Jewelbox's $100M consumer opportunity 💍
Can lab grown diamonds beat natural diamonds?
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Jewelbox recently raised about ₹2 Cr for 6% Equity from Shark Tank India. But what makes Lab Grown Diamonds a Venture-backed business? Especially when natural diamonds already exist in the market?
The value chain of a diamond 💎
A diamond goes through four steps before it is sold to a consumer like you - Extraction, Polishing, Grading & Putting it in a jewel.
Before you can buy that ring the Gemological industry has graded it based on the 4Cs Cut, Clarity, Carat & Color.
This is where it gets interesting 💡
From a production POV, a lab-grown diamond can be produced in six weeks, compared to hundreds of years for a natural diamond. But from a chemical composition standpoint, there is almost no way to tell a natural diamond apart from a lab-grown diamond after it is polished 👀
The savings on a lab-grown diamond 🕺🏻
Compared to natural diamonds, a lab-grown diamond is ~40% of the price. See, 70% of the cost of producing a diamond is in exploration & mining. This is the cost savings that is passed on to the consumer.
The export opportunity 🚢
Just in 2021, we exported ~$26 Billion of diamonds, making us one of the biggest diamond exporters in the world. With the USA as one of the major export hubs, export is a huge opportunity - even for lab-grown diamonds. On that front, we are directly competing with China. But, I want to discuss a different opportunity for Jewelbox and lab-grown diamond companies - the Indian consumer opportunity!
What is Jewelbox’s $100M opportunity in India?
1/ The sustainability opportunity
There is a reason why Swiggy & Blinkit use paper/compostable plastic bags to send all their deliveries. Sustainability is not a novel concept anymore. Your GenZ & Millenials crowd are consciously choosing brands that offer sustainability in their production & packaging.
To find 1 carat of a natural diamond, you need almost 200+ litres of water and have to displace ~250 tonnes of land. Add pollution from heavy machinery used to do this and it drives the ‘sustainability’ concept home for Jewelbox. Also, sustainable product = bragworthy helps Jewelbox’s case.
2/ The cost opportunity
It’s no wonder only ~5% of Indian women own diamond jewellery. And the reason is out in the open - exorbitant cost $$$
Cost diff between natural Vs lab grown.
Tanishq (Natural) - 0.3 carat - ₹71,000 while Jewelbox( lab grown) - 0.6 carat - ₹35,000 (almost 4X cheaper). Plus, the tech to grow a diamond is still nascent. With time the cost to produce a diamond will also go down, opening up new use cases for buying & gifting.
3/ The gifting opportunity.
The gifting industry in India is threefold - festival, personal & corporate gifting. Corporate gifting aside, a diamond ring starting at ~₹5,000 opens up a lot of opportunities in the festival & personal gifting space.
₹5,000 diamond ring + roses >>> a chocolate hamper from Ferns n Petals.
₹15,000 lab-grown diamond ring as a gift to your mom > > > everything else.
₹20,000 diamond ring for a wedding anniversary >>> a gold ring.
This puts Jewelbox in direct competition with Ferns n Petals & IGP in the personal gifting space. Also, a diamond product is rarely expected as a gift owing to its cost disadvantage. From a gifting POV, a diamond still has a huge delta for consumers.
The lab-grown diamonds market is still early for consumers in India 💍
However, Jewelbox checks all the right boxes for them to become successful.
A market that values diamonds and has been devoid of owning one for a long time
Supreme e-commerce penetration + access to capital
A consumer segment that can pay & prefers sustainable products.
India has been known as the world’s processing and trading hub. The lab-grown diamond industry thrives on exports. But with lab-grown diamonds, I see a huge & thriving consumer market inside India.
We can expect some cannibalisation of the natural diamond market. But I see lab-grown diamonds as a starter product for this market. Eventually, it will help in the adoption of natural diamonds in the marketplace.
That’s all for now.
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