17 Jun 2021
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Why Pandora’s decision to veto natural diamonds under ‘ethical’ concerns is PROBLEMATIC
Pandora, world’s best known jewellery maker was known for its use of natural diamonds – now it has decided to sell only lab grown diamonds in the pretext of the latter being ethical – this has ruffled many feathers in the industry as it sends out the wrong message
By: Diamond World News Service
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May 14 2021 6:20PM
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Reference: 25569  

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World renowned jewellery maker Pandora has literally opened a ‘Pandora’s Box’ by announcing to the world its shift from using naturally mined diamonds to lab-grown ones. According to Roshiel Zaveri, Wondercuts Jewels, “Pandora was always known for its silver products and more of what we call branded fashion jewellery, though it did use naturally mined diamonds – it was never a high-end pure diamond fine jewellery brand. It has been popular among the youth. All the same, it was never a connoisseur’s brand.”

Youngsters are more price conscious shoppers and therefore there has been a shift to cost-effective stones maybe that is why Pandora has decided to shift to cost effective lab-grown stones as compared to naturally mined ones. “Pandora’s decision to shift to lab-grown diamonds is a business decision. Lab-grown diamonds are popular world over, as also are naturally mined diamonds. Naturally mined diamonds are ethical as well. They cannot be labeled as ‘unethical’ – as Pandora did. Both stones will have their own niche demands in the marketplace,” explains Alkesh Shah, Vice Chairman, Gold Star Diamonds. “If Pandora has really termed naturally mined diamonds as unethical, I think they should retract their statement,” opines Alkesh.



Business Strategy

 “It may surely be a strategic decision, because world over many business houses are changing their business strategies – it is what they deem fit for that time and situation. Naturally mined diamonds are in demand all over the world. One international brand changing their business strategy will have no impact on business of naturally mined diamonds,” opines Zaveri. It is seldom the case that one market overlaps the other – they both co-exist peacefully. “The use of word ‘unethical’ is a mistake and misleading and one Pandora should not have used, unless they were trying to get ‘viral’ in their marketing for the brand (which I believe is the case). The percentage of natural diamonds that are considered conflict free are 99.98 per cent according to the WDC, so for a responsible jewellery company to use such words can be considered unprofessional and a marketing ploy to win shareholder value and consumers,” opines Mahiar Borhanjoo, CEO, UNI Diamonds. The diamond industry does more than any other natural or manmade product to ensure that ethical practices are followed from mines all the way through retail. “The mandates of the World Diamond Council, the Responsible Jewellery Council’s audits to all its members, De Beers' Best Practice Principles audit process to all its customers and CIBJO’s work on defining the practices and language of the jewellery industry are just a few key examples of the work that the businesses dealing in natural diamonds do to check their ethical position,” he explained. 

While Pooja Sheth, Limelight Lab Grown Diamonds opines, “As a strong advocate of sustainable lab grown diamonds, having a globally recognised brand such as Pandora enter the lab grown diamond industry is very exciting. Lab grown diamonds have started to receive acceptance amongst consumers worldwide and I'd welcome more and more brands to enter this space and build healthy competition.” 




Youth is the driving force

The Generation Next is all about casual jewellery and fun-filled fashion bling instead of serious high-end and high-value fine jewellery pieces. “It’s no surprise that diamonds are getting a makeover. Younger shoppers are driving growth across consumer goods, and they are more concerned about factors such as a brand’s purpose and a product’s cost to the planet than previous generations were at their age,” adds Pooja.

Copenhagen-based Pandora’s foray into man-made diamonds, which can be produced at a fraction of the cost and time, may also reflect a transition in the jewellery market brought on by the pandemic and the sentiments of younger buyers. Pandora says its lab-created diamonds have the same chemical and physical characteristics as those extracted from mines, and are also graded by cut, colour, clarity and carat. They’re produced in hot, pressurized chambers within weeks, which can require a lot of electricity but still can be produced for a third of the mining price, while those mined from the earth are formed over centuries.“There is a place in the market for natural and laboratory-grown diamonds, driven by consumer preferences and choices. Man-made coloured gems have coexisted with natural gems for more than a century,” says Alkesh Shah.

 Man made diamonds lead on to creating demand for natural diamonds.  When someone is ready to invest in a natural product that holds its value s/he will always turn to a natural diamond. Borhanjoo says, “I think one thing we are forgetting is that GenNext are smart shoppers and cannot be duped by false pretenses. They understand the rarity of a natural diamond being formed under ideal conditions under the pressure of the Earth for billions years. They understand that natural diamonds have a sure and inherent value.”   

 

Cost reigns supreme?

Cost may not be reigning supreme all the time. Naturally mined diamonds have their own buyers. They have a select customer base and come what may; they will not budge from their preference. Lab grown diamonds can never replace natural diamonds totally. The demand for lab grown diamonds seems to be rising in some circles, however in India majority of consumers prefer natural diamonds.

Lab grown diamonds are less expensive because they are not mined. They save up on the mining costs and pass on that as a benefit to the ultimate consumer. “However, it’s not the pricing that appeals to the young consumer but rather the sustainable and environmental benefit that comes with it. Any business that wants to sustain for a long term has to appeal to the GenNext, the switch to lab grown diamonds will be inevitable,” explains Pooja.

When it comes to buying diamonds – Cost is taken in to consideration by maybe first time diamond jewellery buyers, or lower income groups. “In India, jewellery is also bought as an investment, naturally mined diamonds have a good investment value – lab grown diamonds can never give that kind of return,” explains Zaveri. Therefore, the fact that only cost will be the deciding factor for a jewellery business owner to stock up on synthetic diamonds is not all that true. “There are many factors that need to be accounted,” he adds.

Given that the prices of manmade diamonds are 30-40 per cent lower than natural diamonds, one can see that Pandora’s move was focused on the pure economics, especially when one considers a longer term approach of their decision. “As technology improves the price of manmade diamonds will become less and less and hence the pieces containing man made diamonds will provide better margins for Pandora should their strategy be to grow in this area of business. Business economics would certainly play a part in it. However, in my view any business at that scale would take such decisions considering an overall perspective of the market potential and opportunity size and not because lab grown diamonds are cheaper or more ethical. In business, customer is king - so whatever the consumer asks for, is where the opportunity lies,” sums up Pooja. 

 








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