Is it Too Little, Too Late for Natural Diamonds?

Natural diamonds are in trouble, and I’m not sure if there's a way back. The tide has turned as laboratory-grown diamonds have become widely accepted by consumers. The illusion of scarcity and perceived value for natural diamonds has been shattered, with prices tumbling and the public beginning to ask questions. Why buy a natural diamond over a lab-grown equivalent? Previously, retained value and sky-high prices defined a diamond's desirability, but with falling prices, people are questioning if they are even truly rare.

Can a product mined in millions of carats each year be considered rare? Moreover, millions of carats of unsold diamonds are already in circulation. We would surely consider a 10ct D Flawless or a 5ct Pink rare, but can it really be the same for a 0.50ct G VS2 brilliant cut? Truly rare diamonds sell for millions to investors and are therefore out of reach for the majority of the population but a 0.50ct G VS2 sits right in the selling sweet spot for a good quality high street retailer.

The ever-increasing share of bridal sales by lab-grown diamonds has caused some natural diamonds to drop in price by as much as 40% making their value proposition highly questionable. Yes, there is retained value in a natural diamond, but it can still result in a loss far greater than the entire cost of its lab-grown equivalent. Other factors, such as the global economy have also influenced this price drop but to ignore lab-grown diamonds as a major factor would be akin to ignoring the influence of De Beers in the rise of diamond popularity.

Stephen Lussier of De Beers, warned about this scenario in 2019 at the Dubai Diamond Conference. He asked that LGDs be kept away from bridal as they had the potential to ruin the entire diamond trade if not kept in apart. He continued to say that if lab-grown diamonds were focused on jewellery, they had the potential to expand the diamond trade from $80b to $125b annually. It now appears he was partially right, with Anglo American likely to write down the value of De Beers for the second time in an effort to offload the mining giant.

However, Lussier's prediction of the entire diamond trade's demise seems to have been incorrect as LGD sales continue to increase. The tumbling price of lab-grown diamonds has discouraged many growers, but it has also made diamonds more accessible. The natural diamond industry's mistake was letting bridal go without a real challenge. While bridal continues to flourish with lab-grown diamonds, this year we will see them explode on to the market as affordable jewellery. Lab-grown diamond line bracelets and stud earrings have already been great sellers, but at today’s prices, lab grown diamond jewellery will soon be available at every price point. This includes gifts for anniversaries, 18th and 21st birthdays, graduations and even self-purchase. Previously, adding diamonds to this kind of jewellery meant using fully included natural diamonds that look no better than a grain of sugar, with zero retained value. The comparison will be stark, as larger higher-quality stones are offered in even more inventive ways.

The question remains: can this onslaught be stopped? De Beers has announced a major marketing push with their largest advertising spend in the last ten years. However, none of that spend is targeted at the UK. Their “Forever Present” campaign is focused on the US, China, and India, in part using the slogan “Forever Ride or Die” which would not resonate in the UK.

The Natural Diamond Council, a not-for-profit entity established to promote natural diamonds globally, plans a major campaign, including the UK, but is limited in funding. The World Federation of Diamond Bourses has launched the campaign “Created by Earth, Celebrated by You.” While their effort is commendable, the fluffy nature of the message may not land as intended: “When he knelt before me, holding out a ring with a stunning natural diamond, I saw more than its beauty. I saw the effort, the love, and the dreams he poured into finding something as rare and extraordinary as our love. They’re a reflection of life’s most profound emotions.”

These advertising strategies imply that the primary value of mined diamonds lies in their origin, although we know this is not the main driver of sales. They also fail to recognize that couples are increasingly purchasing their engagement rings and other sentimental jewellery together. Continuing to use outdated sentimental tropes will not resonate anymore and demonstrates a failure to acknowledge the evolving landscape of the industry.

I hope someone in the industry realizes that the diamond trade has changed forever. Natural diamonds no longer have a monopoly on their traditional customer base. The focus must shift to the more influential high-end customer, with demand trickling down. The natural diamond industry should then? ?concentrate on this smaller, more profitable sector, pushing prices up, or risk their selling price dropping to just above that of lab-grown. Factor in the cost of mining and this would be neither profitable nor sustainable.

When Al Cook, the CEO of De Beers, attempted to restore confidence in natural diamonds during a recent Bloomberg interview, he faced overwhelming criticism from viewers. Comments included, “We had a monopoly for 60 years. Now people don’t care, and our prices are tanking,” “Ripping people off for decades. Get mad,” and “It’s like taxi drivers mad at Uber. It’s 2025, the world and the game has changed.”

The lingering question remains: " Is it too little, too late? "