Diamond industry players are reeling due to access inventory, lower demand due to decline in retail sales and rising popularity of lab grown diamonds which has resulted in a competitive discount war that has intensified the pressure on industry players.
The decline in prices for diamonds across the natural diamond industry’s value chain has been directly attributed to poor sales, poor inventory management and the rising popularity of lab grown diamonds.
Wholesale diamond suppliers and retailers including jewellery stores are basically pressuring each other by engaging in competitive discounts which are causing the prices of natural diamonds downwards to the extent that diamond manufacturers have reduced production significantly to weather the current storm that has enveloped the entire natural diamond industry mainly because of weak demand for these natural stones resulting in a scenario of oversupply and pressure to unload inventory.
Meanwhile synthetic or lab grown diamonds continues to gain more market share and based on statistical reviews by industry observers this trend is most likely continue until the natural diamond industry stabilises and create or invent new demand for natural stones. Chinese, American, Europe and Asian demand for natural diamonds remains weak as consumers turn to lab grown diamonds which are equal in quality but only cost a fraction of the price of natural diamonds.
Another trend that can be observed within the scheme of things and relatively related is the shift to gold jewellery due to consumers seeing the precious metal as a store of value. Thus far RapNet Diamond Index indicates that the value of natural diamonds of almost all categories have fallen anywhere between 3.6 % and 6 % in June. Companies such as De Beers’ have also been dealt a significant blow as sales of rough diamond fell by almost 20% standing at an estimated $2 billion.
Industry observers are also indicating that 2024 revenue for De Beers’ will slide further directly attributed to competition that is stemming from lab grown stones that are seemingly dominating the bridal component of the industry in 2024 based on more than 50% of engagement rings that have been purchased are adorned with synthetics.
On the side lines primary industry players are seemingly quite sure that the lab grown bridal market will gradually dissipate by the 3rd quarter of 2025 based on the fact that the low prices of synthetic diamonds will render these stones as being unsuitable for engagement rings. This perspective however, is not shared by all industry players citing the fact that the purchase behaviour of Gen Y and Gen Z are not built on tradition, but frugality.
The millennials are in fact aware that these diamonds are created by mimicking the processes that take place deep in the earth in a lab, and they are also aware of the fact that lab grown stones are as good as the natural ones and in some cases even better. In summary, 2025 will be a defining year for the entire diamond industry.
