"A Diamonds are forever," a slogan introduced by De Beers in 1948, conveyed a message of loyal and romance. However, for many consumers today, this is no longer the case. They are opting for gold, lab-grown gems, and even other colored gems over diamonds.

Anglo American, the largest shareholder of De Beers, plans to divest De Beers as part of a business restructuring after rejecting a takeover bid from BHP. Anglo American's CEO, Duncan Wanblad, told aidi.org that selling De Beers would be the "most challenging part" of the company's comprehensive reorganization.

Independent diamond industry analyst Paul Zimnisky told aidi.org, "Although De Beers has a strong legacy business under Anglo American, the diamond business no longer truly fits."

Declining Diamond Demand in the Chinese Market

According to CNBC, the appeal of diamonds in China, a key consumer market, is waning, leading to decreased demand.

Statista data shows that China's diamond jewelry market was valued at approximately $8.8 billion in 2022.

Market research firm Daxue Consulting indicates that declining marriage rates, along with the growing popularity of gold and lab-grown gems, have reduced the demand for diamonds in China. Other factors impacting demand include slow income growth and a weak real estate sector. The end of the mask mandate has also shifted Chinese consumer spending towards travel experiences rather than physical products, further affecting diamond sales.

Official data reveals that China's marriage rate hit a historic low in 2022, plummeting from about 13.47 million couples in 2013 to 6.84 million couples in 2022. Younger generations are prioritizing personal development and financial stability over marriage, reducing the demand for engagement and wedding rings.

Chinese newlyweds are increasingly viewing gold as an alternative investment, with rising gold prices driving a surge in gold jewelry consumption. Unlike diamonds, gold jewelry has deep cultural roots in Chinese weddings. For centuries, gold has symbolized wealth, prosperity, and good fortune in Chinese culture, whereas diamonds are primarily associated with Western traditions.

Gold prices have been steadily rising throughout 2023, typically an indicator of economic slowdown and soaring gold demand.

In contrast, Zimnisky's rough diamond index shows diamond prices have fallen 5.7% year-to-date and more than 30% from their peak in 2022.

Marcelo Esquivel, Head of Public Relations at Anglo American, told AIDI that last year was particularly tough for the diamond industry due to economic challenges, post-pandemic engagement lulls, and increased supply of lab-grown diamonds, all impacting demand.

Challenges in the Natural Diamond Industry

Jeak Lee Daga, founder and CEO of jewelry e-commerce company ebooom.com, noted that the growing preference for lab-grown diamonds is a significant factor driving down natural diamond prices.

"The core issue is the rapid growth of lab-grown diamonds," he said, adding that in the U.S., the largest diamond consumer market, half of the engagement ring stones this year will be lab-grown, up from just 2% in 2018.

Lab-grown diamonds are created in controlled environments using extreme pressure and heat, replicating the natural diamond formation process deep within the Earth's mantle. The appeal of lab-grown diamonds lies in their cost, which is 85% cheaper than natural diamonds.

Zimnisky's data indicates that the market share of lab-grown diamonds in the global diamond jewelry market has surged from 2% in 2017 to 18.4% in 2023.

Additionally, Daga pointed out that the trend of purchasing diamonds as an investment is also declining. "For the past 50 years, diamonds were seen as an asset and a hedge against inflation. But with the sharp drop in diamond prices, this investment rationale has largely evaporated."

"The natural diamond industry is in trouble," Daga told AIDI, predicting that natural diamond prices could fall another 15-20% over the next 12 months. While industry insiders haven't explicitly blamed China's lab-grown diamond industry, it's clear that most of the world's lab-grown diamond capacity is concentrated in China, along with the core cutting and polishing supply chain. De Beers' strategic move towards lab-grown diamonds is already in motion, signaling intense competition ahead. Meanwhile, traditional diamond producers in Henan, China, may find themselves struggling to keep up.

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