When it comes to the diamond industry be it lab grown diamonds or natural diamonds, the dynamics of the industry from a commodity perspective is quite different. Unlike other commodities and asset classes, the final step within the sphere of the diamond commodity chain is the retail component. The retail component has been established as the point of transaction where the diamonds actually move into the hands of the consumers.
Different retailers purchase natural diamonds differently depending on their business model and their business contacts and as for lab grown diamonds or synthetic diamonds the purchase is either from sorting centres or diamond wholesalers or brokers who in turn obtain diamonds from miners directly or other second parties or agents. Over the last century, ever since De Beers came up with the “A Diamond is Forever” campaign the industry has grown exponentially and is currently estimated to be worth more than 70 billion dollars (the US accounts for 50 % of the entire market).
From a general economic perspective diamond transactions are positively correlated with the economy of a country whereby when the economy is healthy people possess greater disposable income which is used to purchase jewellery and when the economy is sluggish, luxury goods such as diamonds are the first to suffer setbacks.
However, quite recently, the diamond industry suffered a major setback due to the rise in popularity of synthetic diamonds or lab grown diamonds which share the same chemical properties, but come at a much lower cost compared to naturally mined diamonds.
The rise in popularity of lab grown diamonds is attributed to much more than lower cost according to industry analysts who also cite trend, wider range of choices and sustainability elements as the primary drivers that have gradually taken up almost 18 % of market share within the last five years.
Another significant sphere within the diamond market is the diamond engagement ring component of the market that has been established as a tradition across different cultures across the globe. Diamond rings, especially engagement rings have had a positive impact on the diamond retail industry which gained momentum when Marilyn Monroe uttered the words “Diamonds are a girl’s best friend” in the movie Gentlemen Prefer Blondes released in 1953.
Coupled with the previous De Beers ’a diamond is forever’ marketing campaign diamond engagement rings have been entrenched into the very fabric of social ideology and is accepted as a part of a marriage’s initial process.
The arrival of lab grown diamonds into the scene was initially thought to be insignificant, until the new generation of consumers realised the fact that these synthetic diamonds are as good as the mined diamonds, and sometimes even better – minus the negative issues that come along with natural diamonds at a fraction of the price.
The trend of having ‘big rocks’ (2 or 3 carats) on engagement rings have become a trend as with synthetic diamonds, a 2 or 3 carat diamond becomes affordable to the largest consumer segment on the planet – the middle class!
