year it’s going to be sold for 20% less. And before I know it, it’s going to be half price. And that what kind of symbol of love does that represent? And that’s just one of the issues that the industry is kind of grappling with. And the funny thing is that it’s the same industry, it’s the same people that polish and sell natural diamonds. So there is, as a business, there’s an important interplay to consider for those companies.