Pandora Closes the Box on Mined Diamonds

July 7, 2021
Pandora Closes the Box on Mined Diamonds

The popular jewelry company, Pandora, will no longer source real diamonds and will exclusively use lab grown diamonds instead.

A combination of low cost and sustainability strategies are driving this change to make beautiful jewelry that is more affordable, accessible, and sustainable.  Pandora’s decision follows a larger market trend that has seen the production of lab-grown diamonds increase to approximately six or seven million carats in 2020, while mined diamonds saw demand drop.


Video Spotlight: 


This post is based on the CNN article, Pandora says laboratory-made diamonds are forever, by Jonathan Josephs, May 4, 2021; CBS News article, Pandora, world’s largest jewelry marker, will no longer use mined diamonds, by Sophie Lewis, May 7, 2021; and the YouTube video in the Spotlight. Image source: Tetra Images/Alamy

Discussion Questions:

1. How does the move to lab-grown diamonds fit with Pandora’s operations strategies?

Guidance: CEO Alexander Lacik says that low cost is a prime driver of the move to using more lab-grown diamonds.  While Pandora’s jewelry is recognized for good quality and attractive design, its design and price point are for “everyday” wear rather than high-end, expensive pieces.

In the past diamonds have not been a major part of Pandora’s product line, but sourcing lab-grown diamonds will give them a bigger role moving forward.  Lab-grown diamonds are optically, chemically and physically the same as mined diamonds but can be purchased for about one-third of the cost.  This better fits Pandora’s everyday wear strategy and puts such jewelry in reach of many more people with a starting price point of $350.

2.  What role does sustainability play in these changes?

Guidance: Another key operations strategy for Pandora is sustainability.  While sustainability was not noted as one of the top five reasons that consumers choose lab-made diamonds in a recent survey by the consulting group Bain & Company, it is still important to some shoppers.   Like Pandora, some consumers are concerned about human rights abuses and dangerous working conditions among miners in countries like Venezuela, Mali, and Ghana.  Furthermore, “blood diamond” or “conflict diamonds,” whose revenues are used to fund rebel conflict against established governments in some African nations, raise ethical concerns for some.

Another issue driving Pandora’s push toward sustainable diamond production involves how the diamonds are made.  Not all manmade diamonds are created in the same way.

Over half of the world’s lab-grown diamonds are made with large amounts of coal powered electricity in China.  However, Pandora already sources 60% of its created diamonds from suppliers in the United Kingdom that use sustainable, clean energy sources and plans to increase that to 100% by next year.  The U.K. will also be the first part of the world in which consumers can buy the new jewelry pieces.

3.  What type of pattern can be seen in historical demand for mined diamonds?

Guidance: Global demand for diamonds decreased from a high of 152 million carats in 2017, to 111 million carats in 2020.  Production was dampened in 2020, in part because of the pandemic, declining 18 percent, but this has rebounded a bit already in 2021.  However, in general, there is a decreasing trend in demand for mined diamonds, while at the same time demand for lab-grown diamonds is increasing.

4.  Are there any other ethical issues related to companies cutting their purchases of mined diamonds?

Guidance: The World Diamond Council (WDC) argues that pulling orders from traditional sources for mined diamonds puts those communities at risk.  People in small mining towns depend on the sale of the diamonds for their livelihood, and if jewelry companies and consumers continue to move to manmade diamonds instead, the poverty and unrest in these areas is predicted to become worse.

Some observers believe there is room for lab created diamonds to co-exist with existing levels of demand for mined diamonds, since they sell for different price points and could serve to increase interest in this category of jewelry in general.

print
Facebook
Twitter

Leave a Reply

avatar
  Subscribe  
Notify of