Lab-Grown Diamonds – Transforming the Global Diamond Landscape

Lab-grown diamonds (LGDs) are rapidly transforming the global diamond industry, offering a sustainable, affordable, and scalable alternative to mined stones. Driven by technological advances and changing consumer values, LGDs now account for 20% of the market by value and are projected to reach up to 50% by 2030, redefining luxury and challenging traditional diamond giants.

The global diamond industry is undergoing a significant transformation, driven by the rapid ascent of lab-grown diamonds (LGDs). Once considered a niche innovation, LGDs have evolved into a mainstream alternative, challenging traditional norms around sourcing, pricing, and consumer preferences.

Positioned at the intersection of affordability, sustainability, and scalability, LGDs are redefining how diamonds are produced, marketed, and consumed. The global LGD market has witnessed strong growth in recent years, driven by rising consumer demand and broader adoption across key regions. In terms of volume, the market grew significantly from 1.4 million carats in 2018 to an estimated 16 million carats in 2024, representing a 2018-2024 CAGR of approximately 50%. In value terms, the market grew from approximately US$24.0 billion in 2022 to an estimated US$28.3 billion in 2024. Looking ahead, it is expected to reach US$59.2 billion by 2032f, reflecting a CAGR of 9.6% over 2024–2032f.

LGDs are physically, chemically, and optically identical to naturally mined diamonds but are created in controlled laboratory environments. Lab-grown diamonds are produced via two main processes: High Pressure High Temperature (HPHT) and Chemical Vapor Deposition (CVD). HPHT mimics natural conditions and is widely used for industrial-grade and larger stones while CVD offers greater control, scalability, and energy efficiency, making it the go-to method for jewelry-grade diamonds. 

China and India: Powerhouses behind the sparkle

LGD production is dominated by China and India who together account for the bulk of the global output. China leads with ~70–75% of global production, primarily via the HPHT method. India contributes ~15%, using the CVD technique, which offers better control over purity and color. With these two nations leading in technology and scale, today’s LGDs often rival or exceed natural diamonds in clarity, cut, and color, making them nearly indistinguishable to the naked eye.

What is driving demand?

The demand for lab-grown diamonds is rising, driven by growing affordability, sustainability, and shifting preferences among younger consumers. The United States remains the undisputed leader, accounting for approximately 75–80% of global LGD jewelry demand, with half of all loose diamonds sold now lab-grown. Technological advances in production have lowered the cost of lab-grown diamonds, making them ~30–40% cheaper than their natural counterparts.

Beyond affordability, lab-grown diamonds are more sustainable, using up to 85% less water and generating far less mineral waste than mined diamonds. These benefits resonate strongly with Gen Z and Millennials, 72% and 52% of whom, respectively, now prefer LGDs. Customization options enabled by HPHT and CVD techniques further fuel consumer interest. According to The Knot, 46% of engagement stones in 2023 were lab-grown, up from 12% in 2019.

LGDs are also gradually entering the luxury accessories space, particularly watches. Brands like TAG Heuer and Breitling have released models featuring lab-grown diamonds. While this incorporation is still niche, it signals a shift toward sustainable luxury materials.

From Premium to Affordable: The LGD price shift 

Given the significant rise in production levels over the past few years, the lab-grown diamond industry has been facing a classic oversupply situation. Led by China and India, production has increased rapidly, but demand growth has not kept pace, particularly in the post-pandemic environment. This imbalance has led to a steep decline in wholesale prices, with 1 to 2-carat lab-grown diamonds witnessing price drops of 30-40% in recent years (more than 60% since 2016). Initially positioned just below natural diamonds in pricing, LGDs have now moved decisively into the low-cost segment, prompting intense price competition and margin pressure across the value chain. 

The sustained decline in LGD prices has also dragged down natural diamond prices, impacting the profitability of the industry. Even De Beers, once the industry’s price-setter, is struggling to maintain control. In late 2024, it slashed prices by 10–15% due to rising LGD competition and weak natural diamond demand. Its traditional pricing power, built on controlled supply, has eroded due to the decentralized and fast-growing LGD ecosystem, especially in China and India. With hundreds of growers in play, artificial scarcity is no longer viable, making it harder for legacy players to sustain premium pricing. While De Beers believes the worst is over, synthetic diamond prices may continue to fall, drawing more consumers in.

Traditional giants rethink their strategies

The shifting demand landscape has prompted mixed reactions from traditional diamond giants. Some, like Pandora, have successfully embraced lab-grown diamonds, positioning them as sustainable, affordable alternatives and reporting strong segment growth. Others, like De Beers, are retreating from space. De Beers launched its Lightbox brand in 2018 to tap into the affordable LGD jewelry segment. However, faced with steep price declines and mounting losses, the company recently decided to shut down Lightbox, citing unsustainable economics and a renewed strategic focus on natural diamonds.

These shifts highlight the growing complexity of the diamond market, where traditional players are struggling with the disruption brought by LGDs.

Are LGDs a smart bet? 

As lab-grown diamonds gain consumer traction and reshape market dynamics, a key question emerges for investors: Are LGD manufacturers positioned for long-term growth? While traditional diamond giants like De Beers and Alrosa still dominate in scale, recent financial trends suggest that newer players focused on LGDs are capturing disproportionate growth, albeit from a smaller base. The chart below compares revenue trends of two LGD-focused companies (Pandora’s LGD segment and Goldiam International) with two legacy natural diamond miners (De Beers and Alrosa).

With respect to margins, while disclosures are limited, available data highlights contrasting profitability trajectories. Goldiam reported strong EBITDA margins of ~25% in 9M24, while De Beers’ margins fell from 21.4% in 2022 to (0.8)% in 2024, hit by price drops, inventory build-ups, and write-downs. On the production front, De Beers’ natural diamond output declined from 34.6 million carats in 2022 to 24.7 million in 2024. Despite a brief recovery in 2022, the continued decline reflects weak demand and rising pressure from LGDs. The company also cut its 2025 production estimate to 20–23 million carats (from 30–33 million earlier) amid ongoing weakness in the rough diamond market.

These anticipated production cuts, alongside falling revenues and negative margins, point to a structurally challenged natural diamond industry, signaling a cautious outlook for traditional players. For asset managers, the message is clear: While legacy players struggle to protect profitability, LGD-focused firms are capturing consumer momentum and operational tailwinds, making them a compelling, albeit selective, bet in a shifting landscape.

Not a full disruption, but a definite redefinition

While LGDs have established themselves as a disruptive force in the diamond industry, they still represent a minority by value share in the diamond market. As of 2024, LGDs accounted for ~20% of the diamond market by value. However, with falling LGD prices and the increasing cost of mined diamonds driven by sanctions and other factors, substitution is expected to accelerate. Recent industry insights suggest LGDs could account for 40–50% of jewelry demand by value by the end of the decade if the current trend continues.

While unlikely to fully displace natural diamonds in the short term, LGDs are rapidly redefining the lower and mid-tier jewelry space, while competing more meaningfully in the luxury segment. The narrative is no longer just “natural vs. synthetic” but “choice vs. tradition.” As technology advances, energy sources get cleaner, and consumer values shift, lab-grown diamonds are well-positioned to become the default diamond of the next generation, provided the industry navigates environmental and market challenges effectively. Change in the diamond industry may not be fast or simple, but it is undeniably underway.