What's Happening?
The World Diamond Council has reported a decline in the popularity of lab-grown diamonds due to oversupply and shifting consumer preferences. According to Feriel Zerouki, president of the council, the prices of lab-grown diamonds have plummeted, undermining
consumer confidence. The price drop is attributed to increased production in China and India, leading to a 96% decrease in the average wholesale price of one-carat and two-carat lab-grown diamonds since 2018. This trend is causing a shift back to natural diamonds, particularly in the bridal market.
Why It's Important?
The decline in lab-grown diamond prices could have significant implications for the diamond industry. As lab-grown diamonds become more affordable, they risk being perceived as mere fashion accessories rather than competitors to natural diamonds. This shift could impact the market dynamics, with natural diamonds potentially regaining their status as the preferred choice for significant purchases like engagement rings. The trend also highlights the challenges faced by the lab-grown diamond sector in maintaining its market position amid changing consumer preferences and economic conditions.
What's Next?
To support the rebound of natural diamonds, initiatives like the Luanda Accord have been introduced. This agreement involves diamond-producing countries and firms creating a collective marketing fund to promote natural diamonds. Countries such as Angola, Botswana, and South Africa have committed to allocating a portion of their diamond sales revenue to this campaign. The success of these efforts will depend on effectively communicating the value and uniqueness of natural diamonds to consumers.
