Global Diamond Certification Business in Exciting Growth Phase

Product differentiation plays a very crucial role and is essential to break the cluster of similar service brands. Various labs employ their individual USP’s or stress on their ongoing legacy components to maintain a superior share in the entire business pie. Reportedly, only 3 million gemstones out of a vast pool of 30 million gemstones in India are certified. Similarly, large amount of diamonds await certification in other parts of the world too. Therefore, immense market remains to be tapped.

Lack of Standards Uniformity: Curse or a Blessing?

Quality Benchmarking Confusing:
As a result, quality benchmarking becomes very tough and creates chaos in the manufacturer’s, wholesaler’s, retailer’s, and most importantly in the customer’s mind, “Deciding on a benchmark for certification of diamonds can be confusing for many consumers. The best advice is to do a little research. It doesn’t take long to narrow down the choices based on reputation and credibility,” suggests Joe.

Educating the Consumer is not a Norm: Many labs spend pounds and dollars aplenty in marketing their services to the trade while fewer donate much needed attention to educate the end consumer, says Palmieri, “For those of you who are familiar with toll roads and toll bridges, imagine the toll booth as a diamond grading laboratory. In order to pass down the highway (supply chain) you must first pay your fee. I believe most laboratories do not feel any further obligation than to collect their fee. Some teach gemmology but do not really attract the consumer. It is a missing detail.” There are still people in the certification business who think that it is not feasible to educate the end consumer always, “It is really up to the final sales person to be educated, and in turn, educate the consumer. The internet is a great facility to get information, but it is costly to pass this information on to the public, may be confusing, and needs a professional jeweller to evaluate, interpret, and translate. The AGS mandate is to educate its members,” tells Joe.

Added Cost:
Certification adds extra cost to the product, and labs make plenty of efforts to justify the additional bucks though at times it gets difficult to convince the consumer, as he is not sure about the necessity of this document. This Destino explains, “The public wants to be comfortable that what they are buying is honestly presented at the counter. Having the guidance of an unbiased, independent grading report is well worth the modest extra cost if it can provide an enhanced level of consumer confidence at the point of sale.”

Past Mistakes:

Detection of flaws and inaccuracies in certification and grading results emanating the biggest of labs in past years have undoubtedly shaken the trust of consumers, “Consumer trust of the US jeweller is slightly over 50% according to research data reported by DTC and the World Diamond Council. To put it the other way, almost 50% of consumers distrust US jewellers. I have been in this industry since 1965 and have watched the milemarkers of industry fraud; indifference and arrogance towards the diamond, gem and jewellery consumers pass by. There is a lot to repair to regain crucial consumer trust. To be sure, I believe most dealers and retailers are honest, hard working individuals with integrity, but they have let a significant population of the unscrupulous dealers, laboratories and retailers drag them into the same mud- hole,” says Palmieri. He further observers, “In an article in Barrons Financial, September 7, 1981, in an interview concerning sloppy and over-graded diamonds by various laboratories, I was quoted saying that I believed the existing laboratories could be 99% accurate if they took the time and effort to do the job right, instead of running paper factories. I believed that then, and I believe that now.” Joe offers an interesting reply, “With the tremendous amount of gemstones being sent to labs today, it is not surprising that mistakes will be made. In defense of the labs, it may be remembered that humans grade the gemstones and grading is somewhat subjective. It is not an exact science and many gemstones may fall on the borderline. In addition, computers generate a great deal of information on the cut and computers are not always 100% correct. Most labs do their best to provide accurate reports.” However, recently a new lab has claimed to take diamond certification and grading from art to a science.

Synthetics: Opportunity or Obligation?
Lately inflow of synthetic diamonds in the market has more or less made it a necessity at the retailer and wholesalers’ end to certify their products. “I would hardly call the appearance of man-made diamonds a “heavy inflow.” At this moment, it is more like a “trickle.” Nonetheless, labs have a responsibility to make certain that such gemstones are properly identified and treatments if any, are disclosed. Rather than characterizing the appearance of synthetics as a “grading opportunity” for labs, I think it is more accurately described as an “obligation” for the labs to ensure full disclosure,” tells Destino. Apart from the professional labs, few companies have evolved their own grading and certification systems to identify synthetics and win consumer trust.

The Road Ahead:
The Diamond Certification segment is at a very interesting point at present. Several labs namely IDL, HRD, IGI, GIA, AGSLAB, GCAL amongst others have extended their operations to India. Like any other place here are also few challenges, it would surely be enlightening to get views to this question from all three respondents, “Figuring out how to play on a level playing field (legitimately) without losing all your business is a major challenge. Laboratories, that built their businesses on furnishing false benefit to diamonds by inflating the quality grades or the value, have no integrity….just an immoral gimmick. I do not know if they can be rehabilitated, or should find another line of work. For honest labs, competition is healthy and robust competition will only benefit them and the consumer at the end of the day,” suggests Palmieri.

Major Challenge: Technical Advancement:
“The major challenges for certification laboratories arise out of the continuing advances in technology which have created a whole new menu of treatments that can be employed to enhance a gemstone artificially. The color and clarity of diamonds can be improved by the use of powerful doses of heat and pressure. The clarity of emeralds can be improved by filling in the fractures that nature created. The color of sapphires and rubies can be enhanced by heat treatment. Some companies have even created diamonds via special technology. None of these technologies are illegal, of course, but the public, standing at a jeweller’s counter and looking at such gemstones, should be properly informed about what they are seeing.

The challenges to GIA and other labs are:

• Make certain to keep pace with all the technological advances, and
• That we can detect and disclose any and all enhancements to the public,” Destino adds, while Joe says, “Challenges for the certification labs in the future lie in consumer education, awareness and confidence. Maintaining consistent and accurate grading practices, as well as keeping up with detecting synthetics and treatments, are of key concern.”