“A diamond lasts forever,” Frances Gerety wrote decades ago for an advertising campaign for De Beers. But even though a diamond may still last forever, the question today seems to be whether it is natural or not.
According to Bloomberg, De Beers, the world’s largest producer of natural diamonds, has cut its prices by 10% to 15% reported. On the one hand, artificial or laboratory-grown diamonds are to blame. Other factors include inflation and weak demand in the Chinese luxury market.
According to Bloomberg, this is the first significant price cut since the beginning of the year and a large price cut historically. Not to mention that price cuts seemed to be the last resort.
Apparently De Beers had been trying to offer customers more flexibility rather than cutting prices until it had no other choice.
“De Beers Group does not comment on specific price movements for its rough diamond sales outside of formal financial reporting,” the company said Assets. “It is worth noting, however, that the stabilization of wholesale cut diamond prices and the decline in retail and midstream cut diamond inventories recently, in our view, provide a platform for improved balance and growth as diamond cutting operations expand “Prepare to reopen after the extended Diwali.”
But a Current report out of McKinseyentitled “The diamond industry is at a tipping point” gave a more bleak assessment of the market.
It explained that diamond prices had collapsed following the pandemic, despite the resumption of engagements and marriages and a normalization of the supply chain.
There are several reasons for the decline in the diamond world: consumers want to know where their diamonds come from and whether they are socially and environmentally sustainable; sanctions against Russia, which happens to produce rough diamonds; And then there are lab-grown diamonds, loved and beloved worn proudly from Millennials and Generation Z.
“First and foremost, the enormous success of lab-grown diamonds has caused prices for natural stones to fall far beyond the mining industry’s expectations, largely due to consumers wanting more affordable options,” it says the report.
Everything feels incredibly expensive at the moment, even if inflation appears to be under control on paper. On the one hand, people want a home and their American dream. So spending tens of thousands of dollars on diamonds while trying to save for a down payment on a house an affordability crisis maybe doesn’t make much sense.
That doesn’t mean the era of natural diamonds is over, just that people are turning to a cheaper option. Think about people who eat more fast food during an economic downturn. Furthermore, purists aside, there isn’t much difference between natural and man-made diamonds.
“Diamonds are among the few raw materials that can be economically replaced by a synthetic product that not only has nearly identical physical properties but also significantly lower costs (in some cases up to 80 percent),” the McKinsey report says.
McKinsey called lab-grown diamonds “probably the biggest challenge facing diamond producers today” due to their perceived ethical benefits, lower price, similarity to natural diamonds and popularity among younger generations, particularly in Western countries. According to McKinsey, demand has shifted to synthetic stones, which has contributed to the decline in the price of natural diamonds. (To be clear, the majority of man-made diamonds are produced in China or India, and their power grids rely heavily on coal.)
Either way, one Opinion poll found that the majority of Gen Z respondents preferred a three-carat, lab-grown diamond to a one-carat, naturally mined diamond. “Gen Z is rewriting the rules of the diamond industry,” Ankur Daga, chief executive and co-founder of Angara, which sells lab-grown jewelry, said in a press release about the survey results.
Daga continued: “For decades we have been given the idea that De Beers and diamonds represent perfection and status. However, today’s consumers and younger generations are questioning traditions and gravitating toward affordable options like lab-grown diamonds. As Generation Z continues to influence consumer trends, lab-grown diamonds are poised to become the new standard for affordable luxury and conscious consumption.”