4 factors that could shape the future of lab-grown diamonds

Laboratory diamonds

Thu 20 Oct 2022 | 6:06 p.m.

Consumer demand for synthetic diamonds is increasing, raising the question, what will the market look like in 10 to 15 years?

Published in a report in early August, industry analyst Paul Zimnisky takes a longer-term view of the market: “I think the key is to really take a step back.

“What a mature lab-grown diamond jewelry market might look like” outlines the four major factors that Zimnisky believes could shape the lab-grown diamond jewelry market over the next 10 to 15 years.

The first is an unlimited supply.

According to data from Zimnisky, the volume of rough diamonds grown for use in jewelry really started to take off around 2018, the same year De Beers Group launched its lab-grown diamond jewelry brand, Lightbox.

He predicts that production will continue to increase until the end of the decade, approaching 25 million carats (excluding fray) by 2030, a substantial increase for the category but which represents only a fraction of production world of natural diamonds, which reached 120 million carats last year.

the second characteristic is the quality of the stones, which lays the foundation.

Zimnisky thinks this will shape a mature market for lab-grown diamonds – the stones are likely to be of high quality across the board.

The development, according to the industry analyst, could make grading lab-grown diamonds unnecessary.

The lack of grading reports, coupled with increased supply, will further drive down the price of lab-grown diamonds, which are already significantly cheaper than natural diamonds.

According to Zimnisky, as of mid-2018, a 1-carat generic (unbranded) lab-grown diamond, G VS1, was selling for $3,625, compared to $6,600 for a natural diamond of the same size and quality.

Today, that same lab-grown diamond sells for $1,615 while the natural costs $6,705.

“In the longer term, it will likely be more expensive lab-grown diamond jewelry that will compete the most with natural diamonds.” — Paul Zimnisky, Industry Analyst

the third factor is brand image.

There are existing jewelry companies positioned to offer a “luxury” version of lab-grown diamonds by leveraging existing brand value, with Zimnisky noting in his report: “A product need not necessarily be limited by nature to be rare or luxurious.”

“In the longer term, it will likely be more expensive lab-grown diamond jewelry that will compete the most with natural diamonds.”

He does, however, see the opportunity for a “bridge” category of lab-grown diamond jewelry to emerge, lines that are less expensive but affiliated with “premium” brands.

He cites “Pandora Brilliance,” the popular charm brand’s lab-grown diamond line that arrived in the United States late last month, as a current example.

Tested in the UK and proven to be more popular for gifts than self-purchase, the line looks set to take off in the US, with a choice of 33 styles in sterling silver or 14k gold and price points. from $300. .

“Pandora will succeed,” Zimnisky said. “They already have the right customer, the distribution lined up, the right price. It fits their business model better than anyone [else’s]”

the fourth factor that is expected to shape the future of the lab-grown diamond market – custom shapes and colors – will be a path that diamond producers will follow in order to differentiate themselves as prices fall and quality evens out at all levels.

Producers will take advantage of lower stone prices to experiment with ways that are impossible or financially impossible with natural diamonds, Zimnisky said.

Indeed, some experiments with shapes and colors have already appeared on the market.

In 2018, Apple’s Jony Ive and design partner Marc Newson teamed up with diamond producer Diamond Foundry 2018 to create an all-diamond ring, while Swarovski launched a line of imaginatively named lab-grown diamonds in a big variety of colors in early 2020. .

“People will eventually be able to go to a website and have a diamond cut into whatever shape they want,” Zimnisky predicts.

Sarah C. Figueiredo