2025: Where Next for Lab Growns?
January 09, 25
Happy New Year. And welcome to a 2025 filled with opportunities - and uncertainties. The diamond industry is at an inflection point, according to the global management consultants McKinsey & Company.
The supply chain is normalizing after Covid disruption, they say in an end-of-year report.
Couples are setting back into the traditional three-year cycle of engagement to marriage, and ever cheaper lab growns are driving down the price of their natural counterparts.
Against this background, McKinsey presents three possible outcomes for the future of the industry.
ONE: Lab growns become the norm. They take over the majority of the market. Natural diamonds become a niche luxury, like collecting classic cars.
TWO: Lab growns become so cheap that they effectively become fashion accessories and no longer compete with natural diamonds.
THREE: Diamonds go out of fashion because consumers can't tell the difference between lab growns and natural stones. Diamonds lose their appeal, and are no longer seen as a must-have for engagement rings.
Three starkly different scenarios, each with profound repercussions at every point along the pipeline.
The first outcome - natural diamonds as a niche luxury - would be devastating for the traditional diamond industry. Mining companies would become all but obsolete, and the price of natural diamonds would rocket. Bad news for naturals, good news for lab growns.
The second - lab growns as cheap fashion accessories - would split the market into two distinct segments, with natural diamonds retaining their position in the luxury market. OK for naturals, OK for lab growns.
The third outcome - diamonds go out of fashion altogether - would be terrible for naturals, terrible for lab growns - an apocalyptic vision of an industry on a path to self-destruction.
In this context a segmented market - lab growns for fashion/naturals for luxury - looks like the best option for overall survival.
Gaetano Cavalieri, president of the World Jewellery Confederation (CIBJO) believes both sectors must go back to the drawing board and clearly brand their products to restore customer confidence.
Consumers need to know that they're different products, he says, and shouldn't be price-matching one against the other.
He gave the keynote address last month at the 2024 Global Gems and Jewellery Development Conference, in Hainan, southern China.
And he made it very clear that marketing strategies adopted during the mass launch of lab grown diamond jewelry had negatively impacted consumer confidence across the board.
"The early decision to benchmark laboratory-grown diamond prices against the price of natural diamonds, which, while maybe serving the short-term interest of laboratory-grown diamond producers, proved to be a critical error over the longer term," he said.
"It should aways have been apparent that the economic principles governing a natural product, where there is always a finite production ceiling, was different to that of a manufactured product, where there is no production ceiling."
Hindsight is, of course, a marvelous thing. If we could time-travel back to the early years of lab growns, we could warn manufacturers that they mustn't go head-to-head with natural diamonds.
But it wouldn't work. We are where we are and we can't change the past. But now, January 2025, is the time when we can resolve to pursue outcome two, the win-win outcome for both sectors.
Have a fabulous 2025.