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The chances of a copy-cat being better than the original are low but never zero. Case in point: Diamonds. Naturally-mined diamonds are quickly being outpaced by their low-cost counterparts—lab-grown diamonds (LGDs). These man-made gems, which share nearly identical physical properties with natural diamonds yet cost half as much or even less, have gained remarkable traction in recent years. LGD market share in the US has soared from just 11 per cent in February 2020 to over 50 per cent by February 2024, as per market analytics firm Tenoris.
Goldiam International, a diamond exporter primarily to the US, has swiftly shifted gears over the years to capitalise on this consumer trend. Originally a natural diamond jewellery exporter, the company now derives 80 per cent of its revenue from LGDs (as of Q3 FY25), up from just 58 per cent a year ago. Meanwhile, natural diamonds now make up only half the sales they did last year.
Goldiam is now eyeing India as the next big frontier, with an ambitious plan to become the largest organised retailer of LGDs through its ORIGEM brand. After opening four stores in Mumbai, the company plans to scale up to 200 stores over the next four to five years.
The goal is ambitious. The company expects breakeven for each store at Rs 30 lakhs monthly sales. Assuming this to be Rs 40 lakhs, its annual sales target translates to Rs 960 crore from all stores. To put this in perspective, Goldiam is currently making around Rs 700 crore in annual sales from its US operations. Simply put, it is aiming to replicate this massive scale in India - a bold target that raises questions about its achievability.
Goldiam's growth thesis: What's driving the bet?
Capturing the value buyer
The company is eyeing the sub-Rs 1 to 2 lakh diamond-studded gold jewellery market, which it believes should see substantial growth over the next decade.
With gold prices at historic highs, consumers are increasingly finding that natural diamonds in this price range offer limited value with smaller sizes and lower carat weights. In contrast, LGDs allow customers to get much larger stones for the same price, or buy similar-sized stones at a fraction of the natural diamond's cost. This, Goldiam believes, will strengthen the appeal of LGDs, making them an increasingly viable option for price-conscious buyers.
Banking on the first-mover advantage
The company argues that the lack of large organised retailers for LGDs is why their adoption has been slow in India. In the US, widespread acceptance by large chains fueled demand, normalising LGDs as a mainstream choice. Something that it believes it can emulate locally by pioneering the category through its dedicated retail network.
However, execution is far from simple. The company needs to tackle some key challenges:
The hurdles
First mover? Perhaps not
Goldiam's first-mover advantage in India's LGD market could be fleeting. Heavyweights like Trent and Senco Gold are other new entrants in the market, armed with stronger brand equity and scale. Not just that, giants like Titan have maintained that they could follow suit once demand for LGDs is proven. Goldiam, with its low brand visibility in India, could be swiftly overshadowed by larger competitors' established trust and reach in an industry where brand perception is paramount.
Combine this with the company's LGD EBITDA margin, which is down from nearly 45 per cent in Q4 FY23 to 25 per cent now, indicating competitive heat even in the US and pressure on profitability despite its backward integration efforts.
Uncertain demand scenario
Going by Titan's recent earnings call, the company is seeing no significant consumer queries for LGDs across its stores. While its sub-Rs 1 lakh diamond jewellery continues to see strong traction, Titan said that customers remain loyal to natural diamonds.
While Goldiam reported encouraging traction in its three Mumbai stores, it's too early to predict healthy demand.
The company's plans hinge on the assumption that Indian consumers will adopt LGDs en masse. But there is a long-standing loyalty to natural diamonds and even gold jewellery, which holds emotional and investment appeal in the country. Overcoming these entrenched preferences will require a massive branding and education effort. Without a significant shift in consumer behaviour, Goldiam may be rushing into an untested market with overly ambitious plans.
Final word
Goldiam's ambitious retail expansion is a bold bet fraught with risks. The market demand itself remains nascent to begin with. Even if mass adoption takes place, larger, established peers can easily sweep off a chunk of the market. Essentially, it would take a massive consumer shift and aggressive branding push by the company to avoid losing out to competitors. The stock has run up 116 per cent since the local foray was announced in August 2024. However, with so many unknowns, investors should proceed with caution as the growth story needs many variables to work out.
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