【中国台湾】Market Value Projected at $800 Billion! Why Are DE BEERS and PANDORA Rushing into the Synthetic Diamond Market?

Even the sparkling diamond industry was not immune to the shadow cast by the COVID-19 pandemic. According to Bain & Company’s “The Global Diamond Industry 2020–21” report, the diamond industry was severely impacted at the onset of the pandemic. Although it fared better than other luxury goods sectors, the average revenue across the entire supply chain still fell by 15% to 33%. Lockdowns, travel bans, and economic uncertainty led to a 15% decline in overall diamond sales in 2020, altering sales models in the diamond and jewelry markets. This shift placed greater emphasis on local sales and increased online channels, while also ushering in a spring for synthetic diamonds.

The report indicates that as countries gradually lifted restrictions, the diamond industry’s performance steadily rebounded. The market started 2021 strongly, with growing confidence, and is expected to recover faster than initially predicted. Furthermore, The Wedding Report forecasts approximately 2.5 million weddings in the United States next year, potentially the highest number in 40 years, which will also benefit the jewelry market.

Among the trends, alongside traditional natural diamonds, synthetic diamonds (also known as lab-grown diamonds), cultivated in laboratories, are gaining significant attention for their development potential and have become a new choice for consumers, particularly favored by younger generations.

Synthetic diamonds, also called lab-grown diamonds, are diamonds formed in laboratories or factories.

There are two primary methods for producing synthetic diamonds. The earlier method, High Pressure High Temperature (HPHT), developed mainly in the 1950s, is often used in industrial applications like communications, laser optics, and abrasives, and is thus primarily considered an industrial diamond.

Since the 21st century, diamonds made using Chemical Vapor Deposition (CVD) have matured. Compared to the 1400°C high-temperature, high-pressure environment required for HPHT diamonds, CVD diamonds can be produced at around 800°C, requiring lower pressure and temperature conditions. Over the past decade, CVD diamond production has achieved scale, entering the mainstream consumer market.

Visually,

Like natural diamonds, synthetic diamonds also have a strict grading system, with identification reports and certifications issued by the Gemological Institute of America (GIA).

Thanks to technological advancements and increased market acceptance, synthetic diamond production has been growing at double-digit rates since 2019-2020, with prices continuously falling.

Data from Statista indicates that synthetic diamonds are projected to account for 10% of the global diamond market by 2030. Their market value is also expected to grow from $19.5 billion (approx. NT$540 billion) in 2019 to $29.2 billion (approx. NT$810 billion) by 2025.

The price difference between natural and synthetic diamonds can now be as high as 10 times. Many traditional jewelry brands that primarily sell natural diamonds are actively expanding their synthetic diamond product lines to attract a broader, more price-sensitive consumer base.

Swarovski acquired the synthetic diamond brand DIAMA in 2018. Jewelry brands under Warren Buffett’s Berkshire Hathaway, in partnership with Macy’s in the US, launched the synthetic diamond brand Growth with Love. Diamond industry giant De Beers also established its lab-grown jewelry brand, LightBox, in 2018, highlighting the intense competition in the synthetic diamond market in recent years.

In May of this year, the world’s largest jewelry brand, Pandora, announced that, for environmental and human rights considerations, it would fully transition to using lab-grown diamonds, becoming the first major jeweler to announce a complete shift away from mined diamonds.

IPOs for synthetic diamond startups have also surged recently. Examples include DIAMOND FOUNDRY, the world’s only zero-carbon emission synthetic diamond brand invested in by Leonardo DiCaprio, and the jewelry brand Brilliant Earth, which promotes “ethical diamonds” and focuses on synthetic diamonds, successfully completing its IPO with a current market capitalization of $1.1 billion.

Currently, the long-term outlook for the diamond market remains optimistic. Bain believes that

Looking ahead, jewelry brands can capture consumer trends and expand their market by focusing on the following three strategies:

The declining price of synthetic diamonds allows jewelry brands to reach more potential consumers, such as by developing the promising fashion jewelry market.

Bain & Company analysis suggests that future diamond industry marketing strategies need to be more diversified. Traditionally, due to high prices, diamond purchases might only occur for once-in-a-lifetime events like weddings, resulting in a lower purchase frequency compared to other luxuries.

The new generation of consumers is already accustomed to searching and browsing for diamonds online first. The share of online diamond sales jumped from 13% in 2019 to 20% in 2020. Bain analysis indicates that this trend will not change even after the pandemic.

Sustainability has clearly become a consumption trend influencing customer purchase decisions, a trend further accelerated by the pandemic.

Consumers in the three major markets—the US, China, and India—are more concerned than ever about the environmental safety and carbon footprint of the diamond production supply chain. ESG has become a crucial issue for the jewelry industry. The rise of the synthetic diamond market is also forcing the natural diamond sector to provide clearer origin and supply chain traceability, emphasizing its “natural” status to help consumers distinguish it from synthetic diamonds.