We have so long admired diamonds perceiving them as a “sparkling dream” that we almost forget to ask ourselves why we love these gemstones so much. Where is this love rooted and what does foster human interest in diamonds?

The story began with natural diamonds

There is no doubt that most people whom one asks about the first association for diamonds will imagine shining jewelry with gemstones. Yet, just a few know that natural gemstones like man-made diamonds had initially industrial applications. Being the hardest material known worldwide natural diamonds were used for different purposes from polishing ceremonial burial axes during the Stone Age almost over 4,500 years ago to conducting a variety of abrasive jobs, such as machining (turning, milling, grinding, sawing, drilling, lapping, and polishing) metals, carbides, ceramics, glass, stone, and concrete.

Indeed, diamonds’ sparkling nature and mysterious origin caused a special human interest in them from the beginning of the times. People believed that just looking at this stone could restore human energy and bring miracles into one’s life.  In ancient times diamonds were available for royalty persons only and one could guess that this fact preconditioned a perception of gems as a luxury item. Most likely, this conception was taken as a ground for future positioning of the product developed by DeBeers in the 50s within the widely known campaign “A Diamond is Forever”.

This campaign was called to boost sales of diamonds that had fallen because of the Great Depression. It appealed to a strong association between love and diamonds as a symbol of longevity, hardness, and rarity. This approach appeared to be effective and allowed to launch of a prosperous bridal jewelry collection that turned diamonds into a must-have engagement item.  

This campaign has reshaped the diamond market significantly by placing a bold accent on the jewelry application of the gemstones and generating interest in them from middle-class representatives. Sure, growing sales made it possible to decrease prices and democratize somehow a product, which prior was available for rich people only. 

In 2022, the global natural diamond market was valued at $100.4 billion and is projected to reach $155.5 billion by 2032.

These figures could look even more impressive if not the story with man-made diamonds, which appeared as an alternative to natural stones and had stolen a significant part of diamond popularity.

How could this happen?

Dramatically for the natural diamond market, but the lab-grown diamond industry repeated the same trick that was used by DeBeer earlier – appealing to actual human values and democratizing the product value.  

Lab-grown diamonds emerged in the times of the technological revolution that was closely related to both human progress and growing environmental concerns. The industry succeeded in offering one product corresponding to both needs – aspiration for having an innovative product and desire to follow sustainable life settings. 

One of the very first marketing campaigns offered by Madestones, a leading European Antwerpen-based diamond trader, said that lab-grown diamond is a product “marrying a science and technology, which is an affordable, conscientious and modern choice”.

This appeal indeed became reasonable for many consumers, who dreamt about diamonds but could not afford them earlier or did not want to harm the Earth with their choice. Predictably the engagement ring segment occurred to be the most affected by innovations and man-made diamonds have comprised 10% of US diamond engagement ring sales (or 6% of the overall engagement ring market) very quickly. The threshold was passed in 2022.

To grasp the meaning of these figures for the jewelry market conjuncture, one should have a broader comparative vision. Thus, according to research from the wedding website “The Knot,” 95% of couples are getting a ring for their engagement, and the vast majority of them, namely 85%, are buying a diamond, among which half of the stones are lab-grown gems. The latest statistics say that 46% of couples married last year chose a lab-grown diamond for the center stone of their engagement ring and it was nearly four times as high as the 12% reported in The Knot’s 2019 survey.

So, one can see that in the bridal segment, man-made diamonds have won half of the natural diamonds market and have become even more popular than their natural counterpart. Yet, despite the growing popularity currently man-made diamonds only account for 20% of global diamond jewelry sales, with the majority still held by mined stones. 

Does it mean that the lab-grown diamond industry has reached its ceiling?

If you are tracking the jewelry market news, you might see that many observers claim that man-made diamonds have exhausted their potential and predict the fading of the industry by coming back to natural diamonds. At the same time, many others believe in further prosperous development.

Indeed, currently one can observe a significant decline in price for lab-grown diamonds that is inextricably linked to profitability. It seems that the price democratizing approach has played a cruel joke on the industry leaving no chance for the economic survival of the core market players.  Yet, it only seems; actually, it is a predictable economic algorithm when the initial price for an innovative product has been decreased alongside increasing production volumes and a partial devaluation in terms of the innovativeness. Some analysts call this process stabilization and claim that this is what actually has happened with the price for man-made diamonds over a few years.

So, what could happen next with the popularity of lab-grown diamonds?

 Contrary to pessimistic predictions, the man-made diamond market players believe that reverse development is impossible, and the industry has no other choice except for prosperity. It is evident that easy traditional marketing strategies do not work today because it is not enough to make an accent just on origin anymore. People love lab-grown diamonds for their sustainability and know about it more than they did a few decades ago. It is not surprising. The trick is that the majority of those who wanted to have man-made diamonds have already bought them. Now, the main task of the industry is to revitalize consumers’ interest in products by surprising them with new and fresh options. 

There are no doubts that a step back unlikely could happen. New values would not disappear; they can be changed with the new ones, but, it is unlikely for highly-aware people to turn back to unsustainable products. 

Man-made diamonds will continue to be popular, but one can expect the unexpected pace of events on the market. The analysts, observers, producers, and traders clearly understand that they are at the point of a new challenge – the urgent need for fresh marketing strategies to enable them to hold the price level and create additional value for lab-grown jewelry to boost sales. This process started with entering lab-grown diamonds into the luxury segment, becoming embraced by famous brands, and changing a direct application. The story is continuing and soon we will see more.

Published by HOLR Magazine.