'The Diamond Industry Is In Trouble'

If recent trends are any indication, natural diamonds are losing their sparkle with consumers. CNBC News takes a look at a downturn in the biz that seems existential now that one of the most recognizable names in the industry, De Beers, is losing its parent company. Anglo American plans to divest its De Beers subsidiary and shift toward commodities that support green infrastructure, such as copper. Diamond prices have dropped 5.7% this year and are down 30% from a 2022 peak. "Last year was a much tougher period for the industry as economic challenges, a post-Covid lull in engagements, and a growth in supply of lab-grown diamonds all affected demand conditions," Anglo American's Marcelo Esquivel tells CNBC.

Elaborating on those factors: Industry experts say that once pandemic travel restrictions were lifted, money spent on diamonds diverted toward vacations. Fewer marriages, particularly among Gen Z, also is creating less demand for wedding rings, notes Fortune. Falling interest in natural diamonds in the crucial market of China hurts as well. But the biggest threat of all to the industry comes from a surge in popularity of lab-grown diamonds, which can be 85% cheaper than mined ones. Ankur Daga of seller Angara says lab-grown gems are the "core issue" in the industry and predicts prices may drop another 15 to 20% this year. "The diamond industry is in trouble," he says.

He notes, for example, that half of engagement rings will encase lab-grown diamonds this year, a huge shift from 2018, when they made up only 2% of such sales. But some are doubling down on mined diamonds. Per Glossy, online brand the Clear Cut is joining De Beers in exclusively selling natural diamonds—and to sweeten the pot, they are including a lab-grown diamond with some purchases for wearers to switch out while traveling. Insiders say it's high time for sellers to start wooing the public again. "The industry has not done large-scale category marketing for almost 20 years," says Anish Aggarwal of Gemdax. Kyle Simon, CEO of the Clear Cut, agrees: "Storytelling around the origin of a natural diamond is going to be a really big thing." (More diamonds stories.)