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Synthetics: The Meat of the Matter

The natural-diamond trade needs to be more aggressive in the lab-grown debate
Feb 21, 2019 6:58 AM   By Avi Krawitz
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RAPAPORT... In a bold and somewhat savvy move back in January 2018, Tyson Foods, one of the largest food-processing companies in the US, took a minority stake in Memphis Meats, a startup in the budding cultured-meat industry.

Despite the deal’s sleeping-with-the-enemy feel, the investment sparked little controversy, as Tyson was the latest in a line of high-profile investors in the food-tech business. Memphis Meats also counts Bill Gates, Richard Branson and Cargill Inc., another meat producer, among its backers.

Lab-grown meat, which is essentially cultured from animal cells, offers environmental benefits, but it also taps into social trends.

If the product takes off, lab-grown meat could help lower greenhouse-gas emissions and reduce damage to the environment, which the food industry currently impacts through deforestation and overcrowding. Economically, it could ride the wave of ethical consumerism and the strong movement toward non-meat diets.

Rather than resist the new product category, meat-processing companies have embraced it as a complementary business that could drive growth. “We continue to invest significantly in our traditional meat business, but also believe in exploring additional opportunities for growth that give consumers more choice,” explained Justin Whitmore, vice president of corporate strategy and chief sustainability officer at Tyson Foods.

The 4Ds

The key, it seems, is to know what you’re eating. While the product is still in its early days and many still question whether consumers will take to it, ordering a steak in the future will likely involve more than choosing rare, medium or well-done.

But for that to happen, restaurateurs will have to provide full disclosure of what’s on the menu, and regulators will need to oversee the correct documentation of that disclosure. The Food and Drug Administration (FDA) in November agreed to share regulation of cell-cultured food, monitoring the collection and differentiation of cells, while the US Department of Agriculture would oversee production and labeling of these products.

That’s led to a debate over what to call meat derived from animal cells rather than the animal itself, and whether you should even use the word “meat” to describe it. Some argue it should be called “cultured,” “synthetic” or “in-vitro” meat, while lobbyists such as the US Cattlemen’s Association refer to it as “cell-cultured products” or “cultured tissue” (i.e., not meat).

Correct labeling is vital, since food-tech companies note that their product has the same taste, look, texture and nutrition as regular meat. Plus, they need to differentiate to demonstrate their added value. Their businesses won’t be viable without the proper detection, disclosure, documentation and differentiation (the 4Ds) of the alternative meat products becoming available.

Diamond parallels

The diamond industry faces a different set of challenges when it comes to lab-grown, even as one can clearly draw parallels to the meat industry’s experience. It has also reached a more mature phase of its synthetics discussion, particularly when it comes to implementing the 4Ds.

Regulators are less involved in the quality control of lab-grown diamonds, although they have weighed in on what is considered a diamond: The Federal Trade Commission (FTC) declared last year that the word “diamond” could refer to natural or synthetic stones. Of course, the trade body still requires lab-grown suppliers to make the proper disclosures in their marketing and sales pitches. But it has largely been left to the natural-diamond sector to police synthetics supply through grading and detection. Undisclosed mixing of synthetics in parcels of natural diamonds remains a significant threat to diamantaires, undermining the value of the mined product. Alarmingly, the number of cases of such mixing continues to rise.

Differentiation phase

Undisclosed synthetics have dominated the lab-grown narrative over the last few years. Diamantaires have become aware of the problem, and an impressive number of synthetic-detection services and machines have become available, even if it remains difficult to neutralize the threat.

Today, however, the discussion has shifted to focus on differentiation as lab-grown diamonds gain in popularity and acceptance.

“For us, 2018 was the year that lab-grown diamonds got a place in the jewelry industry,” researchers at lender ABN Amro wrote in a recent report. “We think that 2019 and 2020 will be the years that lab-grown diamonds take off and move from an introduction phase to a growth phase.”

Synthetics producers are investing to tap that growth. De Beers is building a new facility, and Diamond Foundry is expanding to raise its supply significantly. Meanwhile, equity firm Huron Capital bought into WD Lab Grown Diamonds, and even the Flemish government has provided a $2 million grant to develop Antwerp-made synthetics.

Differentiation is important for the lab-grown industry, as it is for natural diamonds. A majority of the synthetics players market themselves as the ethical alternative to mined diamonds, which they claim are tainted with conflict and hurt the earth. That has put the natural-diamond trade on the defensive, resulting in the industry having to prove its added value over synthetics when it should be the other way around. The lab-grown product, after all, is the newcomer trying to gain market share.

To ensure sustainable growth, synthetics suppliers need to show that their competitive edge extends beyond badmouthing natural diamonds — particularly since the claim that a lab-grown diamond is eco-friendly, transparent and ethically sourced tends to be vague, as the Diamond Producers Association (DPA) has noted. There is very little, if any, source verification of lab-grown diamonds or monitoring of its ethical footprint.

Ideally, lab-grown producers should adhere to the same know-your-supplier practices that a growing number in the natural-diamond trade do.

Believing in the product

The mined-diamond industry needs to get off the defensive in the synthetic-diamond debate. It can do so by amplifying the good that diamonds do — through both its corporate social-responsibility programs and its role in providing livelihoods to tens of millions of people. It should also enhance its storytelling about where a diamond comes from, building on the wave of source-verification and traceability programs that have recently emerged.

Consumers do care about what they’re buying, and they want to be assured that their purchase is making a positive contribution. Natural-diamond companies should be providing those assurances regardless of the rivalry with synthetics. It has become quite clear that the natural-diamond and jewelry brands able to garner growth in today’s challenging environment are those investing in technology and telling a meaningful story.

In that context, the synthetic-diamond debate should not be about the threat of losing market share. Lab-grown products, whether meat or diamonds, provide a different appeal and will evolve to a segmented market. Rather, it’s about the diamond industry believing in its product. Having survived the early-disrupter challenges that cultured meat is now presenting for food suppliers, the natural-diamond trade should have the tools to sell with confidence. The growth of synthetics may continue to shake the market, but natural diamonds have a unique value proposition that still resonates with consumers.

This article first appeared in the February issue of Rapaport Magazine.

Image: Scientist samples meat grown in a laboratory (Shutterstock).  
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Tags: ABN Amro, Avi Krawitz, Bill Gates, Cultured Meat, De Beers, diamonds, Dpa, ftc, lab-grown diamonds, Memphis Meats, Richard Branson, Synthetics, Tysoon Foods
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