This week, a look at the explosive growth of lab-grown diamonds, including how it’s affecting the mined diamond sector and whether the two categories can coexist. Scroll down to use Glossy+ Comments, giving the Glossy+ community the opportunity to join discussions around industry topics.
On February 5, the French government’s Directorate-General for Competition, Consumer Affairs and Prevention of Fraud made a ruling on how manufacturers can refer to lab-grown diamonds. While “lab-grown” or “cultivated” are acceptable terms outside of France, diamonds not mined from the ground will now have to be sold in France as “synthetic diamonds,” a term that rankles many who sell lab-grown because of the connotation that these diamonds are somehow “fake” when in reality they are chemically identical products.
It’s a semantic win for the mined diamond industries, but in the larger war, lab-grown diamonds are ascendant. Last month, diamond company De Beers announced that it would be lowering its prices by up to 25% as it struggled to juice up demand for its mined diamonds. Meanwhile, lab-grown diamonds, a technology that’s been around since the 1950s but exploded into jewelry in the last five years, has had a massive impact on the jewelry industry. The low prices of lab-grown diamonds have left companies like De Beers which specialize in mined diamonds on the backfoot, unable to compete.
In the last year, we’ve seen companies like Pandora, Jean Dousset and Mejuri, along with luxury stalwarts like Tag Heuer, embrace lab-grown diamonds. Sales of lab-grown diamonds across the U.S. have grown from $1 billion in 2016 to over $12 billion by 2022. Mined diamond companies have put money into advertising against lab-grown diamonds, including hiring celebrities like Ana de Armas for campaigns promoting the alleged authenticity of “natural” diamonds over lab-grown. That’s despite the fact that lab-grown diamonds are structurally and chemically the same material as diamonds mined from the ground. But these campaigns have done little to slow the growth of lab-grown diamonds, which now make up 20% of all diamond sales, a percentage that continues to grow.
Al Cook, CEO of De Beers Group, said in the company’s most recent earnings statement that diamond sales have stabilized for the moment but acknowledged that it’s a difficult moment for the mined diamond sector. The company’s rough diamond sales were down 37% last year compared to the year before.
“Solid consumer demand for diamonds in the United States over the year-end holiday season has certainly helped to stabilize the industry and we are seeing polished diamond prices increasing again,” he said. “However, as the prospects for economic growth in many major economies remain uncertain, we expect that it may take some time for rough diamond demand to fully recover.“
So will lab-grown diamonds completely replace mined diamonds in the future? And if not, how will these two categories coexist? Glossy spoke to executives from several diamond and jewelry brands that sell both lab-grown and mined diamonds. The consensus is that both categories will continue existing, but that lab-grown will likely be the choice most everyday consumers make while mined diamonds continue as a high-end niche for only the wealthiest customers.
Ankur Daga, CEO of the 19-year-old DTC jewelry brand Angara, said he’s witnessed the immense growth of lab-grown diamonds firsthand. Angara only launched lab-grown diamonds six months ago and yet already they account for more than two-thirds of all of the brand’s sales. Daga said the price of lab-grown diamonds, which has precipitously dropped in the last few years from 20% cheaper than mined diamonds to 75% cheaper or more, has been the main driving factor of its growth. This comes from lab-grown diamond manufacturers improving their technology and charging less as they produce more diamonds at scale.
“Historically, there’s two reasons people buy diamonds,” Daga said. “It’s a flex you can show off or it’s a financial asset that you can resell. Both of those reasons are gone now. You can get a lab-grown diamond for one-tenth of the price of a natural diamond and because of the prices collapsing, people have lost faith in diamonds as an asset. I think we’ll keep seeing natural diamond prices come down by as much as 40% this year.”
A survey conducted by Angara of its own customers found that 38% of Gen-Z customers would prefer a three-carat lab-grown diamond over a one-carat mined diamond at the same price.
Shraddha Mehta, brand director of the diamond and jewelry brand Unsaid which sells only lab-grown diamonds, said that the economics of lab-grown diamonds are simply too good for mined diamond companies to beat. At a time when luxury spending is down as much as 15% year-over-year, people are drawn to lower-price options. That’s not to mention the other issues with mined diamonds, including their impact on the environment and the working conditions of the people who mine them.
“At the end of the day, the material is exactly the same,” she said. Lab-grown diamonds are virtually impossible to distinguish from each other without the highly specialized equipment from organizations like the Gemological Institute of America, which rates and certifies both lab and mined diamonds. “It will become difficult for any [natural diamond] companies to compete with lab-grown diamonds when it comes to price, so the future for them is leveraging their own creativity and design credibility to bring in new customers. I do think the two can coexist.”
For Jean Dousset, founder and CEO of his eponymous diamond brand and great-great-grandson of Cartier owner Louis Cartier, the shift to lab-grown diamonds is something the diamond industry needed. For many people, diamonds may be the only luxury product they ever purchase. You don’t need to buy a Rolex or a Chanel handbag, but if you’re getting engaged, you will likely buy a diamond ring. But because the prices were so prohibitive, less affluent customers only had the option of a very small diamond or a very low-quality one.
“From a personal perspective, I’ve always been uncomfortable with diamond prices,” Dousset said. “There’s a lot of tension around purchasing diamonds for many people because the financial commitment is so great. For decades we were telling people you can’t compromise on quality, but also, you can’t afford not to. I always yearned for a way for diamonds to be more accessible.”
While he was initially skeptical that lab-grown diamonds could match the quality of mined diamonds in 2018, Dousset said it was 2022 when he was finally convinced that lab-grown diamonds were just as good. In spring of 2022, Dousset pivoted his brand to entirely using lab-grown diamonds in its jewelry. Similar to Angara, he immediately saw a boost in sales. In 2023, sales increased 78% year-over-year as customers embraced lab-grown.
While some of the biggest mined diamond companies, including De Beers, have tested lab-grown diamonds, the experiments have been light. De Beers’ Lightbox brand, which sells lab-grown, focuses on costume jewelry and small stones to avoid cannibalizing sales of its mined diamonds. In June of last year, it briefly tested selling engagement rings with lab-grown diamonds but halted the test run in September and hasn’t gone back to it.
“The very large global luxury brands like Cartier are not going to change anything,” Dousset said. “They occupy that ultimate rare space where the niche of natural diamonds is still appealing. But, by and large, I don’t believe natural diamonds will be the choice for most people in future generations. They will only be for people with specific belief systems who only want the rarest and most exclusive things.”
Daga agreed with Dousset’s assessment.
“Lab-grown diamonds have a much higher profit margin than natural, even though the average order value is lower,” he said. “But the very high end of the market will remain natural. Those brands like Tiffany and Cartier, their margins are already so high that switching to lab won’t really make much of a difference for them. Everyone else will probably offer both with the vast majority of customers picking lab-grown.”
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