Brilliant Earth’s sales grew 4% year on year to $124.3 million in the fourth quarter amid a record number of orders.
The 18% increase in individual orders offset a 12% decline in the average value per sale during the three months that ended December 31, the retailer said last week. Net profit for the period fell 69% to $1.9 million.
Engagement rings were one of the top sellers for the company, with demand for those above $10,000 increasing year-on-year in the fourth quarter, Brilliant Earth CEO Beth Gerstein said last week in an earnings call, transcribed by Seeking Alpha. The average sales price for engagement rings was up 4% year-on-year during the three months.
Additionally, new campaigns featuring celebrities and influencers brought in consumers. The launch of Brilliant Earth’s Sol collection, in partnership with Emmy-nominated actress Camilla Morrone, proved popular, with productivity “far outpacing” that of prior collection launches, Gerstein explained. The company’s new lab-grown Capture collection, made with synthetic diamonds manufactured using 100% renewable energy, also “resonated strongly” with consumers, it said.
For the full-year, sales rose 1.5% to $446.4 million, while net profit dropped 75% to $4.7 million.
Brilliant Earth expects sales for the first quarter of 2024 to reach between $96.5 million and $98.5 million, ranging from a decrease of 1% to growth of 1%, chief financial officer Jeff Kuo noted on the earnings call. For the full year, net sales are anticipated to rise 2% to 5% to between $455 million and $469 million.
Human-made diamonds come with an appealing claim: Manufacturers say the stones are produced ethically using renewable energy. But many of the products do not meet that claim or their producers do not confirm the electricity sources they use. And, laboratory diamonds require a lot of electricity to produce.
In the United States, lab-grown diamond sales increased 16 percent in 2023 from 2022, says Edahn Golan, an industry expert. The stones cost much less than natural diamonds.
Bario Neal is a jewelry store in Philadelphia, Pennsylvania. It uses lab diamonds. All of the stones are either made with renewable energy or neutral use of energy through the carbon credit system. Credits pay for activities like planting trees, which capture carbon.
Social media posts show Millennials and Generation Zs proudly explaining the purchase of their lab-grown diamonds for sustainability and ethical reasons. But the sustainability of production is questionable. A high number of manufacturers are not transparent, or open, about their operations.
Many of the manufacturers are in India, where about 75 percent of electricity comes from burning coal. The companies use words like “sustainable” and “environmentally-friendly” on their websites. But they do not release reports on the environmental effects of their operations.
Cupid Diamonds, for example, says on its website that it produces diamonds in “an environmentally friendly manner.” But it did not answer questions about the sustainability of its operations.
Solar energy is quickly expanding in India and there are some companies, such as Greenlab Diamonds, that use renewables in their manufacturing processes.
China is the other major country producing laboratory diamonds. The largest makers did not return requests for comment. They also did not release details about their electricity source.
More than half of China’s electricity came from coal in 2023.
Paul Zimnisky is a diamond industry expert. He said few companies are honest about their supply chains and their use of renewable energy.
Zimnisky said a lot of companies claim to make an “environmentally-friendly product when they aren’t really doing anything that’s environmentally friendly.”
How it is made
Lab diamonds have been in production around seventy years. Producers treat carbon to high pressure and high temperature. The idea is to copy the natural conditions that form diamonds underground. But, nature spends at least one billion years to make a diamond. Lab diamonds are complete in a few weeks.
In the past, the stones were used mostly in industries like stone cutting, mining and dentistry tools.
Over time the laboratories, or foundries, have gotten better at making stones. Production costs have dropped as technology improves.
Companies now can manufacture as many stones as they want and choose their size and quality.
Diamonds, whether lab-grown or natural, are chemically identical and entirely made out of carbon. Experts can identify between the two using lasers to examine their atomic structures.
Marketing battle
The lab diamond is competing in the same market as natural stones. Worldwide, lab-grown diamonds are now 5 to 6 percent of that market. And, the public battle for customers has begun.
The natural diamond industry and some experts argue that lab-grown diamonds will not hold value over time.
Zimnisky predicts that natural diamonds will continue to sell in the thousands and tens of thousands of dollars for engagement rings.
And the human-made stone?
“Five to ten years into the future, I think there’s going to be very few customers that are willing to spend thousands of dollars for a lab diamond,” he said.
Page Neal said she co-founded Bario Neal in 2008 to “create jewelry of lasting value that would have a positive impact on people and the planet.”
She added: “We want to only work with materials that we feel like our clients would be proud to own.”
I’m Dan Novak.
Dan Novak adapted this story for VOA Learning English based on reporting by The Associated Press.
Gemological Science International (GSI) has issued a warning to the trade after coming across a “notable increase” in jewelry set with pink, yellow and brown lab-grown diamonds posing as natural.
The jewels, which have been submitted to the lab for grading, often contain synthetic stones mixed in with natural colored diamonds, Debbie Mazar, president and cofounder of GSI, explained Tuesday. Many of the undisclosed synthetics were type IIa, with a single nitrogen atom, and ranged in size from melee to 1 carat.
Additionally, some of the lab-grown diamonds were intentionally cut to mimic natural ones, GSI noted. The GSI observed several with fractures, pinpoint clouds, polish-overs and distinct brown grain lines, features found in natural diamonds, which would potentially enable the fraudulent stones to pass standard gemological evaluation, GSI said.
“The challenge arises as most jewelry-screening equipment in the market is designed to screen white, near-colorless diamonds,” Azar explained.
The advanced technology in diamond growth is contributing to increased success by growers in replicating natural diamonds more and more, GSI added.
GSI’s warning comes on the heels of several from other labs. In December, Italian grading lab Gem-Tech cautioned that it had encountered a number of lab-grown stones circulating bearing fraudulent inscriptions from the Gemological Institute of America (GIA) for natural stones. Last month, the International Gemological Institute (IGI) examined a 6.01-carat lab-grown with a GIA laser inscription for a similarly cut natural, while the GIA reported it was taking steps to combat the recent influx of lab-growns bearing fraudulent inscriptions from the lab by offering same-day report verification.
The International Gemological Institute’s laboratory in Tel Aviv recently detected a 6-carat lab-grown diamond that someone apparently was hoping to pass off as a natural stone.
The 6.01-carat, pear-shaped synthetic diamond was fraudulently inscribed with the Gemological Institute of America report number for a G-color natural diamond of the same size and shape, but with a few key differences, IGI said in a news release issued Tuesday.
First, the lab said, photoluminescence (PL) spectroscopy, which is now widely used by grading labs to separate natural diamonds from lab-grown stones and to identify diamond treatments, shows a wavelength peak of 737 nanometers in the diamond (see chart below).
This is an indicator that the diamond was grown in a factory using the chemical vapor deposition process.
IGI photoluminescence spectra The photoluminescence spectra for the 6.01-carat lab-grown diamond recently examined by the International Gemological Institute
Second, when examined under a microscope, IGI graders saw a carbon inclusion where the feather was indicated on the clarity plotting diagram in the GIA report.
They also noticed a cloud inclusion, resulting in IGI giving the lab-grown diamond a lower clarity grade than VVS1, the clarity grade of the natural diamond.
Lastly, there was a discrepancy between the depth of the diamond IGI examined and the depth noted on the GIA report.
“Everyone in our industry must be vigilant,” said IGI CEO Tehmasp Printer, who took over as head of the lab in October after Roland Lorie retired.
“As attempted fraud increases, the need for ongoing verification is a necessary step to protect consumers from purchasing misrepresented gems and jewelry.”
Lab growns and natural diamonds will coexist in the future, says Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC).
He was speaking at the IIJS Signature, which opened in Mumbai on Friday (5 January 2024).
“With natural diamonds, there is an aspiration, whereas lab-grown diamonds are for affordability, and for fun and fashion,” he said.
“So, it’s a completely different segment … It is not going to be that one is going to take over the other,” he said.
He noted that the supply of natural diamonds would reduce over time, with no new mines due to open and some deposits reaching the end of their lives.
He said the lab grown and natural consumer bases would complement each other.
“Natural diamonds are for those who have a desire for diamonds and they’re getting diamonds,” he said.
“Also, if you are looking for investment, you will choose natural diamonds. So, the idea is that once first-time buyers start with lab-grown diamonds, they will aspire to buy natural diamonds.”
Hong Kong authorities have arrested four people suspected of running a money-laundering syndicate that falsely declared synthetic diamonds as natural.
The operation, which authorities codenamed “Gem Crusher,” was the first money-laundering case using transnational diamond trading the Hong Kong Customs and Excise Department has detected, the government organization said Thursday.
On December 19 and 20, customs raided eight premises across multiple areas in Hong Kong, including residential and business locations. So far, authorities have frozen HKD 8.2 million ($1.1 million) in assets belonging to those in custody.
Hong Kong customs officials were alerted to the scheme earlier this year and launched a financial investigation, exchanging information with authorities in India, the department explained.
Members of the crime syndicate had established diamond-trading companies in both Hong Kong and India. Throughout 2021, the syndicate exported low-value lab-grown diamonds from Hong Kong to India with fictitious declarations presenting them as high-value naturals.
The purpose was to “transfer significant amounts of suspicious funds from India to Hong Kong,” authorities alleged. The suspects laundered around HKD 500 million ($64 million), the department claimed.
During the raid, customs seized a “large quantity of suspected synthetic diamonds, a small quantity of natural diamonds, about HKD 1 million [$128,055] in cash, a number of mobile phones, computers, company [seals], checkbooks, bank cards, bank documents and trading documents” from the four suspects, authorities said.
The four men — believed to be the “masterminds, ring leaders and members” of the syndicate — were arrested on suspicion of “dealing with property known or reasonably believed to represent proceeds of an indictable offense.”
The investigation is ongoing, and further arrests cannot be ruled out, customs noted.
WD Lab Grown Diamonds, the second largest lab grown producer in the USA, has filed for bankruptcy.
The Washington DC-based company is the first major casualty of the plunge in lab grown prices.
It filed for Chapter 7 protection last Wednesday (11 October) in a Delaware bankruptcy court, with disclosed liabilities of $44m with assets of $3m.
WD pioneered chemical vapor deposition (CVD) diamonds since 2008 and had its own patented process.
In 2016 it produced its first 5 carat round brilliant diamond and in 2018, it set a record for the largest gem quality lab grown, at 9.04 carat.
In 2021 it acquired J2 Materials, and advanced materials and diamond crystal growth laboratory based in Chicago.
WD generated $33m of revenue last year, according to a Financial Times report. But the company has fallen victim to low prices and intense competition from China and India.
De Beers decided to call time on offering lab-grown diamonds for engagement rings even as the man-made alternatives continue to cannibalize demand in one of the company’s most important markets.
After vowing for years that it wouldn’t sell stones created in laboratories, in 2018 De Beers reversed that position and only this year started testing sales of the diamonds in the crucial engagement-ring sector.
The diamond industry leader said Wednesday that the trial showed that it wasn’t a sustainable market.
De Beers’ move comes as the kinds of stones that go into the cheaper one- or two-carat solitaire bridal rings popular in the US have experienced far sharper price drops than the rest of the market, with the lower-cost lab-grown competition seen behind the collapse.
De Beers has said the current weakness is a natural downswing in demand after the pandemic, with engagement rings particularly vulnerable. The company concedes that there has been some penetration into the category from synthetic stones, but doesn’t see it as a structural shift.
Lab-grown diamonds — physically identical stones that can be made in matter of weeks in a microwave chamber — have long been seen as an existential threat to the natural mining industry. Proponents say they can offer a cheaper alternative without many of the environmental or social downsides sometimes attached to mined diamonds.
While the price of some natural stones used in lower-quality engagement rings have plummeted in the past year, the fall in lab-grown prices has been even steeper. De Beers has said it expects lab-grown prices to continue to decline as more supply comes into the market
Retailers would need to double the number of lab-grown carats they sell every two years, just to maintain profits, De Beers said.
A US advertising watchdog has called on e-tailer Agape Diamonds to make the origins of its synthetic and simulated stones clearer.
The recommendation came from the National Advertising Division (NAD) of BBB National Programs — a nonprofit that helps businesses self-regulate — after the National Diamond Council (NDC) challenged Agape’s claims, the NAD reported last week.
Agape’s promotional material, including how it was presenting products for sale on its website, did not clearly and conspicuously disclose the origins of its stones, the NDC had argued, according to the NAD. As such, the council claimed, the online retailer and lab-grown manufacturer was violating the Federal Trade Commission (FTC) guidelines on jewelry marketing.
Agape changed its advertising across its website and social media in response to the NDC’s complaint, and the NAD declared the company’s modified disclosures effective and consistent with the FTC rules. However, other online advertising lacked “clear and conspicuous” origin disclosure, the watchdog said.
Race to the Bottom? Retailers’ Lab-Grown Doubts
The NAD urged Agape to rectify this by including words such as “simulated” or “lab-grown” immediately before the words “diamond” or “stone,” with “equal conspicuousness so as to clearly disclose the nature and origin of the product and the fact that it is not a mined gemstone.”
Agape and the NDC were unavailable for comment on Sunday. In its advertiser statement to the NAD, Agape said it was “committed to accurate and truthful advertising, as recommended by NAD and as codified in the federal regulations and enforced by the FTC.”
India-based Ethereal Green Diamond has created and sold the largest polished lab-grown diamond in history, according to the International Gemological Institute (IGI), which graded it.
Named Shiphra, the emerald-cut, 50.25-carat, type IIa stone has G color, VS2 clarity, and an “excellent” score for cut, polish and symmetry, IGI said Thursday. It measures 22.95 x 18.45 x 11.57 millimeters. It’s the world’s first polished lab-grown diamond above 50 carats, IGI claimed.
Ethereal grew the 150-carat rough using the chemical vapor deposition (CVD) method over a period of eight months. It cut the stone in Surat, India, and will display the polished at its JCK Las Vegas booth. Swiss brand Shiphra Jewelry has bought it and lent its name to the piece.
“This gemstone is a paradigm-shifting breakthrough, surpassing 50 carats while exemplifying preeminent standards of sophistication and quality,” said Tehmasp Printer, president and managing director of IGI India.
The record comes shortly after IGI graded its largest lab-grown diamond to date: A 35-carat CVD stone that Maitri Lab Grown Diamonds produced. Last month, the Gemological Institute of America (GIA) said it had examined a 34.59-carat diamond that Ethereal synthesized using the same method.
