Synthetic diamonds and generation Z’s new way to consume.

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What effect will this have on prices in the Tiffany stores? Our opinion.

Market history is being made before our very eyes – we can observe the grown diamonds’ “ascension into the limelight”. They have the same chemical makeup, physical and optical properties. For many technical and high-tech purposes, synthetic diamonds have practically replaced natural ones. Today it is practically impossible to distinguish them from their authentic counterparts without extensive lab work. The pricing, however, is far lower comparatively.

To promote such a product researchers use mercilessly aggressive methods. Patrons of artificially created diamonds weaponized a popular trend and adopted the name “eco-diamonds”, drawing public ire to naturally mined gemstones. Although such a campaign can full well turn against them. Consider that the cost of lab-grown diamonds depends on the price of real ones. To kill that market, therefore, is inadvisable. If demand for the natural product falls, it inevitably will for the artificial counterpart. The best positioning strategy for the future of lab-grown diamonds is coexistence.

It’s naive to assume that the interest in “new” diamonds will wane. The market segment they occupy will only grow. If we were to compile the data from Bain & Company, Morgan Stanley, Frost & Sullivan, then by 2025 the number of artificial diamonds on the market will grow by 20%, and in the cut of about 17%. And that’s just the beginning.

Before the year 2000 De Beers invested up to $200 per year to advance diamonds as a product category. Their efforts were not in vain: while the necessity to gift diamonds made them an unavoidable purchase to many, but the younger generation sees things differently.

Millennials don’t like their jewelry the same way the older generations did. The younger crowd is often eager to embrace minimalism – a Smartwatch suffices just fine as an engagement ring.

Because of this, the entire industry faces a problem promoting jewelry as an interesting and sophisticated good among both millennials and their children.

Russia’s contribution to worldwide diamond-studded jewelry is less than 1%. After the devaluation of the Ruble in 2014, prices fell due to all rocks and precious metals being counted in US dollars. Therefore, the demand for non-essential goods faded in light of more essential purchases. The Russian jewelry market still hasn’t fully recovered from such changes.

The diamond market is feverish with surplus, political turmoil, economic crises and external pressure from artificially grown rivals. The market still heavily depends on sales figures from the pre-festive period.

Traders hold out hope that demand will grow and the surplus will lower to some semblance of equilibrium. In all, the diamond market is undergoing a severe crisis.

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