Diamonds might be forever, but the market and business models surrounding them definitely isn’t. Sales of diamonds have been falling for years, with rough diamond sales predicted to decline around 25% in the next year and this figure will only increase in the coming years. One of the biggest reasons behind this decline in the diamond industry is the production of lab-grown diamonds that are disrupting the market. Last year, the market for lab-grown diamonds was estimated to be around $19.3 billion dollars. By 2030, this figure is predicted to reach a huge 49.9 billion dollars.
Lab-grown diamonds were first created around 50 years ago, but thanks to technological advances and with more focus being put on sustainability, it is now cheaper, faster and more efficient to create man-made diamonds than ever before. Let’s take a look at why lab grown diamonds are the future and the impact this is having on both diamond businesses and lab grown diamond businesses.
What Are Lab Grown Diamonds?
Lab grown, or engineered, diamonds are grown in controlled laboratory environments using advanced technological processes. The conditions in which diamonds naturally form are duplicated in laboratories and these diamonds actually consist of the same carbon atoms that are responsible for natural diamond production. As they are made of the same material as natural diamonds, they have the same chemical and optical properties. Man-made diamonds are indistinguishable to the naked eye, and they can only really be separated when using specialised tests and equipment.
Diamond Mining Disruption
There are three main disruptors when it comes to the mined-diamond industry: online sales, growing demand for environmental responsibility and lab grown diamonds. If the diamond industry was facing disruption from just online sales, then it is likely that the market would recover and adapt in around 2 years. The diamond supply chain could adapt and adjust to support issues such as supply chain challenges and learn to support more online and traditional brick and mortar businesses, but the other two disruptors go hand in hand.
Today, consumers are demanding social and environmental responsibility from businesses, especially the diamond industry, and this is causing particular disruption in the GenZ and Millenial consumer markets, as they are the primary target markets for diamond engagement rings. These consumers are looking for sustainable alternatives to traditional diamond engagement rings and with sales of vintage engagement rings and lab grown diamonds expanding exponentially, this is causing major disruption to the mining, production and sales channels in the market for traditionally mined diamonds.
Opportunities For Growth
With the production of lab grown diamonds becoming much more mainstream, this means that prices for lab grown diamonds are declining. It is estimated that lab-grown diamonds cost around 50% less than natural diamonds, which means that for businesses selling or producing these diamonds, this can mean more sales, leading to higher profits. Lab-grown diamonds are not only limited to jewellery, but they also have many different uses. Thanks to continuing research, this has discovered more unique ways in which they can be used, from drilling or cutting materials to lasers and electronics.
The lab grown industry is predicted to reach its full potential in the coming years. As more and more people across the world are able to readily purchase lab grown diamonds without concern about the conflict that natural diamonds bring, some experts predict that in future years, all diamonds sold on earth will be lab grown.
Why Sustainability Is Key
Businesses are now more focused on sustainability and for many, it is one of their main USPs and focal points to consumers. With the world’s attention now on global warming and sustainability, more and more people are looking at ways they can change their day-to-day habits and purchases. If providing sustainable alternatives allows consumers to feel better about their purchases, yet still create an ROI for the business, as well as improve their sustainability focus, then it is just a win-win for everyone involved.
When it comes to larger purchases, such as buying engagement rings, more consideration is obviously needed and, if sustainability options are available without compromising on quality or appearance, this will be an option that more people will take. There are many alternatives to buying expensive and unique jewellery pieces without the need to purchase natural diamonds, such as vintage jewellery, family heirlooms or through auctions. But, if lab grown diamonds are more available and budget-friendly, we can expect to see them quickly take over the use of natural diamonds, without a cost to the environment.
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