Natural and synthetic diamonds are going head-to-head in the US bridal market. Since 1947, when copywriter Frances Gerety scribbled “A Diamond Is Forever” on a piece of paper and created one of the most ingenious ad campaigns in history, the precious stone has been a staple for any marriage. Enter the man-made diamond, which has been grabbing market share from its natural counterpart since 2015 and will likely continue its hold for the remainder of 2024 and beyond.
The growing price gap
The US is the most dominant market for synthetics, which currently account for 44% of US engagement-ring sales by volume, according to jewelry-analytics firm Tenoris’s data for January through July. By value, the figure is 25%, compared to only 7.5% four years ago.
Price is still king in 2024 as millennials and Gen Z continue to clamor for 2- and 3-carat synthetic center stones, sizes that tend to be financially out of reach in naturals. Sustainability, the environment, and human-rights concerns about natural mining are other draws for the synthetic space, and lab-grown purveyors are aggressively marketing those factors to consumers.
In 2020, the average cost of natural-diamond engagement rings was $5,213, as opposed to $3,889 for synthetics, reports Tenoris, which based its findings on data from 2,000 independent US jewelry stores. After the pandemic in 2022, when engagements and weddings boomed, average sales jumped to a height of $6,605 for naturals and $3,973 for synthetic editions.
However, the sparkle of lab-grown diamonds is quickly fading. Prices have fallen drastically, particularly at the wholesale level — where they’re as low as $99 a carat — and to a lesser extent at retail. This year to date, average purchases for natural engagement rings have been around $6,300, while synthetic rings have gone down by nearly a third since 2022 at $2,710. Analysts foresee further price drops, with some predicting declines of 50% to 80%.
Rapaport believes synthetics will continue to dominate the US bridal segment in 2024 but collapse in 2025, as the low prices will make them unsuitable for engagement rings.
Jewelry retailers, aware of these plummeting prices, are split between cashing in on the consumer demand for synthetics — profit margins remain high at 65%, according to Tenoris — and rushing to unload them before margins normalize.
What customers value
Paul Schneider doesn’t sell many synthetic diamonds, but he doesn’t pretend they don’t exist, either.
“You’d like to keep the story black and white, but it never is,” says the cofounder of Twist, which has stores in Portland, Oregon, and Seattle, Washington. “Price is black and white, and it’s such a huge motivating factor regardless of all the stories. That’s real. [Lab-grown diamonds] are so f***** cheap.”
Larry Sanders, owner of Sanders Diamond Jewelers, came late to the game; he started offering synthetic diamonds on memo at his Pasadena, Maryland, store in November 2023. “We’re still selling more naturals than labs, but we’ve seen [naturals] slow up a little bit,” he reports. “We want to give customers a choice, but we want them to be well-informed, too. We have been up-front with customers about the value of man-made diamonds. Young girls want to flash a big rock.”
For Jeremy Auslander, owner of Roxbury Jewelers in Los Angeles, business is evenly split between natural- and synthetic-diamond engagement rings, with the latter averaging $3,000 to $5,000 for a 2- to 3-carat center stone. “I never sold a diamond as an investment or heirloom,” he says. “I didn’t believe in that. I sold it as a beautiful, bright item with meaning and value solely to its buyer.”
‘It’s just not for high-end jewelers’
Many retailers that sell natural-diamond engagement rings and heirloom estate jewelry take the opposite view: They see no place for synthetic diamonds. Established independent stores like Marissa Perry in New York, Tiny Jewel Box in Washington, DC, and Ylang23 in Dallas, Texas, made the decision to stay away from lab-grown years ago.
“I’m not interested [in synthetic diamonds],” declares Tiny Jewel Box director Jim Rosenheim. “The relationship with clients is the most important thing, and there’s real harm if there’s no trade-in value. It’s not a good product.”
Richard Servis agrees. “There’s no rarity factor in lab-grown; it’s just not for high-end jewelers,” says the diamond buyer for retailer Turgeon Raine. The Seattle jeweler briefly dabbled in synthetic-diamond engagement rings but ultimately concluded there was little value. “It’s going to become something used in fashion jewelry.”
Bella Cosa Jewelers in Willowbrook, Illinois, does sell synthetics. But while owner Joseph Molfese worries their continual price drops will cheapen the allure of natural diamonds, he believes the opposite is more likely: “The price [of synthetics] will get too inexpensive to bring meaning to an engagement, and people will look elsewhere, at either natural [diamonds] or colored stones.”
Natural-diamond purveyor The Clear Cut has given away hundreds of 2-carat synthetic stones to sweeten sales, according to husband-and-wife founders Olivia Landau and Kyle Simon.
“With every purchase of a natural-diamond engagement ring, you’re eligible to get a free lab-grown diamond set into a basic solitaire for a travel ring,” Landau explains.
“We used to do this with cubic zirconia,” adds Simon, “but the price of lab-grown diamonds has become so low that now we do it with synthetics.”
Highlighting the experience
Some believe companies that go beyond a commodity’s price to create a luxury experience — like wine-sellers or high-end travel and fashion firms — are the ones that will succeed.
Kay Jewelers’ marketing for its Monique Lhuillier Bliss collection focuses on elevated design, much like the luxury bridal-gown range that bears the Los Angeles-based designer’s name. The Bliss line features multiple cuts and shapes for its synthetic offering, which it launched in 2023. This past September, it added a selection of light-pink, baby-blue and soft-yellow options as well.
Synthetic-diamond jewelry brand Kimai is also concentrating on design-driven innovation in the bridal sector. “Engagement rings and wedding bands are ready for a modern refresh,” says cofounder Jessica Warch. “This area is the fastest-growing part of our business, and we’re excited to expand it further.”
A major mentality shift must take place in the lab-grown space, according to Amish Shah, founder and CEO of synthetic-diamond specialists Altr and J’evar.
“Most people in lab-grown diamonds have related price to value,” he explains. The successful ones will be those who “take this component and create something out of it: design a diamond into a newer cut, turn a traditional shape into a beautiful jewelry design, have a beautiful piece of jewelry that is then packaged and branded, and have a brand that you can further market [to] create desire.”
Main Image: Vrai synthetic-diamond engagement ring. (Vrai)
This article is from the October-November 2024 issue of Rapaport Magazine. View other articles here.
Stay up to date by signing up for our diamond and jewelry industry news and analysis.