De Beers has made waves by reducing rough diamond prices by 10% to 15%, sparking questions and debate within the industry. This move comes as polished diamond prices have fallen by 15% to 20% over the past year, driven by China’s market downturn and the increasing dominance of lab-grown diamonds, which now account for nearly 50% of the U.S. market for diamonds.
The Story Behind the Price Drop
For much of the year, De Beers’ rough diamond prices were 20% to 25% higher than open-market rough tender prices. Instead of pushing sightholders to sell polished diamonds at a loss to purchase their rough diamonds, De Beers allowed them to defer purchases to the year’s end. Now, De Beers is aligning its prices more closely with the polished market, giving its clients a chance to regain profitability.
A Shift in Strategy for Natural Diamonds
Martin Rapaport, a leading voice in the diamond industry, emphasizes that this price cut is not necessarily a signal for polished diamond prices to drop. Retailers, especially in the U.S., are holding firm this holiday season. “De Beers’ lower rough prices are an opportunity to increase profits, not to lower polished prices,” Rapaport notes.
He stresses that the real key to success lies in adding value. Retailers who understand their customers and provide a luxury experience will thrive, even as price-driven buyers increasingly turn to lab-grown diamonds.
Lessons for the Industry: Focus on Luxury, Not Price Wars
The natural diamond market is shifting from a supply-driven to a demand-driven model. Rapaport explains that competition with lab-grown diamonds has already shifted price-sensitive customers away from natural diamonds.
Key strategies for success include:
- Focusing on luxury and exclusivity: Sell to customers who value quality and experience over price.
- Understanding your market: Knowing what to sell, how to sell, and to whom to sell is crucial.
- Adding value to the product: By offering more than just a stone, such as craftsmanship and storytelling, retailers can appeal to high-end buyers.
The Path Forward for Natural Diamonds
Despite the turbulence, Rapaport believes there’s “lots of money to be made” in the natural diamond market for those who adapt to its evolving dynamics. While the De Beers price cut aims to help its clients stay afloat, the broader challenge remains clear: the future of natural diamonds lies in positioning them as a luxury good, rather than competing on price with synthetic alternatives.