 Key points
• Man-made diamonds are directly competing for natural diamonds’ market share • Attempts to clarify terminology and prevent misleading marketing have so far been unsuccessful and led to further confusion • Natural diamonds have been dealt an unfair disadvantage by an unquestioning media and confusing regulatory guidelines |
Make no bones about it. For the new lab-grown companies to achieve long-term profitability, they must capture the customer base of the natural diamond market.
This has all the hallmarks of the video-format war of the late 1970s and early 1980s where Sony’s Betamax and JVC’s VHS battled for supremacy; however, while that was a zero sum game, which resulted in death for the loser Betamax, man-made and natural diamonds can co-exist.
That’s not to say this fight will be fair, let alone decent.
As is always the case, the first casualty of war is truth. The synthetic side had been doing a great job disparaging the traditional market with terms like ‘mined’, ‘earth mined’ and ‘dirt’ diamonds, attacking the eco-unfriendliness of the sector and emphasising mining’s harmful impact on the environment.
At the same time, the mined diamond sector has been rather effectively attacking the lab-grown sector’s authenticity (‘realness’) and lack of rarity. They ask: where is the value in something that has endless supply?
The use of nomenclature has been a divisive weapon in the land grab and we have all seen it.
Consumer protection
The lab-grown brands have performed better here. Unquestioning consumer-media writers have failed to fact-check the litany of unproven claims about eco-friendliness and sustainability made by many lab-grown brands. Publishing these claims without scrutiny is akin to ‘drinking the Kool Aid’.
The fight substantially changed in July 2018 when the US Federal Trade Commission (FTC) entered the ring as referee by updating its Jewelry Guides to “help prevent deception in jewelry marketing”. They are key words: deception in marketing.
By attempting to protect consumers against false and misleading claims, I believe the FTC has caused more confusion, to the detriment of the industry, and helped fuel the land grab.
The FTC Jewelry Guides essentially declare that a diamond is a diamond, only their history is different; one type is formed in the earth and one is formed by equipment.
However, the FTC quite rightly ruled out man-made diamonds from being described as ‘natural’: “It is unfair or deceptive to use the word ‘real,’ ‘genuine,’ ‘natural’ ... or similar terms to describe any industry product that is manufactured or produced artificially.”
Instead, the FTC’s recommended terms include ‘synthetic’, ‘lab-created’ or ‘lab-grown’ diamond.
However, if we accept that both products are identical in their chemical composition, then, in my view, the nomenclature has unfairly favoured the man-made diamond side.
Before I detail why, we should remember that the FTC’s rules only apply in the US to protect its consumers. The rest of the world can ignore the FTC’s decisions – which is largely what’s been occurring.
I view ‘synthetic’ and ‘mass-manufactured’ as uncomplimentary marketing terms, which is why the traditional market uses them to disparage their opponents; they like to avoid the more friendly ‘lab-grown’ or ‘lab-created’.
Likewise the lab-grown side prefers to use ‘mined’, ‘below-ground’ or ‘earth/dirt’ as a way to disparage the naturally-formed diamond sector.
The man-made side is happy with ‘lab-grown’ or ‘lab-created’ because they’re complimentary or, at least, acceptable marketing terms – using them helps capture the hearts and minds of potential customers. They dislike ‘synthetic’.
Honesty and fairness
On the other hand, ‘mined diamond’ is not complimentary but, because of confusion, the traditional market is being railroaded into using it, including by many in the industry who are meant to act in an even-handed and neutral manner.
Honesty and fairness has flown out the window!
The FTC recommendations have affected the public relations campaigns for both sides, especially in consumer magazines where the complimentary ‘lab-grown’ competes against the uncomplimentary ‘mined’.
Having become aware of the FTC’s decisions and actions, large sections of the media don’t understand that they have no need to comply with the FTC, even in the US. They can ignore its Guides.
You see, the nomenclature only pertains to diamond jewellery marketing and advertising, not reporting, which means the media can describe the products however they see fit. However, most journalists have happily swallowed the lab-grown Kool Aid.
FTC statements such as this do not help: “The Commission no longer defines a ‘diamond’ by using the term ‘natural’ because it is no longer accurate to define diamonds as ‘natural’ when it is now possible to create products that have essentially the same optical, physical, and chemical properties as mined diamonds.”
One might take that to believe that marketing and advertising a diamond as ‘natural’ is inaccurate and therefore “deceptive”.
Of course it’s hogwash; it’s inarguable that diamonds are formed naturally – “existing in or derived from nature; not made or caused by humankind”.
Well-known luxury sector market researcher Pam Danziger best illustrates my point about the FTC ruling favouring the synthetic market.
Writing for Forbes in August 2018, she observed: “Thanks to the new [FTC] ruling, consumers ultimately are the biggest winners, the mined-diamond industry the biggest losers. Lab-grown diamond marketers can now communicate to consumers clearly, effectively and in simple language what their product is and how it is as good or even better than diamonds that are mined out of the ground through rape and pillage methods.”
Ignoring the highly charged language, nothing could have been further from the truth!
What followed was a barrage of misinformation (or to use the language of Danziger’s elected president, ‘fake news’) false claims, outrageous exaggerations and, in some cases, lies. Many lab-grown diamond manufacturers went into overdrive with consumer deceptions.
Misinformation
Indeed, it reached a level that the FTC was forced to take action against some of the so-called leaders of the lab-grown industry.
Unfortunately, the misinformation has not stopped; although I have no doubt that some, or much, of it is caused by the confusion over the FTC’s new Guides.
So much for Danzinger’s claim of clear, effective and simple communication by the lab-grown suppliers for the benefit of consumers! (I can’t recall a time where the FTC was forced to act, en masse, against the natural diamond suppliers).
As I wrote above: this battle will not be fair, let alone decent.
If the purpose of the FTC is to protect consumers against deceptive marketing, then I suggest simplicity is always the best practice.
The new US nomenclature has only created more confusion because people rely on it only when it suits them. Adding to the confusion, CIBJO and non-US countries have their own, long-held nomenclature, which the FTC’s Guides seem to contradict.
Surely the easiest way to protect consumers is to keep nomenclature matter-of-fact.
Consumers can easily understand that diamonds from the earth are formed naturally and synthetic diamonds are manufactured, so why not describe them both fairly, as ‘natural’ and ‘man-made’?
End of story!
Indeed, I have previously made the argument that lab-grown diamonds are not made in laboratories anyway, so why can that “deception” still be allowed?
A laboratory is “a room or building equipped for scientific experiments, research, or teaching”. Man-made diamonds are manufactured in factory-like environments through processes no different to other consumer goods.
Why is it therefore acceptable for consumers to be led to believe they are made in laboratories? Why do the FTC rules allow for the natural suppliers to be hectored with ‘mined’ and yet allow the deception that synthetic stones are made in ‘laboratories’?
Do the lab-grown manufacturers even describe their own large factories as ‘laboratories’? I doubt it; indeed, I know some who refer to the ‘factory’ or (manufacturing) ‘plant’.
If the FTC’s mandate is to help prevent deception in marketing then I believe one of the largest deceptions is perpetuating the perception that man-made diamonds are created in scientific laboratories.
For these and other reasons, would it not be fairer for everyone if the terms were simply ‘natural diamond’ and ‘man-made diamond’? Wouldn’t consumers immediately understand the provenance of each product?
'Man-made' nomenclature
Better still; if the man-made diamond manufacturers truly believe that consumers prefer eco-friendly, sustainable products – as an increasing number do – ‘man-made’ perfectly communicates that message. It says it all, and consumers will know what they’re buying because the manufacturing process can be controlled.
It’s an important issue, not merely because of consumer transparency. In this digital age, words have become potent weapons used by groups intent on harming businesses or entire industries. While both diamond sectors need to adapt to an ever-changing world, it will be consumers who ultimately decide the outcome of these marketing battles.
Therefore, isn’t it only fair that this ‘war’ plays out on a level playing field?
And that’s exactly why we have published Round II of The Great Diamond Debate; as a way of addressing the real issues, not simply accepting half-truths and public relations fairy-floss.
The jewellery industry must ensure that both sides are treated evenly and uniformly, which is not the case now. And for the record, I believe that high-quality man-made diamonds are a great addition to the industry.
Room exists for both diamond products and respective sectors will eventually adapt to consumer demand and find their own niches, however this transition should occur with complete transparency and on equal terms – no pun intended.
Unfortunately, at the moment, it seems one side is fighting with a hand tied behind its back.
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