Consumers in general, and Millennial and Gen Z consumers in particular, are taking a more ethical approach to consumption. For the most part, they want not only high-quality products that look great; they will seek out brands that share their concerns for environmental sustainability and ethical labor practices.
For these consumers, the appeal of lab-grown diamonds is obvious. But what about consumers whose primary concern is not with sustainability? How do we best extol the virtues of lab-grown diamonds to the consumers who only want a great-looking diamond? For these other consumers, lab-grown diamonds still have a lot to offer beyond the (admittedly contentious) environmental benefits.
The price of a lab-grown diamond fell between 20 and 33% between 2018 and 2022. The prices of the smallest lab-grown diamonds fell almost 50% in that time frame. Mined diamond prices remained relatively stable from 2012 to 2020 before dropping during the pandemic and rising sharply in early 2022. They have since fallen back to pre-pandemic levels, but they still remain far more expensive than lab-grown diamonds.
While a mined diamond can cost anywhere between $2,500 and $18,000 per carat, depending on the individual diamond’s 4Cs, a lab-grown diamond typically ranges from $1,000 and $6,000. A lab-grown diamond could cost up to 50% less than a comparable mined diamond.
LGD prices are expected to fall further in the future, but rising energy costs could slow the decline and stabilize prices, according to National Jeweler. At the same time, their report suggests, government investment into the LGD sector in India could help lower prices for LGD around the world.
The notion that LGD prices could be stabilized by rising energy prices raises another point: LGD still require energy to create—energy that is just as likely to be created by oil, gas, or coal as it is by clean and renewable sources. It is difficult to quantify exactly how much energy goes into mining a diamond vs. growing a diamond, and unless diamond growers are intentional about their emissions and methods, there is a risk of overselling sustainability claims.
While the market for smaller lab-grown diamonds could shift to fashion jewelry, large, expertly cut lab-grown diamonds will likely remain a luxury product. The market for 3-5 carat lab-grown diamonds is growing, with luxury customers, who can afford mined diamonds, drawn to the idea of getting a much larger lab-grown diamond for the same price they would pay for a smaller mined diamond.
Larger sizes for a lower price also means more ways for jewelry designers to express their creativity. Larger stones, more stones, diamond accents in designs featuring colored gemstones, pavé…the possibilities are endless. Designers can also have fancy colored diamonds in every shade to play with, as well. Lab-grown diamonds open all of these possibilities up to the diamond consumer.
Advances in technology and growing techniques means that all LGD on the market will soon be of equally high quality. All lab-grown diamonds are type IIA diamonds, colorless and free of inclusions. The difference between lab-grown diamonds of equal carat weight will be in the quality of the cut, and a masterfully cut lab-grown diamond will still be able to command a high price, but a far lower one than the same cut in a mined diamond.
The traditional mined diamond engagement ring might be out of reach for many consumers, especially as middle-class Americans are looking to cut spending in the face of rampant inflation and increased costs of necessities. Lab-grown diamonds provide an option for people who couldn’t otherwise afford a diamond engagement ring. But diamonds won’t lose their aura of exclusivity in the face of ubiquity, as growers and retailers will market separate fashion and luxury brands.
American consumers are coming to accept lab-grown diamonds much quicker than consumers in other parts of the world. As lab-grown diamonds become ubiquitous, sales will be driven by marketing rather than rarity. Sustainability is one story we tell about LGD, but LGD will need more stories than that to capture consumer attention in a market where rarity and exclusivity is one of the main draws.
There’s more to lab-grown diamonds than sustainability. Understanding your customers and their desires will help you tailor a message about LGD that will resonate with them.