The diamond market is witnessing a transformative battle as lab grown diamonds and natural diamonds compete for dominance. For consumers, this rivalry has resulted in more options and better prices, but for miners, retailers, and manufacturers, the stakes have never been higher. Natural diamonds, which saw consistent demand since the iconic 1947 campaign featuring the slogan “A Diamond Is Forever,” now face their first significant challenge in decades. The emergence of lab grown diamonds around 2015 disrupted the industry, captivating buyers with their combination of high quality and affordability—a blend that appeals strongly to modern sensibilities.
The Growing Price Disparity
The widening price gap between natural and lab grown diamonds has been a key factor in the rise of synthetics. Younger generations, particularly Millennials and Gen Z, continue to prioritise cost-effectiveness in their purchasing decisions. Lab grown diamonds have become especially popular for engagement rings, with sizes like 2 and 3 carats now accessible to buyers who could not afford equivalent natural stones. This accessibility is reshaping the market, as lab grown diamonds deliver both size and quality at a fraction of the cost.
Environmental and sustainability concerns also play a significant role. The mining of natural diamonds has come under scrutiny for its ecological impact, and lab grown diamond producers have seized this narrative to position their products as a cleaner, greener alternative. The strategy has been remarkably effective, particularly as it aligns with the values of environmentally conscious consumers.
Recent pricing trends underscore this shift. In 2020, a natural diamond engagement ring cost approximately $5,000, compared to $3,800 for a lab grown equivalent of similar quality. By 2022, the average price of a natural diamond ring rose to $6,600, while lab grown rings saw only a modest increase to $4,000. This year, lab grown engagement rings have been reported as low as $2,700, largely due to falling wholesale prices, with some synthetic diamonds dropping to just $100 per carat. Meanwhile, natural diamond prices remain stagnant or are under downward pressure, further highlighting the market’s pivot.
Retailers Pivot to Lab Grown Diamonds
The shift in focus by retailers toward lab grown diamonds has compounded the challenges for natural diamond wholesalers. Many are now burdened with unsold inventories, constraining cash flow and forcing price cuts to compete. Retailers, on the other hand, are thriving with lab grown offerings. The volume of synthetic diamond sales has surged, with some retailers reporting significantly higher profits due to the strong demand for lab grown jewellery. By contrast, natural diamonds are moving sluggishly, with store owners likening their sales performance to “thick mud.”
Lab grown diamonds’ affordability and environmental appeal are proving to be the winning combination in this evolving market. For natural diamonds, maintaining relevance in the face of this competition will require innovative strategies, whether through branding, ethical sourcing, or a stronger focus on their rarity and uniqueness. For now, lab grown diamonds are reshaping the industry, leaving a profound impact on the future of the diamond market.