The diamond market has been upended by the lab-grown craze. Some fear it may never recover.
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- The diamond market has been upended by the boom in lab-grown stones.
- Diamond prices have been on a steady decline, falling to record-low levels this year.
- Some analysts say the market may be permanently changed as consumer preferences split.
Diamonds are losing their sparkle, and the lab-grown boom looks to be the chief culprit, source says. What's more, the upheaval might be permanent.
Lab-grown diamonds — which are virtually indistinguishable from natural stones and are sold at a fraction of the price — had a paralyzing effect on the natural diamond market when they saw an unprecedented boom during the pandemic. Natural diamond sales tumbled — a decline that many analysts wrote off, figuring that man-made stones were a passing fad and that a recovery was coming.
But what has actually transpired is a downturn jewelers say is unlike anything they have seen before, with the lab-grown craze seemingly splitting the natural diamond market in two halves: one made up of cheaper flawed stones, and another half comprising a narrow band of large or unique gems that can still command a premium.
No one is certain how it will shake out, but the latest changes could represent a new secular chapter for diamonds, analysts told Business Insider, pointing to the myriad of reasons that could prevent demand for natural stones from rising much further.
The industry has already gotten a glimpse of what a new reality could look like. The Diamond Standard Index, which tracks the price of investment-grade diamonds, cratered to its lowest-ever level this spring, with prices down 68% from their peak in 2011.
The preference for man-made diamonds over natural stones, meanwhile, has inceased. Global demand for natural diamond jewelry was flat in 2025, a stabilization that followed three straight years of decline, according to data from the diamond miner De Beers.
By comparison, unit sales of lab-grown diamonds between 1.05 and 1.09 carats grew 3% year-over-year in 2025, according to data from Tenoris, a diamond and jewelry analytics firm.
Dan Mano, the CEO of diamond analytics firm Rapaport, said select groups of diamonds have remained more resilient than others amid the downturn. Large natural diamonds are seeing the best performance, as they're able to hold up against "competitive pressure" from lab-grown pieces, he said.
Natural diamonds weighing between 2.5 and 2.74 carats were the fastest-growing category last year, with sales rising 19%, according to Tenoris. Large diamonds are generally considered to weigh 2 carats or above.
Sales of diamonds 1.99 carats and below, by comparison, generally contracted last year.
"The diamond market is increasingly bifurcated," Mano said. "The broader picture remains challenging and continues to vary significantly by category."
Edahn Golan, a diamond analyst and a managing partner at Tenoris, also said it looked like the natural diamond market was splitting.
Besides large stones, some smaller or low-color diamonds have also broken away from the broader decline, Golan said. He pointed to the popularity of brown diamonds, which are often marketed as imperfect, distinctive gems that stand out.
Unit sales for half-carat brown diamonds rose around 200% year-over-year in May, Golan said, citing Tenoris data.
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"They don't call it brown. They give it all sorts of very cute marketing names," Golan said, pointing to terms like "champagne," "cognac," and "chocolate" diamonds, as ways of describing off-color stones to pique consumers' interest.
Elongated diamonds — such as those in an oval or marquise shape — are another rare resilient category in the natural diamond market, Paul Zimnisky, another diamond analyst, told Business Insider. He estimated that diamonds in these shapes had seen around a 25% increase in price over the last several years.
"These are diamonds that tend to sell for well in excess of $10,000, so there is definitely a sort of K-shaped recovery happening," Zimnisky said.
'The industry has been hit on all fronts'
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The devastation wreaked by lab-grown stones largely stems from how man-made diamonds have taken over a critical entry point in them market: middle-class consumers shopping for engagement and wedding rings, Golan said.
Lab-grown stones now look to be at peak popularity with newlyweds, many of whom are attracted to the ethical advantage of lab-grown diamonds and looking for ways to trim costs.
Lab-grown stones made up 61% of engagement ring purchases last year, a 239% increase compared to levels in 2020, according to a survey conducted by the wedding planning platform The Knot.
85% of those surveyed, meanwhile, said the state of the economy had impacted their wedding planning decisions.
"It hurts the diamond industry in the most painful category," Golan said.
It explains why large natural diamonds have been the most resilient category, as consumers who can easily afford them have continued to purchase them, Golan added.
The boom in lab-grown stones has also coincided with a number of headwinds that have battered the natural diamond market. China, one of the world's largest diamond markets, saw its personal luxury goods market contract as much as 5% last year, according to an estimate from the consultancy Bain & Company.
Marriage rates are also declining around the world. Around 47% of US households were made up of married couples last year, down from 66% of households half a century ago, according to Census data.
Lab-grown stones have done a lot of work "devaluing" people's perception of the value of a diamond, Zimnisky said. "The industry has been hit on all fronts."
Zimnisky said there could be a recovery coming for natural diamonds, though he's not certain of the timeline. Lab-grown rings are simply becoming too ubiquitous, he said, referring to how many people usually assume a large, high-quality diamond is manmade nowadays.
"People are starting to want the real thing again," he said.
Other forecasters are less certain of when or if a rebound will come.
Joshua Freedman, a senior diamond analyst at Rapaport, said the decline in natural diamonds has so far looked like a secular change in the market.
"I think people have come to the conclusion that it's not just a cyclical downturn. It's a more fundamental crisis going on in the diamond industry," Freedman said.
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