See Online Magazine
https://labgrownmagazine.com/Issues/July2020/
Cautious Re-Opening
As pandemic fears lesson in some parts of the
country, a number of companies are beginning to
cautiously re-open, including those in the jewelry
industry. There can be no doubt that Covid-19 has
had—and continues to have—a disastrous effect on
the economy and many individual lives. Aside from
the tragic loss of life, some businesses will sadly not
re-open their doors, crushing the dreams of their
owners.
Yet, the jewelry and gems industry as a whole
has shown itself to be resiliant, having weathered
storms in the past. Clearly, though, it will
take some time and it would be unwise to try and
predict consumer demand or sales growth in the
immediate future. What we can predict, though,
is that digital marketing, communication and
e-commerce will continue to grow and play an
increasingly important role in how business is
carried out.
During the lockdown, we have seen—and continue
to see—a plethora of webinars, conferences,
courses, and even mini-trade shows conducted online.
People are connecting in new and novel ways,
and this new normal in the way we interact with
each other is likely to become even stronger in all
aspects of business going forward.
It behooves companies to understand this new
normal and appreciate the marketing possibilities
offered by the digital age. This includes the various
social media platforms and how the entire supply
chain can benefit from direct interaction with the
public and the trade.
And, even during the crisis, lab-grown diamonds
are making news. Lightbox, De Beers’ labgrown
jewelry brand, delayed its new factory in
Oregon due to the virus. Despite this slowdown,
the company indicated that it expects to be up and
running by the end of March 2021 with an annual
capacity of 200,000 carats of polished LGDs.
In a somewhat related matter, the Diamond Producers
Association changed its name to the Natural
Diamond Council. In conjunction with a new
strategy that includes abandoning the slogan “Real
Is Rare,” the NDC hopes to better resonate with
younger consumers, while noting that its mission is
not to attack LGDs in the process.
The feature article in this July issue takes a look
at how you can open new doors and profits in the
LGD sector by incorporating fancy color labgrown
diamonds (and other gemstones) into your
product offer. You won’t want to miss it.
Until next time, please stay safe during these
uncertain times.
Zev
The Color of Profit
Opening a new lab-grown diamond door can unlock additional buyers and revenue.
By Dan Scott
Only one in ten thousand mined diamonds
is certified as a natural, fancy color diamond.
Of those, a small percentage have the leading
diamond grades of Intense and Vivid. According
to the Gemological Institute of America (GIA),
these terms are specific to natural, colored diamonds
or fancies, to use the old-school term.
Whatever you call colored diamonds, everyone
agrees that these stones are rare.
In time, growing colored diamonds will technically
change the rarity factor of fancy diamonds
as more color enters the market. While
the natural side should own the rarity sector,
this category instantly imparts leverage to labgrown
(LG) producers like never before. A new
diamond door of opportunity is opening to accelerated
benefits that can help you sell colored
diamonds, with greater margins and return on
investment.
9,999 Don’t Make the Color
Photographed on the most famous celebrities
and those able to afford such extravagance,
colored diamond jewelry continues to evoke
awe around the world. The daunting fact that
only one in ten thousand stones makes the
fancy grade provides a new product, new audience,
and new revenue to the LG community,
and may move you into the universe of fashion
jewelry and accessories, offering alliances that
were previously not top-of-mind.
This also ushers in an elevated, elite-minded
customer—one prepared to pay thousands for
what would normally be sold in the millions. For
those who have long desired a genuine pink,
blue, or yellow diamond, they may now bypass
jaw-dropping costs and own a level of status
recently reserved for the superrich.
A Leg-Up on Marketing
Colored diamonds are a story of something
new connected to something old. While natural
colored diamonds are rare, so is the opportunity
to gain high-spending customers and enter the
world of fashion and accessories with LG color.
The desire for colored diamonds has been,
and will forever be, in fashion. Historically, jewelry
aficionados and the general public expect
to see exotic colored diamonds making headlines.
Everyone, everywhere, can appreciate
the inherent luxury factor of a blushing pink,
baby blue, or yellow diamond. Therefore, a wide
audience has already turned a learning curve
into a straight line.
Typically, any product introduction or launch
requires in-depth consumer research, marketing,
and public relations to align consumer desire
with purchase. Educating and motivating the
public about a new product generally needs a
significant period of time. That time frame varies
and may easily stretch into years of emotional
appeal and defense of a value proposition. It is
necessary to accurately and consistently communicate
the message in different languages,
while factoring in cultural and behavioral shifts
in fashion purchasing. Even household-name
products diving into launch mode face these
challenges, but with LG color,
you won’t.
This introduction of LG color
comes complete with the longest
consumer and trade marketing
campaign ever produced.
Large-scale product marketing
and PR campaigns, especially
for luxury launches, often start
with teaser placements. Teasers
build upon the new factor and
target those who want to be seen with whatever
is considered new. Just think of people standing
in line around the block for a new I-phone or
X-Box game. To properly create a teaser campaign
for luxury launches, piles of detailed data
are first examined. The results are programed
into a teaser test, tests are evaluated, and then
a roll-out is activated.
The current color opportunity bypasses all of
that. The natural and historical progression of
non-branded, earned media resonating yearover-
year, century after century, gives the LG
color product launch limitless leverage. When
have you been able to offer customers something
that most have never seen in-person yet
have admired from afar? And when have you
been able to do so in a realistic retail price
range, thus allowing for the strongest margins
this industry may ever enjoy? That time is now.
As we carefully reopen our businesses in this
coronavirus-conditioned world, some LG manufacturers
are doing so by adding colored loose
stones and finished LG jewelry designs to their
product line-up. To gauge where the LG colored
diamond industry is heading, this article focuses
on two ends of the spectrum.
On the established side, we interviewed Tom
Chatham, CEO of Chatham, the first producer of
U.S. grown diamonds and colored gemstones.
On the young brand side, we spoke with Samuel
Jansen, CEO, Made By Man Diamonds (MBM),
a start-up in Milwaukee, Wisconsin.
The contrast between a legendary LG colored
diamond and gemstone pioneer and a finance
pro turned diamond grower is extreme on nearly
every level. One represents decades of historical
advancement and caters to an established
base; the other mirrors the majority in this sector,
those diving into an investment-aligned
business opportunity that may not fall within
their core competency.
Everyone can
appreciate the
inherent luxury of
a blushing pink,
baby blue, or
yellow diamond.
Faceted Facts
It’s possible to transform a mined brown
diamond into a fancy by artificial treatment,
although the process greatly diminishes a fancy
diamond’s value. The same
hold true with natural, precious
gemstones and their LG counterparts—
the less fracture filling,
annealing, heat treatments, and
other enhancements that are
used, the higher the price. Remember,
we are comparing the
rarity and monumental expense
of natural colored diamonds to
those grown and possibly treated.
The rarest and most expensive natural
fancies are red, green, and blue. When
those colors are dense and saturated, the
diamond’s value is in the millions of dollars.
While the market has seen its share of pale
pinks, blues, and yellows, they are never at the
cost savings LG may offer.
Lighten Up
Why are LG producers
offering less saturated
colors in the 1.5-carat
range? “The reason that LG
companies are sticking to lighter
colors is, like mined diamonds,
the lighter color stones are easy to
obtain over vivid or intense hues. And, just
like Mother Nature produces, we grow lighter
colored diamonds with greater consistency
in our man-made process,” explains Jansen.
And, the reason we aren’t seeing larger LGD is
because that process is still in development.
When asked the same question, Tom Chatham
segued to why Chatham focuses on
growing rich, dense color gemstones. But for
their LG diamonds, they prefer to grow them
white. One look at the impressive, rich color
saturation of their LG emeralds,
rubies, and blue sapphires
and the reason is obvious.
Chatham offers paler
shades of LG, such as pink
champagne, but only in grown
sapphires.
The difference in critical path
strategies of the two companies is as opposite
as night and day; and is why both executives
were given the microphone.
Faceting a colored diamond, mined or manmade,
has challenges over a colorless stone.
A cutter can damage a diamond’s value forever,
or create facets that elevate the appearance
and value of the gem. Cutting has a
great effect on color. The way a diamond is cut
will alter the light refraction and reflection, thus
changing the way we see the light spectrum,
density, and color graduation.
All colored diamonds contain interstitial
impurities or structural defects, beyond the
stress factor, which often cause the coloration.
Color is not inherent in objects. When an
object comes in contact with a light source,
it absorbs some of the light waves (or colors)
and reflects the rest. We see color
when the eye and brain together translate
the reflected light into the familiar sensations
of color. The brain sends a signal to
our eyes to register the color reflections, letting
us miraculously and consistently identify
the various hues. A small number of people
have some sort of color impairment, meaning
that the colors are transmitted to the brain differently.
And, like the colors on computer monitors,
everyone sees slight variations in color.
It’s ironic that a
D-flawless diamond
is devoid of any color
within the stone, yet it
is the color reflection or
scintillation that gives the
stone such colorful sparkle. In
a colored diamond with many
inclusions, the flow of light is disturbed,
making the color bend around the
inclusion. “MBM follows the science of organic
colored diamond growth, which means we produce
colored diamonds the same way the Earth
does, but in a highly controlled, accelerated
means,” adds Jansen.
Currently, we can’t dial-up the digits to make
diamonds a certain color, at least not with true
consistency. Mined fancies won’t show how
consistent their color is—or how valuable the final
product will be—until they are cut, polished,
and certified. So, too, is the
case for lab-grown fancies.
That said, companies such
as MBM are producing colored
diamond rough in the 1 to 3
carat range with relatively consistent
colors. As with mined
stones, there is a scale of accepted
variance to determine how the diamond
will be certified. The smaller the stone, the more
intense the color may be.
“New” is the best
sales word in the
world; so now is the
time to get into color.
When Rare Is Real
White diamonds are many things, but rare
is not one of them. Regardless of the mining
industry’s promotional slogan of Rare Is Real,
Real Is a Diamond, white diamonds in general
are not rare. Interestingly, the Diamond Producers
Association (DPA) recently changed its
name and announced its plans to drop the Real
Is Rare tagline. Having said that, there certainly
are large and magnificent white diamonds that
are truly rare. Colored diamonds, on
the other hand, are rare, including
LGs. With a long list of
LG producers producing color, they
may not be that rare in the future, but
that doesn’t dampen the deep desire of colored
diamonds now or in the foreseeable future.
For consumers, LG white diamonds are still
rather new, so LG colored diamonds are really
new. New is the best sales word in the
world; so, now is the time to get into color.
Color Craving Consumers
As LG companies are waking up to a world
craving color, “consumers are making the connection
to colored diamonds as something affordable
and within their reach,” says Jansen.
“We decided to go in the direction of color since it’s
a wider worldwide market when
compared to white mined or lab
grown stones. It’s also a proven
market from an acceptance and
desire perspective. A beautiful,
rare pink at auction may sell
for millions and, out of financial
reach for the majority, now
is the new affordable luxury.”
Psychologically, we all crave
what we can’t have. Consumer
demand for colored diamonds
and gemstones is proven.
Chatham’s approach on LG color is focused
on man-made precious gemstones. While it
may be next to impossible to obtain consistency
and size in natural blue sapphires, for example,
Chatham offers color consistency and size
when growing his gems. The company caters to
the end user’s budget rather than the finances
of mining operations.
A Question of Value
Jansen uses Fine Art
as a comparative example of
value for colored LGDs. He notes
the often-pricey framed faux master
copies over an original masterpiece. Art lovers
pay premium prices to commission a wellexecuted
rendition adapted from one-of-akind
art. They know they will never afford
an original Édouard Manet or Salvador
Dalí, nor are they trying to pass off their
copy as an original; they simply wish to
enjoy the expertly executed brush strokes of a
masterfully crafted replicate image on canvas.
Value is in question when reselling joins the
conversation. The debate over an LGD’s resale
value compared to the same carat weight,
color, clarity, and cut of a mined stone is hard
to win. History shows that
natural diamonds have generally
increased in price over the
decades, while the short history
of LGDs shows a decline
in retail prices as white stones
flood the market. One thing
that could change this scenario
is a few legendary designers
embracing LGDs, but that is
yet to occur—at least for the
white gems.
On the Block
While there are no plans to sell LG gemstones
at any major auction house, a recent development
for Christie’s and Sotheby’s has been their
significant push into private sales. There is a
concerted effort to expand revenue streams beyond
those of traditional open-outcry auctions.
In this vein, Sotheby’s inked a deal with eBay
and auction houses are expanding to reach the
masses via online auctions. These are positive
signs that the right carat weight, color, cut, and
clarity of LGDs or LG gemstones may be sold at
high-jewelry auctions in our lifetime.
The moment a major design house embraces
their own branded LG stone and places it on the
right person of influence, the potential of auction-
house LG sales is quite real. LG colored
producers will see new demand and revenue,
as consumers can finally afford a red diamond.
Tom Chatham reminds us of one major designer
that caused caverns of concern for the
natural pearl industry in the 1920s—the cultured
pearl. Dating back to 1893 when Kokichi Mikimoto
succeeded in growing a semi-spherical
pearl, cultured pearls shook up the natural pearl
industry. Sotheby’s has been auctioning
Mikimoto cultured pearl designs since 2016, so
it is not inconceivable that a magnificent labgrown
colored diamond set in an equally magnificent
jewelry design could also find itself on
the auction block.
Rose-Colored Glasses
As businesses continue to reopen in the midst
of the COVID-19 pandemic, we should take off
our rose-colored glasses (yet, keep the face
masks on) and look to other industries that sell
alternative products.
Today, countless consumers consume many
man-made commodities with greater excitement
than their natural counterparts. As one
example, do you enjoy hamburger? No need to
kill cattle anymore or cause environmental destruction.
Just look at companies such as Beyond
Meat and Impossible Burger. Their burgers
and sausages look, smell, and taste just like
the meat variety and are very popular even at a
higher price.
Do you want sun-kissed skin, but don’t have
time for the beach? No worries, a few 20-minute
sessions at a tanning salon gives you a created
tan. Gifting flowers to someone special? Those
stunning roses weren’t plucked from a rose garden,
they were probably GMO-manufactured in
a controlled green house.
The point is, if you improve the service, quality,
variety, and benefits of something natural by
making it yourself, it is clear that people may
actually pay more for the created version.
Want to own a junior-sized, but genuine colored
diamond of the natural variety selling for
millions? If you can afford a few thousand, the
look is yours, or yours to give. Either way, you’ll
feel like a million dollars.
Join the Club
Since you’re reading this story, you have a
vested interest in LGDs or about to take the
plunge. Either way, a question looms—a question
most can’t answer.
There are two LG non-profit organizations
active today. They exist to assist the lab-grown
community (trade and consumer) with a focus
on the trade. Here’s the question: Can you
name one of the two LG non-profit associations
or groups created to support you?
Try the same question on the non-profit
mined-diamond side. Can you name any one
of over a dozen global groups created to support
mined diamonds? There is an abundance
of global mined-diamond groups, each with
esteemed board members, expansive conferences,
and maybe even large budgets.
Then, there’s the LG side. There are only two
because the LG industry is new, and the reason
these two groups are not top-of-mind is because
the magnitude of money and influence of mining
operations simply overpowers them.
Small-to-mid-sized LG companies are somewhat
lost in the diamond to LG-diamond struggle
since they only have their own research and
testing to formulate their business plans.
Add the fact that for colored LGDs, most of
the marketing money is pointed at two mega
brands—Element 6 and Swarovski—and their
digital expansion and pop-up stores that are literally
popping up everywhere.
This isn’t an insurmountable challenge. The
precious metals sector only has one large association
per metal. Platinum interests have the
Platinum Guild International and gold lovers
have the World Gold Council.
You’d be hard pressed to name one natural diamond
group that welcomes LG-focused members.
That noted, I see you reaching for those
rose-colored glasses, but please keep them off
for now. It will allow us to reveal what’s been
staring at us and fix what needs to be fixed.
A Helping Hand
In today’s technology world, there has been
a world-wide shift. It’s called open-source software
(OSS). This collaborative, community minded
type of public software invites developers
to study, use, change, and distribute the
software to anyone and for any legal purpose.
By comparison, the jewelry industry is very
closed source. Trust is lean, and competition
is fierce. Yet the same is true for the software
industry. Why then, does an open software platform—
inviting others in the same field to access
and even change someone else’s work—now
universally commonplace and profitable? Peerto-
peer integration is a formula to success.
While sharing jewelry knowhow is alive and
well in the jewelry industry, it’s found only in small,
pocketed, and non-promoted places such as the
Jewelers Helping Jewelers on Facebook, or an
up-and-comer @TheDiamondFacts on the same
platform. The more the LG supply chain develops
in a vacuum, the more sucked up and
discarded it becomes. A controlled, but dispersed,
sharing of industry secrets is critical to
widespread and long-term success.
Embracing a leading non-profit to assist in
legal updates, communication breakthroughs,
partnership alliances, and promotions should be
on the LG industry’s to-do list. “The lab grown
diamond industry needs to be better educated
on the process, and desperately needs leadership
direction. This is the future of our industry
and will build added value for LG and the mining
business, if built correctly,”
says Jansen. “I have had many
major retailers, manufacturers,
and organizations in my lab in
an effort of education—for my
guests and for us.” Learning is
a two-way street.
Lab-Grown Processes
Chemical Vapor Deposition
(CVD) is today’s most popular
LG process. With CVD, tiny
bits of crushed natural diamond
are seeded onto a surface and
exposed to plasma—a cloud of gas heated to
800oC, stripping away the electrons from their
atoms. The plasma contains hydrogen and carbon,
two elements required to form a diamond.
The heat causes the gasses to break down. The
carbon atoms separate and then adhere to the
diamond seeds where they start to crystallize.
The second major technique is the High-
Pressure-High-Temperature (HPHT) method.
Diamond seeds are covered with a layer of carbon,
in the form of graphite, then heated to about
1500oC, while being pressurized to approximately
1.5 million pounds per square inch.
The graphite is dissolved in molten iron and
nickel at about 1200oC. The diamond seeds are
in a slightly cooler area, and the supersaturated
solution of carbon/iron/nickel kicks out the carbon
atoms in the cooler area and they are attracted to
the seeds. This may sound easy, but it is not.
The high pressure and temperature
are very difficult to
control. “Because these laboratory
processes mimic the
conditions that form natural
diamonds and precious gemstones,
no two lab-created diamonds
or gemstones are ever
the same,” notes Chatham.
If you improve the
quality and benefits
of something natural
by making it yourself,
people may actually
pay more for the
created version.
The Elements of Color
As in Nature, lab-grown colored
diamonds are created by
adding trace elements to the
growth cell during the process. These various
elements are responsible for the different hues.
The trace elements that enter the diamond during
formation mix with the carbon. Nitrogen takes
the place of a number of carbon atoms, thus creating
yellow, brown and orange. Blue diamonds
get their color from boron. The more boron that
replaces carbon atoms, the deeper becomes the
blue shade. The same process is replicated in
a factory. Pink and red colors are made by an
after-growth treatment on pale yellows, similar to
radiation but permanent.
Green diamonds may be the most fascinating
of all, as gamma radiation is responsible for
forming the green hue. A natural green diamond
endures intense exposure to atomic radioactivity
during its formation underground, sometimes
lasting for millions of years. The radiation, usually
coming from radioactive uranium, has the ability
to displace carbon atoms in the diamond from
their positions and changes the rock’s ability to
absorb and refract light, so it reflects a green color.
The longer the radiation exposure, the more
vivid the green color becomes. This process has
been replicated in a lab.The replacement of carbon
by trace elements is why we have four major
diamond types: 1A, 1B, 2A and 2B. Only Type 2A
has no trace elements and is pure carbon.
From an old-world history perspective to a
modern-day new business development mindset
and vision, colored lab-grown diamonds may
very well be in everyone’s future. ►
Carroll Chatham – Emeralds at 12 Years Old
“You’d have to call him a genius,” declares
Tom Chatham, reminiscing about his father’s
explosive garage experiments as a child. And
explosive they were, literally and figuratively. The
components of his formulas would have forced
most children to find a new hobby, but—for one
12-year-old boy living in San Francisco—he simply
reduced the heat and refined his craft to create
the first man-made emerald.
In the years to come, Carroll refined the process,
perfecting it in his pre-college years. “Creating
emeralds required less heat and pressure,
allowing my dad to experiment with formulas. He
was a natural chemist and followed the one passion
that awarded him a lot of press and even
a place in Ripley’s Believe It or Not for making
emeralds at such a young age.
Tom Chatham joined his father in the family
business in 1965 and, aged 21 years at the time,
also became a pioneer in the industry. Since
his father’s emerald-growing formula had been
refined at that stage, Tom began growing other
colored gemstones.
Working very closely with his father, he learned
that gemology and chemistry are two very different
things. The latter allows for deconstruction to
reverse engineer the process. Tom became the
face and voice of the brand. He clearly understood
the importance of PR early on when he
convinced a popular 1950s television show to
come to his home-lab and watch Carroll in action.
Through the years, he worked hand-in-hand
with his father and brought lab-grown rich red
rubies, vivid blue sapphires (which took many
years to finalize), alexandrite, and opals, all of
which are now offered with other LG gems, as
well as a wide variety of colorless LGDs.
As you may know, the father of lab-grown diamonds
is GE’s Tracy Hall, who made worldwide
headlines as the creator of the first man-created
diamonds in 1954. Hall and Chatham were partners
of sorts. While Hall gained the credit for creating
the first reproducible process in making LG
rough, key parts of the story were never told.
Here’s one: GE knew a patent was mandatory,
but they also knew it had to be a utility patent
(protecting the way a process/article is used and
works). Tom recalls a story his father shared to
underline that a utility patent was required: scientists
playfully used peanut butter as a form of
gear lubricant as an example of emphasizing the
functionality focus of Hall’s diamond press.
This accounts for the fact that, while Hall discovered
the LG process on February 15, 1954,
it took a full year for the media blitz to occur,
allowing GE to acquire the proper intellectual
rights protection.
For an interesting education on LGD history
and the growing process, you can hear an interview
of Tom Chatham on Groco at https://tinyurl.
com/LabGrownJune2020-Chatham.
Dan Scott is the Founder and Brand Architect of Luxe Licensing, a New York/metro digital marketing
agency and brand extension group catering to the luxury industry. Fine jewelry clients include Gucci,
Harry Winston,Van Cleef & Arpels and several developmental brands. Dan invites conversation and
may be reached at dans@luxelicensing.com or through www.luxelicensing.com. ■
