Despite increasing consumer awareness and demand, lab-grown diamond prices continue to plummet due to oversupply and lower production costs, while the natural diamond industry struggles with its own challenges, including competition from synthetic diamonds and an oversupply of its own. Where is the lab-grown diamond market headed? Analysts predict further drops in wholesale and retail prices, shrinking profit margins, and the possibility that consumers may stop purchasing lab-grown diamond engagement rings because they become too inexpensive to symbolize a significant commitment. At the same time, lab-grown diamonds seem poised to take over the fashion jewelry category, taking market share from moissanite, lab-grown white sapphires, and other diamond alternatives.
The global lab-grown diamond market was valued at $24 billion in 2022 and is projected to reach $59.2 billion by 2032, growing at a compound annual growth rate (CAGR) of 9.6%, according to Allied Market Research. While some analysts question these high forecasts, one thing is clear: consumer demand remains robust, especially in North America, where lab-grown diamonds dominate market share.
Growth Continues
Retailers and direct-to-consumer brands report strong sales in this category. Ornella Siso, co-founder and chief marketing officer of lab-grown diamond jewelry brand Idyl, confirmed that "in the past three years, we've experienced exponential growth, confirming strong demand for our products." This is supported by data from Tenoris, a jewelry data analytics group, showing that unit sales of lab-grown diamond jewelry in July increased 59% year-over-year, with revenue up 52%. Diamond analyst Paul Zimnisky notes that synthetic diamonds currently account for 20% of the overall diamond jewelry market, and that number is even higher in the U.S. wedding market, with some estimates approaching 50%.
Millennials and Gen Z continue to be the primary consumers of lab-grown diamonds in the U.S., attracted by sustainability claims, human rights concerns in the natural diamond mining industry, and—most importantly—price. As Amish Shah, founder and CEO of Altr and J'evar, said: "Find me a girl who doesn’t want a bigger, prettier diamond on her finger or ear."
The Supply Glut
One issue is the flood of lab-grown diamonds into the market. China, the largest producer, accounted for 40-50% of global production in 2022 with 20 million carats. India follows with about 3 million carats, or 15% of global output, according to CareEdge Advisory. Other key producers include the U.S. and Singapore. As with other tech-driven industries, greater efficiency and output have driven production costs down. Tenoris reports that since 2018, wholesale prices of lab-grown diamonds have dropped 87%. Earlier this year, prices at the JCK Las Vegas jewelry show were as low as $99 per carat.
However, there is often a lag between declining wholesale and retail prices, meaning margins will grow for some time. The average retail price for a lab-grown diamond engagement ring is currently $2,710, with profit margins reaching 65%, higher than ever before, according to Tenoris.
But some retailers, like Olivia Landau, founder of The Clear Cut, warn that retailers are capitalizing on these high profits while consumers remain unaware of the actual value of lab-grown diamonds.
The Downward Spiral
While some large retailers, such as De Beers, have exited the lab-grown diamond business—shifting their focus to industrial applications—others are pivoting toward fashion jewelry. Signet Jewelers has reoriented lab-grown diamonds away from weddings, signaling a broader trend. Smaller U.S. retailers, meanwhile, are racing to sell lab-grown diamonds before these attractive profit margins start shrinking.
Analysts suggest that eventually, lab-grown diamond margins will normalize, especially in the bulk goods sector. Even if production costs fall further, other supply chain costs—cutting, grading, distribution—are more challenging to reduce. If you’re a grower alone, profitability may soon become impossible, with only companies that combine growing and manufacturing able to maintain significant profits.
In India, where 90% of natural diamond polishing businesses have entered the lab-grown market, companies have already built price declines into their business models.
Shifting Focus
In the U.S., some retailers are refocusing on natural diamonds or strategizing for lab-grown diamonds’ next phase, competing with moissanite and other alternatives. Doug Meadows, owner of David Douglas Jewelers in Georgia, offers customers a "Diamond Solitaire Challenge," comparing natural diamonds, lab-grown diamonds, moissanite, and cubic zirconia side-by-side. While he continues to educate consumers, Meadows says more emphasis is being placed on promoting natural diamonds as lab-grown diamond prices drop.
Some lab-grown diamond sellers are now taking cues from the fashion and luxury industries, emphasizing attributes like cut, design, and branding. Jewelry retailers like Brilliant Earth are emphasizing sustainability in their lab-grown diamond lines, with collections like Capture and Renewable, which focus on carbon capture and renewable energy in diamond production.
Challenges for Natural Diamonds
Lab-grown diamonds are continuing to negatively affect the natural diamond industry. In addition to economic challenges and weak demand, fierce competition from lab-grown diamonds has contributed to a 1% drop in natural diamond jewelry sales in the U.S. in the first half of 2024, according to Tenoris.
Some believe lab-grown diamonds are lowering the perceived value of natural diamonds, while others argue that they’re increasing interest in larger or more numerous natural diamonds. In fact, Tenoris reports double-digit growth in sales of natural diamond jewelry priced between $20,000 and $50,000 in the first half of this year.
Lab-grown diamonds are changing the landscape, but convincing consumers to pay a premium for natural gems remains a challenge.
This content is provided by AIDI International Smart Diamond Association. For more information, visit www.aidi.org.