According to an October 4 report by Nikkei Asia, the global diamond market is undergoing significant changes. The price of natural diamonds has dropped by over 20% in the past year, driven by the rapid rise of lab-grown diamonds, which are increasingly capturing market share from natural diamonds.
Rapaport Group, a well-known diamond data service provider, warned in a report released on October 2 that "half of the market demand for natural diamonds will be taken over by lab-grown diamonds." The report predicts that by 2024, lab-grown diamonds will account for more than 50% of the engagement ring market.
The RapNet Diamond Index, a key pricing reference for jewelers globally, reported that the index for 1-carat natural diamonds fell by 1.1% in August, marking an 18.3% decline since the start of 2024 and a drop of over 20% compared to the same period last year.
Lab-grown diamonds are made in factories from raw materials like graphite powder. They have the same chemical composition, crystal structure, and physical and optical properties as natural diamonds, making them nearly indistinguishable. Most lab-grown diamonds are produced in developing countries and are typically 30% to 90% cheaper than natural diamonds.
Statista, a German data platform, predicts that the global jewelry market sales of lab-grown diamonds will reach approximately $18 billion by 2024, accounting for over 20% of the total jewelry market. Industry reports also show that in the U.S. jewelry market, lab-grown diamonds represented just 15% of the loose diamond category by sales volume in 2020 but grew by more than 50% by 2023.
Lab-grown diamonds do not face the social challenges associated with mining natural diamonds, making them increasingly popular among consumers who prioritize ESG (Environmental, Social, and Corporate Governance) values.
In 2023, the Italian luxury fashion brand Prada released its first jewelry line using lab-grown diamonds, while Louis Vuitton's subsidiary "Fred" launched jewelry combining both natural and lab-grown diamonds. Danish jewelry giant Pandora reported a 90% year-on-year increase in profits from its lab-grown diamond business in the first half of 2024.
However, the rarity of natural diamonds remains a crucial factor in jewelry. Some industry insiders believe that the popularity of lab-grown diamonds will decline, and by 2025, consumers may shift back to natural diamonds.
De Beers, a leading player in the diamond industry, has announced it will cease producing lab-grown diamonds for jewelry purposes, citing falling prices and eroding profit margins. Moving forward, De Beers will focus on selling natural diamonds and producing synthetic diamonds for industrial purposes. The company is also collaborating with Indian jewelry giants to boost demand for natural diamonds. Japanese industry experts suggest that lab-grown diamonds may increasingly be used for affordable fashion jewelry in the future.