The Context:
Diamonds are one of the most coveted and mythologized gemstones in the world. The allure of diamonds has captivated mankind for centuries. Diamonds, in their naturally occurring form, are the result of carbon atoms bonding together under extreme heat and pressure deep within the Earth, a process that takes millions of years.
India’s history with diamonds is one of the oldest. Until the 18th century, India was the only source of diamonds for the world and traces of diamond mining can be found in Sanskrit manuscripts as far back as 300 BC. Strong, hardened, and sharp, diamonds came to be known as a symbol of power in medieval era India, revered the most amongst precious jewelry and adorned by Kings and Queens in courts. Back then, diamonds represented power, a consolidation of it, weighted by the size of its carats. Infamously, the Kohinoor diamond, touted as the crown jewel of India, was seized by the British East Indian company, and has since been worn by the late Queen Elizabeth II. The burden of the Kohinoor is etched in our collective psyche as a nation along with it the mystique and symbolism behind diamonds.
Diamond in the rough
Today, diamonds have come to represent love, fondness, and style. Couples across the globe revere their diamond rings as a symbol of their unfettered and undying love. Naturally, capitalism has led to the creation of a large industrial complex behind diamonds. Brands like Cartier and Tiffany, have capitalized on this trend for many decades to create large, sizable businesses.
However, this industrial complex - like all others, has been known to take advantage of demand for diamonds. Natural diamonds - or diamonds occurring naturally in our environment - are mined across hotspots across the globe, most notably across African countries such as South Africa, Botswana, Ivory Coast, among others. Capitalism has turned mining for diamonds into mining for blood diamonds, a systematic exploitation of income inequality between demand-generating nations in the west, and supply-producing nations. (The movie “Blood Diamond” starring Leonardo Dicaprio sheds more light on this topic)
By the mid-2010s, a movement for sustainable and ethically sourced products was emerging. This movement led to the commercial boom for lab-grown diamonds (LGD), or synthetic diamonds, those manufactured inside a high-pressure sensitive lab. Amongst other countries in the west, The US saw a surge in demand for LGD by 2015, with many notable jewelry brands launching their private labels. In 2021, U.S. shoppers spent $20 billion on lab-grown diamonds, showcasing a sustained trend among buyers.
While LGD is still new to India, its emergence could not be timed better. The rising middle class has deeper ambitions and a practicality to their net spend. LGD presents an alternative like no other - both with respect to cost and customization. Moreover, it’s produced in a lab, not in shady, dingy mines exploited by powers unknown.
Diamond in the lab
How LGB and Earth Mined Diamonds are different
Introducing True Diamond:
True Diamond is building India’s most premium lab-grown diamond brand, creating ethically crafted and responsibly beautiful products. It is uniquely positioned to cater to its true belief of becoming a high-touchpoint, consumer awareness and customization focused luxury brand
The Product
True Diamond’s product portfolio consists of bracelets, rings, pendants, earrings, necklaces, and many more. Women & Men Rings, women earrings, spiritual collection and pendant accounts for 45%, 25%, 7.5% and 7% respectively and the rest portfolio accounting for 16% of the total orders.
Distribution Channel
Jewellery has typically been an offline-first market. From small-scale boutique houses to large-scale conglomerates, consumer buying behavior has been successful with an offline-first touchpoint. However, discovery of products has now started to take place online. True Diamond intends to activate a high-touch point across its consumers through a Whatsapp-first approach, followed by a customer visit to its flagship store in Mumbai. A hybrid model between online discovery to offline purchase is likely going to be the route best suited for sales, given the relatively high price point and AOV of jewellery items compared to other categories.
The Market:
The India Jewellery Market is shining:
- India’s jewelry market is expected to reach $215B by 2034 from $90B in 2024 growing at roughly 8% CAGR. There are multiple drivers in the industry leading to such rapid growth, driven by rising disposable income (higher per capita growth in double digits), an improving mix for regular wear (beyond weddings and investment-led), enhanced product offering (design, diamonds, etc.), trust-building through hallmarking, and a better buying experience at organized retail outlets.
- Subsequently, entry of established players like the Aditya Birla Group with its new venture, Indriya and oversubscribed IPO of a jewelry house named PN Gadgil further highlights the potential of jewelry in India.
- It’s not just traditional players benefiting from the rapid growth of India’s jewelry market. Once seen as resistant to digital disruption, the jewelry sector has now embraced online channels.. E-commerce penetration in the jewelry sector has jumped from 1.21% in 2019-20 to 2.32% in 2022-23.
- Omni-channel brands like Bluestone, with over ₹788 crore in revenue, Caratlane, an online jewelry retailer surpassing ₹2177 crore in revenue, and GIVA, a fashion jewelry brand with a strong online presence generating over ₹165 crore in revenue, have all emerged as trailblazers in this evolving landscape.
- As the jewelry market evolves, sub-segments like casual, fashion, ethnic and men jewelry are gaining traction. This shift is driven by a younger, more digitally savvy audience eager for fresh and modern designs. With growing demand across various price points—ranging from mass-market to premium, there is ample space for new brands to carve out their niche.
Whitespace to build a lab-grown diamond brand:
- Diamond jewelry makes up roughly 15%-20% of the total Indian jewelry market and is the fastest growing segment in the jewelry. Within diamond jewelry, the hottest category is non-bridal or everyday wear.
- Diamond, due to its traditionally high cost, has often been out of reach for many consumers. However, the introduction of Lab-Grown Diamonds (LGD) has changed this dynamic, making diamonds more affordable and accessible.
- Globally, the demand for lab-grown diamonds has been strong, with the U.S. market alone valued at $10.8 billion and expected to reach $17.3 billion by 2030. Notably, lab-grown diamonds now make up 10% of engagement rings in the U.S. and account for 20% of global diamond jewelry sales.
- The shift toward lab-grown diamonds is driven by consumer preferences for more affordable and ethically sourced alternatives. Additionally, macroeconomic factors, such as rising gold prices, are encouraging jewelers to integrate lab-grown diamonds into their designs, making them a more accessible option for consumers.
- Lab-grown diamonds are steadily gaining momentum in India too, with early indicators pointing to strong growth. some text
- Svarra, a LGD brand started in 2019 saw a 5X growth last year with revenue reaching 17 Cr.
- LimeLight, another LGD brand started in 2019 clocked 80 Cr revenue and grew 2-3X.
- An extensive survey by Fireside Ventures revealed over 60% women are open to try LGDs for jewelry purchase of below 1 lakh and with all having zero/low negative bias towards lab grown diamonds.
LGD will likely have an impact on casual and fast jewellery segments:
- The Indian jewelry market can be subdivided on the basis of use case and price point as shown below. (Some brands may span across multiple segments and price points)
- Wedding wear accounts for 55-60% of the overall jewelry market, Casual accounting for 30%-35% and Fashion capturing 10% market. For diamonds jewelry specifically, the market share would be more skewed towards casual and fashion wear.
- As prices reduce significantly, lab-grown diamonds have the potential to dominate the mid-premium market across various use cases and even make inroads into the premium segment for sustainable or unique fashion jewelry. This trend is likely to have a greater impact on the market for larger diamonds, as their higher cost makes them more attractive in this segment compared to smaller diamonds.
The Team:
The inflection point for LGD is here, and the duo of Darayus Mehta and Parin Shah are the right operators to lead the charge for True Diamond. They bring a unique combination of experience in FMCG, consumer, investments, and marketing to build a large, sustainable business. Our conversations with the founders have instilled an unwavering belief in their ability to execute. 0 to 1 journeys for consumer brands can be hard and unforgiving, but we observe the right mix of ingredients in the operations set up by the founders.
Fast Forward to 2030:
Similar to the cycle that the west has adopted, we envision a democratisation for premium, high-quality diamonds in the market. While the cost of creating lab grown diamonds will continue to reduce, it will create a level playing field for notable brands to build their businesses. There will likely be a couple of brands that standout - either through positioning, customer satisfaction, product superiority, or a combination of these factors. Eventually, brands with a high-touchpoint consumer base will reap benefits of a longer LTV as well. Online-first discovery combined with offline purchase will likely continue till 2030 and trust of the brand over time will prove to be the right to win for breakout brands in lab-grown diamonds.
