Once the epitome of luxury, natural diamonds are facing a dramatic downturn in pricing, making headlines for losing their shine. Since early 2022, lab-grown diamond prices have plunged by a staggering 85%, while the retail cost of 1-carat lab-grown diamonds has dropped more than 80% from their peak.
Even industry giant De Beers has had to cut prices. On December 3, 2024, the company reduced its rough diamond prices on the secondary market by 10% to 15%, a move analysts consider a “last resort.”
De Beers Struggles Amid Market Pressure
Historically, De Beers has avoided deep price cuts, but the current downturn has forced the company to take aggressive measures. Its 2023 financial report paints a grim picture:
- Total revenue dropped by 34.84%, from $6.6 billion in 2022 to $4.3 billion in 2023.
- Rough diamond sales declined by 40%, from $6 billion in 2022 to $3.6 billion in 2023.
De Beers CEO highlighted a shift in consumer behavior, noting, “Macroeconomic conditions have pushed consumers away from goods toward service-based spending, causing a sharp decline in luxury categories like diamonds.”
The Rise of Lab-Grown Diamonds
Lab-grown diamonds have emerged as a powerful competitor, driving demand away from natural diamonds. Advances in technology now produce lab-grown gems nearly indistinguishable from their natural counterparts, but at a fraction of the cost.
The popularity of lab-grown diamonds is reshaping the market:
- Production Methods: High-pressure high-temperature (HPHT) and chemical vapor deposition (CVD) techniques have made lab-grown diamonds affordable and efficient to produce.
- Consumer Adoption: Lab-grown diamonds are increasingly favored for daily wear and affordable luxury, especially among younger consumers.
In October 2024, a report by Tenoris revealed:
- Overall U.S. finished jewelry retail sales grew by 9.9%.
- Lab-grown diamond sales surged by 46%, compared to a modest 4.7% increase in natural diamond jewelry.
China’s Role in Lab-Grown Diamond Production
China has solidified its position as the global leader in lab-grown diamond manufacturing:
- 95% of the world’s single-crystal diamond production originates from China, with Henan province accounting for 80% of the country’s output.
- Lab-grown diamonds now represent 50% of global diamond production capacity, with China contributing 80% of that total.
According to consulting firm Bain & Company:
- China’s lab-grown diamond sales reached 1.4 million carats in 2021, with a 6.7% market penetration.
- By 2025, sales are expected to hit 4 million carats, pushing penetration to 13.8%.
A Rapidly Growing Market
The global lab-grown diamond market is on an upward trajectory. Statista predicts that by 2024, sales of lab-grown diamonds will reach $18 billion, accounting for over 20% of the global jewelry market. As the industry gains consumer trust and technological advancements continue, lab-grown diamonds are set to dominate.