Editor’s Note
Prada’s new high-end jewelry collection, featuring lab-grown diamonds, has ignited a significant online debate regarding the pricing strategy for synthetic gems. This article examines the market positioning and consumer reaction to these luxury items.
Recently, the announced prices of Prada’s lab-grown diamond fine jewelry have sparked discussions on social media, with the focus naturally being on why lab-grown diamond jewelry is priced so high. Prada’s official website shows that the brand’s Eternal Gold white gold pendant necklace set with lab-grown diamonds is priced at 59,500 yuan, while the Eternal Gold white gold and lab-grown diamond serpent bracelet (approximately 5.65 carats) is priced at about 505,000 yuan.
In recent years, lab-grown diamonds have undoubtedly been one of the hottest topics in the jewelry industry. Companies and brands such as De Beers, Swarovski, Pandora, Yuyuan Jewelry, and Chow Tai Fook have all entered the market, and upstream manufacturers are also continuously expanding production capacity. However, the debate over the value of lab-grown versus natural diamonds remains a focal point of discussion. After the initial boom period, the prospects for lab-grown diamonds seem uncertain.
This May, Anglo American announced it might spin off its De Beers subsidiary “to enhance strategic flexibility.” Following this news, De Beers also announced it would stop producing lab-grown diamonds for jewelry, focusing instead on natural diamonds.
This may indicate that, despite various advantages, the value proposition of lab-grown diamond jewelry for the consumer market still faces a complex situation.
A report from the watch and jewelry industry research and communications company MVI Marketing in September last year showed that 53% of U.S. consumers would choose lab-grown diamonds over mined diamonds.
Pandora, which announced plans to enter the lab-grown diamond field in 2021, has also proven this with its performance. In the first and second quarters of this year, the company’s lab-grown diamond business recorded growth of 87% and 88%, respectively, while also bringing a “halo effect” to other product lines.
Swarovski has also long joined this race, launching series such as Eternity and Galaxy. Its lab-grown diamond products have achieved success in markets like the United States, Canada, and Japan, while also continuing to increase efforts in markets like China and India. The company’s 2023 financial report showed comparable sales growth reached 10%.
However, at the same time, De Beers’ financial report for the first half of this year showed that the price of lab-grown diamonds continues to fall. Its lab-grown diamond brand Lightbox needs to continuously lower prices to maintain competitiveness, affecting its sales performance. When it stopped its lab-grown diamond engagement ring business in 2023, the company also stated that many lab-grown diamond engagement ring businesses might be commercially unsustainable, and retailers would need to “double lab-grown diamond carat sales every two years to keep absolute gross profit flat.”
From the perspective of upstream manufacturers, the growth of lab-grown diamonds may also face challenges. In the first quarter of this year, the lab-grown diamond revenue of domestic synthetic diamond manufacturer Power Diamond fell by 41.5%, with gross profit margin dropping by 26.6 percentage points. Another leading lab-grown diamond company, Huanghe Whirlwind, saw revenue decline by 34.51% and was in a loss-making state.
A report from the trading company DMCC showed that in July 2023, the market share of lab-grown diamonds had reached 50%, continuously impacting the natural diamond market. However, as the price of lab-grown diamonds continues to fall, can this increasingly “cheap” raw material still support the value of a piece of jewelry?
It is undeniable that natural diamonds remain a high-value symbol at the pinnacle of the pyramid, to some extent still representing the value rule of the luxury industry—luxury due to scarcity. Therefore, even with identical physical and chemical properties, lab-grown diamonds, which can be mass-produced and achieve “carat freedom,” clearly still cannot compare to natural diamonds.
According to Tenoris data, from January 2020 to April 2024, the wholesale price of a two-carat lab-grown diamond fell by 34%, and the retail price fell by 25%. Meanwhile, as supply tightens, the price of natural diamonds is expected to rise at a compound annual growth rate of 3% to 5% by 2032.
A consumer survey conducted in China and the United States showed that consumers still rate natural diamonds higher than lab-grown diamonds in many situations. De Beers’ “2023 Diamond Industry Insight Report” also showed that among the most desired gifts for Chinese women in 2023, jewelry set with lab-grown diamonds ranked last at 20th place, with less than 1% of women expressing a preference for such jewelry, while gold jewelry and jewelry set with natural diamonds ranked first and third, respectively.
But change is still happening. Especially as more and more jewelry brands, luxury giants, and international retail platforms continue to enter the market, launching a series of cultural interactions and commercial communications targeting the new generation, lab-grown diamonds remain a “seed player” in the jewelry industry and the luxury sector.
At Walmart, lab-grown diamond wedding jewelry has become a leader in the entire category. Michelle Gill, Vice President of Jewelry and Accessories at Walmart, stated that the retailer’s 1.5-carat engagement ring, priced at $698, is a best-selling product. She also mentioned that there will always be customers who want to wear natural diamonds at their weddings, but especially among the younger generation, consumer attitudes have shifted significantly. Industry expert Edahn Golan also stated in a recent Forbes interview that nearly half of the diamond engagement rings sold in the United States are set with lab-grown diamonds.
If Walmart’s hot-selling lab-grown diamond engagement rings target the mass consumer market that focuses more on cost-effectiveness, in the luxury consumption sector, lab-grown diamonds are also a disruptor, impacting the value rules of luxury jewelry.
In 2022, LVMH’s luxury venture capital fund invested in lab-grown diamond manufacturer Lusix. Prior to that, LVMH’s luxury watch brand TAG Heuer had already used Lusix diamonds in its Carrera Plasma watch. In September last year, LVMH’s jewelry brand Fred also launched a high jewelry series using lab-grown diamonds. Prada launched its lab-grown diamond fine jewelry series in October last year. The French jewelry brand Oscar Massin, born in the 19th century and relaunched in 2022, also uses only lab-grown diamonds in its new products.
For emerging high-end jewelry brands, lab-grown diamonds also lower the barrier to entering the “high jewelry” field. They can more easily obtain larger-carat diamonds and have greater freedom in cutting and jewelry design.
The lab-grown diamond jewelry brand Grown Brilliance launched a high jewelry series last year, including a necklace set with a 69.56-carat diamond, with many pieces featuring main stones reaching 15 carats. Another lab-grown diamond brand, Unsaid, has also begun to venture into high jewelry, stating that its first high jewelry series will feature unique pieces weighing up to 300 carats. In April this year, London’s Bond Street welcomed its first lab-grown diamond brand, The Diamond Lab, neighboring brands like Harry Winston and Graff.
The commercial feasibility of these “high jewelry” or “fine jewelry” series made from lab-grown diamonds, or the brands’ belief in their feasibility, is also underpinned by a shift in consumer attitudes.
Especially for young people, jewelry is no longer just a symbol of important life moments. Rewarding oneself or expressing individuality can also be reasons for purchasing jewelry. While whether the jewelry retains its value remains an important factor influencing consumer behavior, emotional value and aesthetic value are also beginning to occupy increasingly important positions. As Amish Shah, President of the lab-grown diamond brand Altr Created Diamonds, said:
Eric Gourgouillon, Senior Vice President of Marketing and Sales at Unsaid, also stated that customers are buying not the diamond, but the design and style.
In the future, lab-grown diamonds may gain more growth opportunities in the fashion jewelry and fine jewelry markets. However, in the realm of true high jewelry, those brands with years of heritage, whose material selection, craftsmanship, and aesthetic value better fit the definition of “luxury,” will continue to play the role of gatekeepers for a long time to come.