A diamond is forever. Even lab-grown diamonds?

DeBeers completely revolutionized the Diamond industry through arguably one of the best marketing campaigns of all time….A Diamond is Forever. The famous line, coined by a young copywriter, Miss Frances Gerety in 1947, hit home at a subliminal level, creating a desire that enraptures with its magic and its promise.

By creating a parallel between a diamond and love, the words diamonds are forever made diamonds a symbol of love. Indestructible love to be symbolized through an indestructible stone. A love as rare and precious as the stone, that takes millions and often billions of years, at depths of over 120 kms, through intense heat of between 900 -1300 C , pressures of over 45 k bar for the incredible miracle to happen – carbon to crystallize to form diamonds.

By romanticizing the diamond with a narrative of its eternal emotional value, what was considered a luxury reserved only for the super wealthy and royalty until then, the DeBeers campaign changed by convincing young men promising a woman everlasting love to seal the deal with a sparkling diamond. And where its estimated only 10% of brides in the US were receiving diamond rings prior to the campaign the number skyrocketed to 80% in the next decade, laying the foundation for an estimated ~95 billion dollar annual industry, which DeBeers has dominated for more than 80 years.

Diamond prices, soaring highs to plummeting lows
Today, the diamond industry is going through its biggest crisis with prices experiencing quite a roller coaster, infact more of a nose dive at 40 % lower from their previous high. The speed and severity of this plunge has caught everyone by surprise.


Source: Bloomberg, Diamond Standard Ltd. | Currency: USD | Unit: USD/Coins

Why are diamonds losing their luster?
The diamond industry was one of the biggest winners during the COVID19 pandemic as diamonds witnessed a surge in prices. People had money – from capital markets, Bitcoin gains, economic stimulus money that stuck at home shoppers were eager to splurge on expensive diamond jewelry and luxury goods as everything else was off the table. Post the pandemic, however, as the world opened up and experiential spending on travel and dining came back, the demand for diamonds cooled off leaving many traders caught by surprise with too much stock purchased at much higher prices.
With the global economy downturn and slowdown, what started as a small correction post pandemic demand has turned into a full scale free fall. The US economy, one of the largest markets for diamonds has been wobbling under high inflationary pressures and high interest rates; China a key growth market is reeling under its own crises and the general slowdown across developed markets has made everything more expensive leading to a substantial fall for demand in diamonds.


The industry’s response has been to choke off the supply in the most unprecedented way.

To understand how this Industry works we have to go back to history. Diamonds were rare stones, until the late 19th century when huge diamond mines were discovered in South Africa. The British financiers behind the South African mines realized that the diamond market would be saturated unless they don’t control the pricing as well as the supply and demand of the precious stone. De Beers Consolidated Mines Ltd was created in 1888, to take full control and ownership of the world diamond trade by monopolizing diamond prices and controlling the supply side while building the demand.

On the supply side, there has been a controlled process on how much to supply, who to sell to and at what price. Handpicked buyers, called sight holders are invited and have to buy the allocations or face penalties in the future. DeBeers controlled the world’s supply of rough diamonds for many decades, until their rival the Russian miner ALROSA made its way to 30% of the world’s roughage.

The demand side story of how Diamonds became forever is fascinating, De Beers chose N.W Ayer an ad agency, based on their pitch to strategically change social attitudes about diamonds to appeal to a much wider audience. At that time women wanted their men to spend money on a washing machine, television, car and diamonds were considered money down the drain. The agency set an ambitious goal ‘to create a situation where almost every person pledging marriage feels compelled to acquire a diamond ring’ The foundation of the Industry was a simple idea – the eternal emotional value surrounding the diamond.

The rest as they say is history!

The Industry’s response to the plunge in prices has been to choke off the supply in the most unprecedented way.

DeBeers not only cut prices aggressively this year, but has allowed its buyers to refuse all purchases without any impact on future allocations. Alrosa, the Russian miner beseeched by western sanctions had stopped selling diamonds for many months this year, and the Indian diamond sector that accounts for 90% of global diamond cut and polish, has halted imports entirely for a few months.

The Game Changer
The jury is still out on whether these drastic measures taken to curtail the supply of diamonds will work. That’s because of potential structural changes, the elephant in the room – Lab grown diamonds. They are diamonds, not fake diamonds or artificial stones, chemically and optically they are the same as natural diamonds.

It took me some time to wrap my head around ‘lab grown diamonds are diamonds’. Marketing campaigns like diamonds are a girl’s best friend, a diamond is forever are made for people like me. We have completely bought into the narrative and find it difficult to give that up, as many cherished moments and future hopes are linked intricately with that.

To mark a special occasion, I had thought to buy myself a rock, the 4 Cs had been shortlisted, designer had been chosen, but the noise around lab grown couldn’t be ignored by my head that wears the financial hat. I thought to myself, a trip to the Diamond Bourse in BKC to hear from the horse’s mouth on what the fuss about lab grown is all about is called for. Surely it’s a fad. I met one of the world’s largest diamond manufacturers and he patiently took me through the industry trends, the players, the international intrigue and the challenges that the Industry is looking at.

And girls, bad news – a lab grown diamond is a diamond. Every time I said ‘but a real diamond’ I was abruptly cut off to, ‘no, this is a real diamond’ – the human eye cannot spot any difference between a natural and a lab grown, they are chemically the same, lab grown won’t fade over time, they shine as bright. They are an existential tech disruption; what nature took millions of years to create, a ‘reactor’ is now able to do in a matter of weeks, and without the environmental impact that the diamond industry has been notorious for.

As a growing number of consumers choose lab grown diamonds and a growing number of leading jewelers start using lab grown, the question is whether the plunging demand for natural diamonds is a permanent and structural shift. The numbers are suggesting that it is, until 5 years ago LGD were priced about 20% below natural diamonds, the prices have crashed to 80 – 90 % below natural.

The diamond industry is prepping to fight this trend with DeBeers allocating a 20 million dollar marketing budget for the survival of natural diamonds. Good things take time, the best a billion years; Natures Mic Drop; Artist credit – Mother Nature are some of the new slogans. Will it work?


I have recently been prone to asking the ladies who wear diamonds on their view on lab growns. The response I generally get is ‘we only buy natural, but yes, I’m hearing many people in my circle are buying lab grown’. They go to pains to justify that natural diamonds are also an investment and a store of value. Girls, bad news again, diamonds have not shown any uptick in the long run, especially when you compare it to the favorite glittering metal of most Indians.


Source: Bloomberg | Data as on 22nd Nov 2023

I’m not an expert on diamonds, I write this as someone who has loved diamonds (and these are my own thoughts) and felt joy when they have been gifted and can stare at them and feel their sparkle brighten life. Somehow, the DeBeers campaigns have evoked an emotional connect to this stone for us. Amongst the many memories, one of the most endearing exchanges between my parents that I always smile about when I remember, was when my dad to celebrate an occasion asked my mom what he can get her, and she replied ‘something sparkling’.

I believe having wealth means you have to responsibly invest it, but equally enjoy it by spending it on the finer things in life. I’ve never purchased a fake or a replica designer bag, shoes, jewelry, watch or anything, simply because it’s not the same as the original and that will show up in time. But if a lab grown diamond is a diamond, then it’s tough to buy into the advertising narrative anymore. The diamond industry will leave no stone unturned as they spend millions of dollars on emotional marketing and control demand and supply. But the less expensive, conflict free, socially responsible and environmental friendly lab grown will appeal to many, especially the younger Gen Z. At the same time, the most critical aspects of luxury is rarity and exclusivity, as well as in-accessibility, and somehow producing diamonds of any color, clarity, cut and carat on tap in a lab does not evoke the same emotions.

Love as many would say today, does not last forever. Will a diamond be forever?
Diamonds are forever, sparkling around my little finger, unlike men the diamonds linger.
I don’t need love, for what good will love do me? Diamonds never lie to me,
For when loves gone, they’ll luster on, Diamonds are forever, forever, forever.

(Title track of the James Bond Movie, Diamonds are Forever)

(The author, Amrita Farmahan, is CEO, Ambit Global Private Client)

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