In an interview with Rough & Polished, Edahn Golan, founder of Edahn Golan Diamond Research and Data, sheds light on the ongoing decline in lab-grown diamond (LGD) prices.
According to Golan, wholesale prices for lab-created diamonds, particularly in the 1 to 1.4-carat and 2 to 2.99-carat categories, saw significant drops of 60% and 65% respectively in 2023. Comparatively, 1-carat lab-grown diamonds are priced approximately 76% lower than their natural counterparts, while 2-carat pieces are 86% lower.
Golan predicts this downward trend will continue, especially impacting retail and mid-stream markets. He suggests that this decline is likely to persist until the gross margin of retailers reaches a range of 35 to 40%.
According to Golan, several factors contribute to the decline in loose LGD prices. Primarily, LGDs are marketed as a more affordable alternative, prompting consumers to demand lower prices. Second, high profit margins allow retailers to offer discounts. Finally, oversupply in the market is also a contributing factor to the price reduction.
Golan says that, despite declining prices, the demand for lab-grown diamonds is still increasing in terms of unit sales, although at a slower pace. However, the challenge lies in ensuring that demand continues to outpace the price declines. Retailers are beginning to witness a decline in their overall diamond revenue fromLGDs, which means they have to reconsider strategies in response to this shift in the market.
Lab-grown diamonds are particularly popular among young consumers, says Golan, with the largest market segment being 25-year-old Americans. Additionally, the US dominates both the manufacturing and consumption of lab-grown diamonds, accounting for approximately 85% of global demand.
Read the full interview here.
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