“A diamond is forever,” Frances Gerety famously wrote for an ad campaign for De Beers decades ago. But while a diamond can still be eternal, today the question is whether it is natural or not.
De Beers, the world’s largest producer of natural diamonds, has cut prices by 10-15%, Bloomberg reported. Blame man-made or lab-grown diamonds for one. Other factors include inflation and weak demand in China’s luxury market.
That’s the first significant drop in prices since the beginning of the year and the biggest drop in history, according to Bloomberg. Not to mention, price cuts seem to have been a last resort.
Apparently, De Beers tried to offer customers more flexibility instead of lowering prices until it had no other choice.
“The De Beers Group does not comment on specific price developments in its rough diamond sales outside of official financial reporting,” the company said Wealth. “However, it is worth noting that with the stabilization of wholesale polished diamond prices and the recent decline in retail and mid-trade polished diamond inventories, we believe this presents a platform for improved balance and growth as diamond polishing operations prepare to reopen after an extended Diwali.” break.”
But a recent report from McKinseyheadlined “Diamond industry at a turning point,” he gave a more gloomy assessment of the market.
He explains that diamond prices have fallen since the pandemic, despite engagements and marriages re-establishing and the normalization of the supply chain.
There are multiple reasons behind the decline in the diamond world: consumers who want to understand where their diamonds come from and that they are socially and environmentally sustainable; sanctions against Russia, which happens to be a producer of rough diamonds; and there are also lab-grown diamonds, loved and proudly worn Millennials and Generation Z.
“First and foremost, the enormous success of lab-grown diamonds has driven down the prices of natural stones far beyond what the mining industry expected, driven largely by consumers wanting more affordable options,” the report said.
Everything seems incredibly expensive at the moment, even if inflation appears to be under control on paper. First of all, people want homes and their American dream. So spend tens of thousands of dollars on diamonds while trying to save for a down payment on a house in the middle affordability crisis maybe it doesn’t make much sense.
This does not mean that the era of natural diamonds has come to an end, just that people are turning to a more affordable option; imagine people eating more fast food during an economic downturn. Besides, purists aside, there is not much difference between natural and man-made diamonds.
“Diamonds are one of the few commodities that can be economically substituted for a synthetic product that not only has nearly identical physical properties, but also significantly lower costs (as much as 80 percent in some cases),” according to the McKinsey report.
McKinsey called lab-grown diamonds “probably the biggest challenge facing diamond producers today” because of their perceived ethical advantages, lower cost, similarity to natural diamonds and popularity among younger generations, particularly in Western countries. Demand has shifted toward synthetic stones, contributing to the decline in natural diamond prices, McKinsey said. (To be clear, most man-made diamonds are produced in China or India and rely heavily on coal to power their electrical grids).
Anyway, one poll found that most Gen Z respondents preferred a three-carat lab-grown diamond over a one-carat natural mined diamond. “Generation Z is rewriting the rules of the diamond industry,” Ankur Daga, CEO and co-founder of Angara, which sells lab-grown jewelry, said in a press release accompanying the survey results.
Daga continued: “For decades we were sold the idea that De Beers and diamonds equated perfection and status. However, today’s consumers and younger generations are challenging tradition 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.”
