The diamond industry, with its intricate web of miners, suppliers, retailers, and consumers, is a dynamic and ever-evolving sector that is constantly shaped by global events and shifting consumer sentiments. Recent times have seen unprecedented challenges, from the impact of the COVID-19 pandemic and geopolitical tensions such as the Russia-Ukraine war to a decline in consumer sentiment and income. These external factors have ignited discussions within the industry about the ecological state of our world, sparking debates on issues such as transparency and traceability. Increasingly, sustainability, greenwashing, and ethical practices in diamond mining and production have emerged as concerns among consumers, driving demand for diamonds that are traceable and ethically sourced. As consumers navigate their choices in the market, they are faced with another choice: lab-grown or natural diamonds. So, what’s in store for the diamond industry and what preparations need to be made?
The industry finds itself at a critical juncture, where it must adapt and respond to changing consumer expectations and demands, while also addressing broader societal and environmental concerns. Looking ahead, it becomes evident that strategic preparations need to be made to ensure continued relevance and success. In this ever-evolving landscape, staying ahead of the curve and navigating the complex interplay of economic, social, and environmental factors will be crucial for stakeholders in the diamond industry.
Diamond suppliers and retailers have different views on how the next 12 months in the industry will unfold. Linda Menzies, owner of Menzies Jewellery, notes that younger consumers are increasingly opting for lab-grown diamonds over their natural counterparts. Phil Davidson, owner of Artisan Jewellery suggests consumers might enquire about lab-grown, but often end up choosing natural.
Craig Miller, chief executive officer of JC Jewels, forecasts numerous challenges for the industry, with luxury and aspirational spending expected to continue its sluggish trend for the foreseeable future. Adam Plant, director of Orange River Diamonds, believes demand for natural diamonds will rebound once consumer sentiment stabilises. Cameron Robinson, director of Bruce Robinson Diamonds, affirms that natural diamonds remain the preferred choice for his clients. However, he notes that lab-grown diamonds may warrant further consideration in the future. With such divergent perspectives among industry insiders, the future of the diamond industry remains intriguing and multifaceted.
Lab-grown diamonds continue to be a pressing conversation in the industry, but is the resale value of lab-grown and natural diamonds affecting purchase rates? “It is still early days,” Craig says. However, looking at the grand scheme of the diamond resale market may be the answer.”
“Have you ever met a consumer who sold a white diamond under five carats within five to ten years of owning it and got back one dollar more than they paid? They would be lucky to get what they paid back, with respect, at this point the consumer is showing zero concerns in this regard. They just see the value proposition… bigger, whiter, for less money,” says Craig.
Adam suggests that consumers equate price with quality, and many are looking to spend more. “Lab-grown diamonds are getting too cheap, consumers still want to spend over $5000 on an engagement ring… we are already seeing a lot of clients turning back to natural diamonds.” Conversely, Linda notes that more often, younger consumers opt for lab-grown over natural. Despite their popularity among younger consumers, lab-grown diamond prices are decreasing, and only around 15 percent of her purchases are lab-grown. Similarly, Craig recognises their popularity, positing that “Lab-grown [diamonds] are a winner in the consumer’s eyes, in Australia our consumers are enjoying the value proposition and consumers vote with their wallets.”
Agreeing with Adam, Craig also suggests that lab-grown diamonds, despite being relatively new and having experienced a drop in prices, will eventually stabilise. Craig acknowledges that the industry is undergoing significant changes due to the introduction of lab-grown diamonds, noting “Some will prosper and others may feel the pinch.” On the other hand, Phil notes that he has observed minimal impact on the market from lab-grown diamonds, as most of his customers still prefer natural diamonds despite their inquiries into lab-grown diamonds. Cameron echoes Phil’s view, mentioning that Bruce Robinson Diamonds has not ventured into the lab-grown market, but “As lab prices continue the race to the bottom, we might revisit that product line sometime in the future,” he says.
The natural diamond market has experienced significant impacts from the ongoing pandemic, with lockdowns and travel restrictions leading to increased demand for diamonds and jewellery in Australia, as Adam details. However, the closure of diamond mines and facilities due to these restrictions has had a drastic impact on the price increase of diamonds from 2021 onwards. “Since mid-2022, luxury travel has resumed, but there has been much uncertainty. Consumers are hesitant to spend money on luxury goods, such as diamonds,” adds Adam.
Despite the challenges posed by COVID, Cameron notes that the natural diamond market has rebounded to pre-pandemic sales levels, with clients still showing interest in fine handmade jewellery. “Interest rates have definitely affected the younger generation, while older clients have been relatively insulated from upward rate changes,” he says. Phil also acknowledges the effects of the pandemic but highlights the persistent desire for high-quality jewellery. “Everyone is tightening their belt, but they still want nice jewellery.”
Adam also believes that spending will resume once interest rates stabilise and people have time to adjust to the new cost of living and borrowing money. “In any period of change, consumer spending tightens up. I think once interest rates stop increasing and people have time to adjust to the new cost of living and borrowing money, spending will commence again,” he says. The natural diamond market has not been immune to the far-reaching effects of the pandemic, with lockdowns, travel restrictions, and uncertainty impacting demand and prices. However, industry experts remain optimistic about the market’s recovery and anticipate a return to normalcy as consumers adjust to changing circumstances.
Despite the struggles faced by the diamond industry in recent years, retailers remain dedicated to consumers. “We are really busy like most jewellers, I don’t see things changing,” says Linda. For retailers that stock both natural and lab-grown diamonds, it is clear the consumer knows what they want, whether lab-grown or natural. “I find clients are a lot more educated, they come in and know what they want,” Linda says. Adam projects positive changes in demand over the next 12 months, especially for the natural diamond market. “I think people are stabilising their spending with the increased living expenses and once the interest rates stabilise, consumer sentiment should go back to business as normal,” Adam suggests.
Looking ahead, Craig predicts numerous challenges for the industry in the next 12 months. “Every consumer is feeling the crunch on some level, luxury spending and aspirational spending will continue to slow down for some time, it would be foolish not to think how this can encourage consumers to favour lab-grown at this point in time, based on budgets alone,” he warns, citing the impact of the COVID-19 pandemic and other global economic downturns on the diamond industry. In the past, consumers had limited options with only natural diamonds available, but the introduction of lab-grown diamonds has provided more variety, inevitably affecting the natural diamond sector. “I feel as lab-grown enters markets there are patterns, the demand is consumer driven and dominated by Millennials, whether they see lab-grown as a more sustainable option or simply a value proposition, it looks like it hits all their touch points for the most part,” Craig adds.
Sustainability remains a significant topic of conversation in the diamond industry, but its complexity often renders full transparency a challenge to ascertain. “I feel like the word sustainability can often be misinterpreted,” says Craig, highlighting its conceptual nuances, “Some simply feel growing diamonds above the ground with technology versus digging holes in the earth is more sustainable but there are many levels when discussing sustainability.”
The issue of sustainability in the diamond industry is often highly subjective. While discussions often revolve around the social and environmental impacts of mining operations and the concern over conflict diamonds, the sustainability of lab-grown diamonds in terms of energy and resource usage is also a contentious topic. “We are seeing all industries move towards sustainability with haste and for good reason, our industry is no different and through the eyes of the millennial I do feel they see lab-grown as the more sustainable option,” notes Craig.
According to Adam, sustainability entails making decisions that can withstand the test of time. “For the diamond industry to truly embody sustainability, it must be economically viable at all levels of the supply chain. This has been effectively managed by industry players such as the Diamond Trading Company (DTC) and Alrosa in the case of natural diamonds, ensuring that diamond prices remain at a level that allows miners, manufacturers, distributors, and retailers to thrive while delivering an aspirational luxury product to consumers.”
However, Adam expresses concerns about the current state of the lab-grown diamond market. “Unfortunately, we are witnessing an unsustainable collapse in pricing for lab-grown diamonds, leading to many manufacturers, distributors, and retailers operating at a loss. This has led to disillusionment among retail consumers, as what was once an aspirational lab-grown diamond product has now become a mass consumer item at the lower end of the market.” Adam further highlights sustainability concerns, “There is a lot of greenwashing and misinformation going on about lab-grown diamonds, which is negatively affecting the natural diamond market,” he says.
Cameron also raises concerns about consumer understanding of sustainability, “I’m not sure all the information available is transparent enough for the consumer to disseminate accurately,” he explains. Sustainability in the diamond industry is a complex and evolving issue that involves various perspectives, from the social and environmental impacts of mining operations to the ethical concerns surrounding lab-grown diamonds. It is essential for the industry to strive for sustainability that encompasses economic viability, transparency, and accurate information for consumers to make informed choices. As Adam aptly puts it, “Sustainability means making decisions that we can stand by not just today, but for the next 10 or 20 plus years.”
The diamond market has experienced uncertainty in recent times. Nevertheless, experts predict that the industry will rebound in the next 12 months, as consumer sentiment returns to normal and living expenses and interest rates stabilise. The ongoing debate between lab-grown and natural diamonds continues to captivate industry insiders, with opinions divided on the future of both. Lab-grown diamonds are gaining traction among younger consumers, who are increasingly concerned about the environment and making eco-friendly purchasing decisions. The resumption of consumer purchasing behaviour is a positive sign for the diamond industry, and this trend is expected to continue to gain momentum.
As the industry undergoes significant changes, professionals must adapt to meet evolving consumer needs. With strategic adaptation and a keen focus on consumer preferences, the diamond industry can embrace the challenges ahead and continue to shine bright in the ever-changing world of luxury goods.
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