Editor’s Note
The enduring link between diamonds and matrimony is largely a marketing triumph. As the natural diamond market shifts, this article explores the changing economics and symbolism behind the engagement ring.
The advertising slogan “A Diamond Is Forever,” arguably the most successful of the 20th century, has made diamonds synonymous with love ever since. Many women began to envision that stepping into marriage must involve wearing a diamond engagement ring, while men felt pressured by this unwritten rule. However, the recent decline in natural diamond prices should come as a great relief to many men preparing to propose.
In the past, marketing tactics that equated diamonds with love, coupled with the fact that diamonds are indeed highly scarce precious stones, allowed diamonds to be not only dazzling ornaments but also assets that preserved and increased in value for a long time. A 2015 research paper by Luc Renneboog, a finance professor at Tilburg University in the Netherlands, pointed out that by analyzing a large amount of auction data, it was found that the real value of diamonds increased by an average of about 8% annually between 1999 and 2012.
But recent data shows that the diamond market is no longer thriving, and natural diamond prices have begun a trend of “continuous decline.” The International Diamond Exchange (IDEX) diamond index has plummeted 28% from its historical peak of 158 points in March 2022 to 113 points today. De Beers, the diamond company that has long monopolized the global supply of natural diamonds, has also cut the price of 2-carat to 4-carat natural rough diamonds by 40%. It is reported that 2-carat to 4-carat rough diamonds can be cut into 1-carat to 2-carat engagement rings and have always been the company’s mainstream product. Overall, industry merchants and analysts estimate that the price of natural rough diamonds alone has fallen by 20% to 30% this year.
Two major factors behind the decline in natural diamond prices are that the market is no longer monopolized by a single giant and that lab-grown diamonds are increasingly favored by consumers.
De Beers happens to be the diamond company that launched the “A Diamond Is Forever” advertising slogan in 1948, much to the chagrin of men. It long monopolized the diamond market, controlling 80% of the global diamond supply in the 1980s, thus possessing extremely high pricing power and being able to hoard inventory to increase the scarcity of diamonds and push up prices.
However, The Economist analysis suggests that De Beers’ dominant position is no longer secure, as other competitors are gradually eating into its market share. Among them, Russia’s Alrosa currently accounts for 28% of the global diamond supply. This has weakened De Beers’ pricing power.
Another more severe challenge is that relatively cheap lab-grown diamonds are becoming increasingly popular with consumers, as people no longer see natural diamonds as the only option for “sparkling diamonds.” So-called lab-grown diamonds are cultivated in laboratories by simulating the growth environment of natural diamonds. Lab-grown diamonds are essentially identical to natural diamonds in composition; both are pure carbon crystals with the same chemical composition, and the naked eye cannot distinguish between the two.
In simple terms, lab-grown diamonds are also real diamonds. The only difference between them and natural diamonds is their formation process. Natural diamonds take billions of years to form in nature, while lab-grown diamonds replace the billions of years of natural refinement with artificial methods, taking less than 10 weeks to form. However, lab-grown diamonds, which are indistinguishable from natural diamonds, are up to 73% cheaper.
For consumers, both lab-grown and natural diamonds are real diamonds, equally sparkling, but with vastly different prices, making them naturally attractive. In the United States, which accounts for half of global diamond sales, lab-grown diamonds have risen from just 2% of the local market in 2019 to 8% in 2022. This year’s sales data shows that the market share of lab-grown diamonds has further increased to 11%.
For merchants, lab-grown diamonds are also more profitable. According to The Business Times, the profit margin for lab-grown diamonds is as high as 64%, much higher than the 35% for natural diamonds. This undoubtedly gives more jewelers an incentive to sell lab-grown diamonds.
Beyond price, the controversy behind natural diamonds is another major factor driving people to buy lab-grown diamonds. There is a saying:
In some African countries plagued by years of war, the mining process of natural diamonds often involves exploitation and violence, and the revenue from selling natural diamonds is frequently used to fund military activities, terrorism, and warlord activities. Natural diamonds originating from war zones (typically African countries) are called “blood diamonds.”
Although the United Nations launched a regulatory mechanism in 2002, abbreviated as the Kimberley Process, attempting to exclude blood diamonds from Africa through certification, negative news about natural diamonds being “blood-stained” is still common. As social awareness progresses and consumers receive more comprehensive information, lab-grown diamonds are gradually gaining favor in global markets, including Singapore.
According to Shin Min Daily News, Huang Xiuren, one of the founders of the local lab-grown diamond jeweler “The Better Diamond,” pointed out:
The gradual loss of natural diamonds’ “status” has forced De Beers, the world’s largest diamond company, to announce on September 13 that it will restart its classic “A Diamond Is Forever” promotional campaign.
However, in today’s society with more awakened values, rhetoric that still equates love with diamonds seems somewhat vulgar. Taking a step back, if the goal is truly to possess a symbol of eternity, what’s wrong with lab-grown diamonds, which have the same composition as natural diamonds, are equally hard, and equally crystal clear?
Some exaggerated claims question whether the drop in natural diamond prices is because people no longer believe in love. But rather than saying people no longer believe in love, it’s more accurate to say they no longer believe the rhetoric that diamonds equal eternal love. There are many other ways in the world to demonstrate the value of love. Isn’t the mutual support and companionship of two people for the rest of their lives more precious than the momentary brilliance of a natural diamond?
No longer obsessing over natural diamonds, future HDB flats might not need to be paid for so strenuously, and奶粉钱 (milk powder money) might not need to be earned so hard. Letting love break free from the bondage of diamonds, increasing the freedom of married life, and not letting happiness be dictated by expensive jewelry—that is truly noble and eternal love.