Lab Diamonds are the Future of Luxury. An Open Letter to Tiffany & Co.
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Last week, a Tiffany & Co. executive weighed in on the lab diamond debate:
“Our position is lab-grown diamonds are not a luxury material. We don’t see a role for them in a luxury brand. They have their use and they have their place, but I think luxury consumers will continue to desire the rarity and amazing story of natural diamonds.” — Andy Hart, SVP of Tiffany & Co.
Dear Andy,
Hi —I’m reaching out to explain why your viewpoint about lab diamonds is incorrect. To introduce myself, I’m the CEO of Ada Diamonds, a luxury lab diamond brand that you don’t believe to be possible.
I highly encourage you to reconsider your position, as your risk-averse view of lab diamonds will age as well as Microsoft’s 2007 view of the iPhone:
Why am I so confident you’re wrong about lab diamonds?
No amount of spending from the Diamond Producers Association, De Beers, or Tiffany’s can change the fact that once a luxury consumer embraces a product of the future, they rarely desire relics of the past.
My average sale price is 3x higher than Tiffany’s [Footnote #1] and I’m far more worried about supply than consumer demand [Footnote #2].
My clients are steadfast in their belief that lab diamonds are the epitome of modern luxury, with most proudly evangelizing the superiority of ‘cultured’ diamonds over ‘dirt’ diamonds.
Thus, I confidently predict that your employer, LVMH, Richemont, Kering, Swatch, and/or Graff will proudly sell lab diamonds by 2025. Here’s why:
The Disaster of Climate Change is Too Real
While the luxury consumer of the past only asked what the item cost ($$$), the luxury consumer of the future asks what the item really costs (the negative externalities of the product).
In other words, today’s high earners that are not rich yet (HENRYs), absolutely care about sustainability, and I’m guessing that Tiffany’s cares deeply about HENRYs.
Tiffany’s public stance on climate change is “We’re still in for bold climate action… The disaster of climate change is too real, and the threat to our planet and to our children is too great.”
Your employer is correct — climate change is a looming disaster, and the burning of millions of gallons of diesel fuel to dig diamonds out of massive holes in the Earth exacerbates the looming disaster.
Thus, if Tiffany & Co. *genuinely* cared about the ‘disaster of climate change,’ it would not call out politicians; it would call diamond mining what it is: an unnecessary evil that permanently damages the Earth while contributing megatonnes of CO2 to our atmosphere.
The Future of Luxury Doesn’t Cost the Earth.
The inconvenient truth is that Tiffany’s mined diamonds are not, as you say, an ‘amazing story.’ They are a sad story of resource extraction that costs the planet, people, and animals.
While known origin is undoubtedly better than unknown origin, your new transparency initiative doesn’t change the fact that Tiffany’s purchases diamonds from sources that:
- pollute pristine Canadian rivers with carcinogens
- strip mine the ocean floor with machines nicknamed ‘the Butcher’,
- require blasting mile-wide holes in the Earth:
Lab Diamonds are Sustainable.
While large-scale diamond mines will always require diesel and dynamite, diamond growing merely requires the sun, the wind, and abundantly available carbon.
Much like Google, Facebook, and Amazon locate their server farms where there is abundant renewable energy available, diamond farms are being built where there is abundant renewable energy available.
Why? Not only is it responsible to place diamond/server farms where there is renewable energy, it’s also economical: electricity near large renewable energy power plants is some of the cheapest power in the world.
The Diamond Producers Association likes to throw stones at lab diamonds, claiming they’re coal-fired energy hogs. Some data to disprove the DPA’s straw-grasping argument:
Today, the most efficient producers of diamonds require approx. 250kwh of electricity to grow a 1-carat lab diamond, which is the same amount of electricity the average U.S. household uses in 8.7 days, or the electricity to fully charge a Tesla 2.5 times.
In fact, most of the lab diamonds gemstones produced today permanently convert the worst greenhouse gas on Earth (methane) into stunning diamonds:
Lab Diamonds are Not Merely Sustainable —They’re Superior.
Setting aside externalities for a moment, lab diamonds are objectively superior gemstones than mined diamonds. Both are crystals of carbon, but diamonds grown by mankind are higher purity, lower strain crystals that have superior fire, brilliance, and scintillation.
GIA researchers describe the quality differences as follows: mined diamonds are subjected to many stresses during their long growth and transport history. In contrast, HPHT lab diamonds are grown in a uniform high-pressure field. Thus, most mined diamonds display higher-order interference colors, whereas lab diamonds tend to display uniform, featureless birefringence and superior light performance.
Diamonds are an outlier in the world of gemstones where the value of the (colorless, not fancy colored) diamond is driven by the purity of the diamond.
Columbian Emeralds, Burmese Rubies, and Sri Lankan Sapphires all have specific defects that define their color and increase their desirability. That’s not the case with mined diamonds, and that’s why luxury consumers don’t want Namibian Diamonds, Botswanan Diamonds, or Russian Diamonds. Luxury consumers want D color diamonds, regardless of origin.
Lab Diamonds are Not Merely Sustainable — They’re a Paragon of Human Achievement, Improving Lives Around the World.
While Tiffany’s ‘dirt diamonds’ undoubtedly cost the Earth, lab diamonds increasingly improve humanity in a plethora of medical, scientific, computational, and manufacturing applications.
Here are a few of my favorite applications of man-made diamonds:
- Lab diamonds help infertile couples have babies and provide superior scalpels to eye surgeons.
- Lab diamonds not only detect early-stage cancer, they also better treat cancer with fewer side-effects.
- Lab diamonds break down the highly-toxic ‘forever’ chemicals that pollute the water in Michigan.
- Lab diamonds make planes, trains, automobiles, and wind turbines more efficient.
- Lab diamonds are the future of computers and the future of the internet.
Diamonds are Forever. So is Being Wrong.
Andy — To close out, on your website, you proclaim that “behind the luster and renown of Tiffany & Co. is a moving story of risk-taking, thrilling discoveries and staunch dedication to quality.” If that’s really the definition of your luster, why isn’t Tiffany & Co. taking a risk and using superior quality diamonds?
I kindly ask you to reconsider your view of lab diamonds, as I believe your current position will quickly join the ranks of viewpoints such as:
“The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks.” — Matthew Lynn, Bloomberg, 2007.
“She doesn’t wear fur because she is cold, she wears fur because she is glamorous.” — Ken Downing, Neiman Marcus VP.
“The horse is here to stay but the automobile is only a novelty. A fad.” — A bank President’s advice to not to invest in Ford Motor Co, 1903.
“Electric Cars Are an Extraordinarily Bad Idea.” — Forbes in 2011.
“Tesla is great, but you’ve got plenty of well-established brands that mean luxury, like Porsche or Mercedes-Benz…Mercedes will attract more buyers than Tesla because of its extensive dealer network and its ability to cater to luxury consumers with a complete luxury experience” — Steve Cannon, Head of Mercedes USA, 2014.
Respectfully,
Jason Payne
Co-Founder & CEO
Ada Diamonds
Footnote #1 — our average sale price is 3x higher than Tiffany & Co.
Doing some basic math on your latest detailed financials, Tiffany’s average sale price (ASP) across all jewelry was $2,391. Ada Diamonds’ ASP across all jewelry? $7,300. Your ASP on engagement rings and wedding bands was $3,400. Mine? $8,300.
I don’t offer you the data above to brag about my business, I offer it to illuminate the rapidly growing demand for high-end jewelry made with cultivated diamonds.
But… Lightbox…
I readily acknowledge that there are non-luxury retailers of lab diamonds, who mass produce cheap jewelry in low-cost countries with unexceptional lab diamonds.
That being said, if you choose to define my brand by the dregs of my industry, shouldn’t you also define your brand by discount retailers such as Walmart and QVC?
Let’s compare apples to apples — it’s significantly cheaper to buy mined diamond studs from Walmart than it is to buy them from the absolute cheapest lab diamond retailer:
Footnote #2 — I’ll be real with you. Lab diamonds are rare.
Today’s news cycles may lead you to believe that repeating an ‘alternative fact’ over and over again can turn it into a fact. But facts are facts.
The real fact-of-the-matter is that high-quality lab diamonds between 2 to 5 carats are quite rare, and lab diamonds of decent quality are far more expensive than $800/ct.
I’m currently seeking millions of dollars of oval lab diamonds between 3–5 carats. The supply to meet my demand does not yet exist.
Don’t believe me? Let’s turn to the real diamond experts from Bain. Thrice in their 2018 state of the industry report, they discuss the gap between supply and demand:
We believe [lab diamond] manufacturing capacity will be a major limiting factor in the short to medium term.
In the short to medium term, growth of lab-grown diamonds will be limited by manufacturing capacity, access to technology and intellectual property, and availability of funding.
Production capacity will limit lab-grown market growth in the short to medium term.
Don’t believe Bain? Do you believe Dr. Shigley, esteemed GIA researcher?
Why are lab diamonds so rare? The American consumer, not the mined diamond lobby, determines the future of luxury, and the real truth is that demand from American consumers is growing faster than diamond growers can keep up.
That’s why private equity firms are making large investments in diamond growers, that’s why diamond growers are raising prices, and that’s why De Beers admitted defeat after spending over $100m on the DPA to fight the threat of synthetics.
