A Lab-Grown Diamond Shakeout Could Be On The Way

19 NOV 2022

The lab-grown diamond industry has had a relatively idyllic existence in recent years. Demand continued to rise, especially in the United States, as the industry benefitted from increased consumer acceptability and all of the factors that bolstered the sector during the COVID-19 epidemic.

Yes, lab-grown prices continued to decline, but in some cases, manufacturing costs also fell, and because total demand was higher, most participants still profited. As a result, an increasing number of people entered the industry.

Even as the US economy begins to slow, it appears that demand is continuing to rise. Breitling and Blue Nile have recently embraced lab-grown, and Swarovski and Pandora have expanded their fashion-oriented lab-grown lines. There is evidence that lab-grown diamonds are stealing market share from natural diamonds, a sector with its own issues.

Even in a market where price cuts are usual, the lab-grown discounts this year have been extremely severe, especially when one prominent manufacturer reduced their preliminary costs. It's increasingly typical to hear merchants, particularly those dealing in "tinged" items, promote diamonds for 95% or 96% off the Rapaport list.

(At the same time, rap prices are plummeting.) One exhibitor at JCK Las Vegas even marketed 1 carat lab-growns for 100% off Rap (free), stating he would profit on the mounting.

While wholesale price declines have exceeded retail price drops, retail prices are also falling. Price competition from internet merchants, which has harmed the natural diamond market for small stores, is now beginning to harm the lab sector as well.