The diamond industry faces significant turmoil as the rise of lab-grown gemstones continues to push prices down further. The surge in demand for lab-grown diamonds, combined with a series of economic factors, has created a challenging environment for natural diamond producers.
Lab-grown diamonds, once a niche market, now make up about 20% of global diamond jewelry demand. This shift has been driven by consumers seeking more affordable alternatives to natural diamonds, which can cost significantly more. The result has been a dramatic drop in prices for both lab-grown and natural diamonds.
Diamond industry 'in trouble' as lab-grown gemstones tank prices further https://t.co/EWAQof2ZzO
— CNBC (@CNBC) June 5, 2024
In recent years, the price of lab-grown diamonds has plummeted. What was once a 20% discount compared to natural diamonds has now ballooned to as much as 80%. This significant price difference is due to advancements in technology that have made it cheaper and faster to produce high-quality lab-grown diamonds. The price for polished lab-grown stones in the wholesale market has dropped by more than half in the past year alone.
The impact on the natural diamond industry has been severe. Companies like De Beers have had to drastically reduce prices to remain competitive. De Beers, which once dominated the diamond market, has seen its profits fall sharply. In an unprecedented move, De Beers cut prices for rough diamonds by over 40% in the past year, including a 15% cut in July.
De Beers ditches lab-grown diamonds and shifts focus to natural stones—as it looks beyond mining giant Anglo. https://t.co/CQcXumL3Zv
— FORTUNE (@FortuneMagazine) June 5, 2024
The pandemic initially boosted demand for luxury items, including diamonds, as affluent shoppers sought to brighten lockdowns with high-end purchases. However, as economies reopened, demand shifted towards experiences and travel, leaving diamond producers with excess stock and declining sales.
Additionally, economic slowdowns in key markets like the U.S. and China, coupled with sanctions on Russian diamonds, have compounded the industry's challenges. India's natural diamond sector, for instance, reported a 25% drop in sales and was forced to implement a voluntary import ban on rough diamonds to stabilize the market.
Despite the declining prices, lab-grown diamonds have found a stable niche. They appeal to consumers who value affordability and ethical considerations, as lab-grown diamonds avoid the environmental and social issues associated with mining. Retailers like Walmart and Pandora have aggressively marketed these stones, further mainstreaming their acceptance.
As the diamond market navigates these turbulent times, the future may see continued integration of lab-grown diamonds, not only for their cost-effectiveness but also for their customizable and high-quality offerings. The industry is adapting by focusing on premium quality and distinctive designs to cater to evolving consumer preferences.
