Natural Diamonds Face Uphill Battle Against Lab-Grown Competitors

The Shifting Landscape of Diamond Demand

The natural diamond industry is at a critical juncture, grappling with the rapidly increasing popularity of lab-grown diamonds (LGDs), evolving consumer preferences, and the need for a unified market strategy. Once a symbol of enduring value and tradition, natural diamonds are facing unprecedented competition, forcing industry players to re-evaluate their approach to marketing, pricing, and consumer engagement. Reports indicate that LGD center stones accounted for a significant 61 percent of engagement ring purchases in 2025, a stark increase driven by economic pragmatism and changing values among consumers, particularly Gen Z.

This shift has led to a decline in the overall diamond category's share of annual jewelry sales, slipping from approximately 50 percent to about 41 percent. While sales of finished natural diamond engagement rings dropped 4 percent in 2025, with unit sales and average retail sales seeing a 2 percent decrease, the market for LGD engagement rings surged by 31 percent. Industry analysts note that LGDs now represent about 15 percent of total diamond sales and over half of engagement ring units sold in 2025, underscoring the intense competitive pressure.

The Challenge of Differentiation and Messaging

A key challenge for the natural diamond industry is the lack of clear differentiation between natural and lab-grown stones. Industry leaders emphasize the urgent need to re-educate consumers about the unique qualities and long-term value of natural diamonds. Mahiar Borhanjoo, chief commercial officer at De Beers Group, stated, 'We need to re-educate consumers about the uniqueness of natural diamonds, and we need to move toward that differentiation sooner rather than later.' This has prompted companies like De Beers to resume category marketing efforts, revitalizing campaigns like 'A Diamond Is Forever' and introducing new concepts to highlight the distinct characteristics of natural stones.

Rebecca Foerster, president of Hearts On Fire, stressed the importance of a unified message, urging the trade to settle on a handful of core ideas to communicate consistently. The industry faces the challenge of capturing consumer attention amidst a flood of information and evolving spending priorities, especially with Gen Z increasingly favoring experiences over material possessions. However, industry advocates argue that jewelry can complement experiences, serving as a lasting accessory.

Evolving Consumer Values and the Rise of ESG

Modern consumers, particularly millennials and Gen Z, are increasingly concerned with the ethical and environmental impact of their purchases. This heightened awareness of Environmental, Social, and Governance (ESG) factors is driving demand for greater sourcing traceability. Consumers want to know where and how their diamonds were extracted, favoring eco-friendly mining practices, reduced carbon footprints, and fair labor conditions. Traceability, often enhanced by digital technologies like blockchain, is becoming a crucial factor in building consumer trust and potentially commanding price premiums.

Ravi Bhansali, CEO of Rosy Blue Antwerp, observes a bifurcation in the retail market, with high-end brands focusing on natural diamonds' value narrative for affluent clients, while the volume market is increasingly dominated by lab-grown alternatives. This has led some brands, like Hearts On Fire, to reposition themselves further upmarket, focusing on profitability and partnering with retailers serving a specific affluent customer profile. The company has nearly doubled its average transaction value since shifting its focus to the high end.

Generational Shifts and the 'Experience Economy'

The preferences of Generation Z are significantly reshaping the fine jewelry market. This demographic, while digitally native, exhibits a nuanced approach to spending, prioritizing value and emotional significance over mere discounts. They are reallocating funds, trading down on routine purchases to invest in meaningful indulgences. While they may opt for larger, more affordable LGDs for engagement rings, their overall purchasing behavior is complex.

Consumers are increasingly purchasing fine jewelry for themselves, mixing pieces with casual wear, and showing interest in upcycling and customization. The rise of e-commerce has also changed the retail landscape, with consumers becoming more comfortable purchasing high-value items online, though in-person shopping remains important for tactile experience and visual assessment. A recent consumer survey indicated that most engagement ring shoppers prefer to buy in person, visiting multiple retailers and viewing numerous rings before making a purchase. This highlights the continued importance of a compelling in-store experience that emphasizes storytelling, aspiration, and emotional connection.

The Future Path for Natural Diamonds

To thrive in this evolving market, the natural diamond industry must focus on highlighting its unique value propositions. This includes emphasizing rarity, heritage, and the emotional significance of natural diamonds as enduring symbols of love and commitment. Industry leaders are exploring strategies such as reinforcing the concept of natural diamonds as luxury items, creating aspirational retail environments, and leveraging storytelling to connect with consumers on an emotional level.

Mahiar Borhanjoo of De Beers Group noted the growing desire for tangible, real-world items amidst increasing virtual immersion, stating, 'With virtual reality becoming more part of everyday life, people are going to want real things and products… This is why it’s so important for us to connect them with our authentic story.' The industry is also investing in technology for better detection and differentiation between natural and LGDs, aiming to bolster market confidence. Ultimately, adapting to changing consumer values, emphasizing unique attributes, and fostering emotional connections will be crucial for the long-term success of the natural diamond sector.