Editor’s Note
The diamond industry is confronting a new reality as shifting consumer preferences, the rise of lab-grown alternatives, and economic pressures reshape its future. This article examines the challenges facing a once-unshakeable market.
After years of dominance, the global diamond industry is facing setbacks due to tariffs, synthetic versions, and changing consumer habits.
The gemstone industry has been through tough times, with diamonds, historically the stalwarts, being particularly at risk in 2025.
The data sets the stage for this conversation, even if diamond industry experts probably don’t like what the numbers are saying right now.
To begin with, global diamond prices fell by 5.7% in 2025, according to the Ziminsky rough diamond index. Diamond prices have also fallen by 30% over the past three years, according to the index.
Industry observers see two major reasons why diamonds (primarily natural diamonds) have lost their luster with the public and investors.
Lab-grown diamonds have captured the attention of price-conscious consumers, as so-called synthetic diamonds can cost up to 85% less than natural diamonds. This is largely a matter of production, as lab-grown diamonds do not need to be mined from the ground in difficult terrain in sub-Saharan Africa.
Instead, lab-grown diamonds are made in a temperature-controlled manufacturing facility using immense pressure and extreme heat to produce gemstones that, to the naked eye, look and feel like natural diamonds, at least to the untrained public.
In the 20th century, no respectable trust fund would be without a diamond portfolio component, either as ownership of a tangible asset or through direct investments in diamond industry stocks and funds. Those days are fading.
Take Anglo American (UK: AAL), which owns 85% of the De Beers Group, long the flagship brand in the diamond field. The London-based mining giant has seen its shares fall by 7% compared to the S&P 500 index, which has risen by 9.7% since the start of the year. While US tariff hikes of up to 50% certainly haven’t helped diamond stocks, De Beers saw its first-half revenue ($195 billion) fall by 13% year-on-year, largely due to significantly lower consumer demand, leading the company to lower diamond prices by 5% or more to compensate.
Or, consider LVMH Moet Hennessy Louis Vuitton ADR (LVMUY), which, with a market capitalization of $266 billion, is one of the world’s largest luxury goods companies. The company’s share price is down -16% since the start of the year and -22% over the past year. While the company may be considered “The House of Fashion” for good reason, it also has deep roots in the diamond sector, with diamond and jewelry brands like TAG Heuer, Bulgari and Tiffany & Co. This exposure to the declining gemstone sector is not helping LVMUY shareholders right now.
It’s not just about synthetic diamonds and a lack of investors.
Industry experts say that the diamond industry is under heavy pressure from multiple angles.
Whereas once, retailers like Kothari imported $100,000 worth of loose diamonds duty-free, now they pay $50,000 in tariffs upfront, on goods that often sit on the shelf until they are sold.
That alone would have been enough to slow sales, but there has also been a notable shift in consumer behavior.
Furthermore, retailers everywhere are hesitant to take large inventory positions.
Other gemstone experts say that talking about a complete collapse of the diamond market is off the mark.