Lab-Grown Diamond Jewelry Market Forecast to Almost Double in Size by 2025

Longer-term man-made diamond growth expected to be driven by fashion jewelry and use in non-jewelry high-tech applications

With the Diamond Foundry’s reported plans to build a 10 million carat per annum plant to cater to the industrial tech market by mid-decade and the world’s largest fashion-jeweler, Pandora (Copenhagen: PNDORA), currently testing a line of “affordable” lab-diamond jewelry, the man-made diamond market appears to be stratifying into a more nuanced industry away from one that was primarily focused on “disrupting” the natural diamond jewelry market just a few years ago.

In the five-or-so years since larger, higher-quality lab-diamond jewelry began hitting the wider market (at first in the U.S.), production technologies have vastly improved, the number of suppliers has greatly multiplied and many retailers have begun to test, and in some cases fully-adopt, the novel product. Industry participants have since segmented into more specific business strategy aims whether it be lowest-cost diamond jewelry, carbon-neutral branded-diamonds or non-jewelry super-material applications.

Estimated lab-diamond production for use in jewelry has grown from just a few hundred-thousand polished carats per annum as recently as four or five years ago to almost 3 million polished carats in 2021 worth almost $2 billion*, representing an estimated mid-to-high single-digit percentage of the total global polished diamond market. The figure is forecast to grow to almost $4 billion by 2025 (see above table).

As the industry grows, man-made diamond producers are taking different approaches to production and product positioning.

In recent years, tech “start-ups” in the U.S. and Israel, such as WD Diamonds and Lusix, have seemingly focused on lower-emission, more-sustainable production methods to differentiate their jewelry product. The aforementioned Diamond Foundry has publicly expressed a longer-term aim at targeting single-crystal diamond wafer production for use in semiconductors, an industry multiples larger than the jewelry industry.

Others are seemingly targeting lowest-cost diamond jewelry production.

The number of producers in India is estimated to have grown rapidly driven by relative cost benefits in the country as companies there realize subsidized energy (the greatest variable cost for man-made diamond producers) and domestic access to the industry’s largest manufacturing hub. In China, some legacy, high-capacity high-pressure-high-temperature (HPHT) producers continue to upgrade their production technologies allowing for larger, higher-quality gem production —allowing them to compete with more modern chemical vapor deposition production (CVD) methods.

On the down-stream end of the lab-grown diamond jewelry market, its seems that many consumers that are choosing a lab-diamond in the place of a natural diamond are doing so because of the notable price differential. Based on a survey of prices, a consumer can buy a better-than-average-quality 2.15-carat lab-diamond solitaire for the price of an equivalent 1.00-carat natural.

In general, the price differential between generic lab-diamonds and natural has steadily widened in recent years —in some cases expanding from a 10-15% differential just a few years ago to as much as 75%-or-more at present, i.e. the differential being the “discount” of a lab-diamond relative to a natural diamond of similar size and quality (see above chart).

This price action is likely, at least in part, due to the production fundamentals of the two products, i.e. lab-diamonds are a manufactured product, whereas natural diamonds are a non-renewal resource of varying quality and size. Consequently, the widening price differential between lab-grown and natural could influence the way that down-stream brands and jewelers market the products.

While it is likely that some lab-diamond companies will successfully apply branding leverage and other strategies allowing their product to garner a premium to most (especially generic) lab-diamonds, longer-term it is forecasted that a growing amount of lab-diamond jewelry will be marketed with more of a “fashion-jewelry” orientation, i.e. as lower-priced jewelry competing less with higher-priced natural diamond jewelry (see below chart).

For instance, Pandora’s new lab-diamond line, marketed as Pandora Brilliance, is being positioned to “democratize” diamonds, according to the company. The collection starts at a price point of about $350 (for a complete piece of jewelry) and includes pendants, earrings, bracelets and rings —although the rings are not directly being marketed as engagement rings.

Another iconic global fashion jewelry-brand, Swarovski, recently launched a fancy-colored lab-diamond line available in an array of vibrant proprietary colors —colors which are not typically available in natural diamonds. The line does not appear to be positioned as a bridal product either.

Other retailers' strategies appear less clear.

Mid-market U.S. department store majors, Macy’s (NYSE: M) and JCPenney, which have historically sold an array of other man-made gems, began offering lab-diamond jewelry in 2018. The following year, Signet Jewelers (NYSE: SIG), the largest mid-tier jewelry conglomerate in the U.S., began selling a limited amount of lab-diamonds. All three companies are all offering lab-diamond bridal/engagement options as well as more "fashion" positioned merchandise.

Tiffany & Co., the largest fine jeweler in the world, as well as high-jewelers such as Cartier and Bulgari, do not directly offer lab-diamonds, nor do the larger, corporate jewelers in Greater China, the diamond industry’s second largest, and fasted growing, market.

Blue Nile, which is estimated to be the largest online retailer of diamonds globally, began offering De Beers’ Lightbox lab-diamonds late last year. The line is exclusively sold as non-bridal jewelry and is priced at a liner $800-per-carat (up to 2-carat solitaire in size). However, Blue Nile’s fast-growing competitor, Brilliant Earth (Nasdaq: BRLT), which recently went public at a valuation exceeding $1 billion, is speculated to be one of the largest sellers of lab-diamonds globally —as fine and fashion jewelry.

Looking longer-term, novel and emerging industrial applications for diamond is forecasted to drive the man-made diamond industry’s greatest growth, whether it be in advanced thermal management devises, medical equipment, energy storage or semiconductors —which alone is estimated to be almost a half-trillion-dollar industry**. The market size of these applications far exceeds that of jewelry, and the end user is much more likely to be indiscriminate about whether the diamond is manufactured or natural.

With industrial applications for diamond, the lower-price option will theoretically win out as long as performance is comparable. With diamond jewelry, as is the case with luxury more generally, the consumer rational for purchase is not nearly as practical and is often influenced by more intuitive factors like emotion or an affinity for rarity.

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*In polished diamond value at retail, i.e. “loose diamond equivalent” or net of jewelry.

**The demand for diamond substrate specifically would theoretically only be a fraction of the total market size.

A press release that accompanied this report can be downloaded here.

This was published in print in Jeweller Magazine and was covered by JCK and National Jeweler.

Read more of Paul Zimnisky's analysis on lab-grown diamonds here:

How the Largest Jewelers Are Marketing LGDs [Exclusive for GJEPC]

Retail Margins Could Be Boosting Man-made Diamond Sales

What We Call Man-made Diamonds Could Determine Their Success

2018: The Year of the Lab-created Diamond

Paul Zimnisky, CFA is an independent diamond industry analyst and consultant based in the New York metro area. For regular in-depth analysis of the diamond industry please consider subscribing to his State of the Diamond Market, a leading monthly industry report; an index of previous issues can be found here. Also, listen to the Paul Zimnisky Diamond Analytics Podcast on iTunes or Spotify. Paul is a graduate of the University of Maryland's Robert H. Smith School of Business with a B.S. in finance and he is a CFA charterholder. He can be reached at paul@paulzimnisky.com and followed on Twitter @paulzimnisky.

Disclosure: At the time of writing Paul Zimnisky held a long position in Lucara Diamond Corp, Star Diamond Corp and North Arrow Minerals Inc. Please read full disclosure below.