Editor’s Note
The traditional diamond industry is facing a profound shift as lab-grown alternatives gain market share, challenging the gem’s long-held status as a luxury symbol. This article explores the economic and cultural implications of this accelerating change.
The status of diamonds as a symbol of wealth is declining at an accelerating pace. This is because the value of natural diamonds mined from the earth is falling as lower-priced, artificially created lab-grown diamonds expand their market share.
This situation is not only a headache for the traditional diamond and jewelry industry, but recent financial analysis also highlights the challenges caused by the shift from a high-value, low-volume business to a low-value, high-volume business.
According to investment bank Morgan Stanley, lab-grown diamonds accounted for 14.3% of the total diamond supply in 2023, reaching 16 million carats. In contrast, newly mined natural diamonds were overwhelmingly more numerous at 112 million carats.
However, the interesting aspect of these figures lies in the overall trend: while the supply of lab-grown diamonds is increasing significantly, the supply of natural diamonds is either flat or declining.
Morgan Stanley’s supply-demand model released in September predicts that the share of lab-grown diamonds in the overall diamond market will rise to 18% this year and increase further next year to 21.3% (25.1 million carats out of a total of 118 million carats).
The rapid pace of expansion in the lab-grown diamond market is evident from the fact that its share was 7.5% in 2020 (8 million carats out of a total of 107 million carats).
In contrast, the supply of natural diamonds is on a declining trend, having peaked at 151 million carats in 2017 and dropping to 107 million carats in 2020. Although it has gradually recovered since then, it is expected to remain at 112 million carats this year.
As with general industrial products, the majority of lab-grown diamonds are produced in China. According to Morgan Stanley, Chinese production accounted for 9.3% of the supply in 2023 and is expected to increase to 12.7% this year. India is in second place, expected to account for 2.9% this year.
