Why the jewellery industry isn’t giving up on natural diamonds: heritage brands trade on rarity of ‘real’ stones as demand for lab-grown gems slumps

Aug 17 , 2024

Louis Vuitton and Graff launch new natural diamond collections: jewellery giants trade on rarity of ‘real’ stones as demand for lab-grown slumps, with specialists De Beers slashing overall output. Pictured: Louis Vuitton Drift rings, from the Deep Time collection. Photos: Handout

The value of lab-grown diamonds has fallen by more than 90% over two years, per De Beers CEO Al Cook, while Cormac Kinney, CEO of Diamond Standard, anticipates a further 50-80% dip in sales

Louis Vuitton’s Deep Time Laurasia necklace has a 5-carat yellow diamond at its centre, while Graff’s Galaxia collection features more than 1,100 carats of diamonds and precious gemstones

Recent months have seen the value of diamonds become the subject of much interrogation, with the emergence – and relative popularity – of lab-grown gems, and a broader decline in luxury spending the key factors weighing heavily on the industry.

In February, De Beers CEO Al Cook acknowledged that the brand had built up a diamond inventory worth around US$2 billion. This excess of supply led to a halt in production and on April 23, the diamond specialists announced a reduction in global output to 26-29 million carats, down from 29-32 million. According to a production report by De Beers’ parent company Anglo American, this has led to a rise in average cost from US$80 to US$90 per carat.

Nevertheless, De Beers has hailed 2024 as the year for a rebound. “The recovery in rough diamond demand is expected to be gradual through the rest of the year,” Anglo American said.

De Beers’ 1888 Master Diamonds collection

The prediction rests on belief in a wider economic recovery, creating more spending power in luxury sectors, as well as a decline in the price of natural diamonds’ lab-grown counterparts.

Lab-grown diamonds had been claiming an increasingly large market share, which led to a significant impact on natural diamond sales and valuation. However, a recent decline in sales points to a changing tide.

“They have fallen by more than 90 per cent over the last two years,” De Beers’ Cook said of lab-grown diamonds. “And customers clearly see now that natural diamonds and lab-grown diamonds are two entirely different things.”

Louis Vuitton Wave bracelet, from the Deep Time high jewellery collection

There is also renewed focus on the sustainability of man-made diamonds.

While there are well-documented environmental and ethical considerations with natural diamonds, the man-made market also faces environmental considerations, especially as more than 60 per cent of the stones are produced in China and India, which both rely heavily on coal for electricity production.

Last autumn, De Beers withdrew its trial of lab-grown diamond engagement rings, piloted under its lab-grown label, Lightbox, calling their commercial proposition “likely unsustainable”. Cormac Kinney, CEO of commodities traders Diamond Standard, anticipates a further dip of between 50 and 80 per cent in lab-grown diamond sales. As he told Business Insider, “Only real is rare.”