After suffering a 33% price-drop from their 2022 all-time-high, natural diamonds are in a bit of a funk. Their lab-grown counterparts, however, and the businesses that sell them, are experiencing high demand.
It’s about 2016 and Jordan Cullen is looking to propose to his then-girlfriend, but he’s fresh out of university and the kind of ring she wants is not the kind he can afford. He needs an alternative.
“Moissanite is something I was interested in, and I found a supplier overseas because it was difficult to find in Australia at the time,” he says. “Then we quickly discovered lab-grown diamonds were also a good alternative, and the price was coming down a fair bit making them a lot more affordable.”
Cullen was working with an Australian jeweller to craft a ring for his now-wife, when the business management grad had an idea: “I asked him, if I can market some [moissanite and lab-grown diamond] engagement rings, will you make them for me?” And that was the genesis of Cullen Jewellery, a now six-year-old lab-grown diamond jeweller based in Melbourne, with shopfronts also in Sydney, Brisbane and Perth – and soon, Adelaide.
Lab-grown diamonds have the same physical, chemical and optical characteristics as natural diamonds, and are graded the same way (according to the four Cs of cut, clarity, carat and colour). Instead of being mined from the earth, they are developed by scientists who replicate the same conditions needed to form a diamond in a lab setting.
Cullen says the main draw-card of a lab-grown diamond is its significant price difference.
“A mined diamond is exponentially more expensive as it gets larger and clearer, because they are rarer,” he says. “For a 1.5 carat lab-grown diamond, you may be looking at $2,500 for a really good stone. For a mined alternative, you could be looking between $20,000 and $25,000 for a stone of the same quality. If we jump to three carats, a lab-grown may increase to about $5,000 or $6,000, and a mined stone would be worth several hundred thousand.”
The company has also seen success among customers who are looking for an ethical alternative to mined diamonds. And interest is growing: in the 2023 calendar year, the company says it saw revenue growth of 400% year-on-year, and current year-on-year revenue growth is 60%.
That’s in line with the growth in the wider lab-grown diamond market, which is projected to be worth US$59.2 billion (AU$90 billion) by 2032, growing at a compound annual growth rate of 9.6%, according to Allied Market Research. Statista research suggests the market volume is expected to reach about 19.2 million carats by 2030, up from 7.5 million in 2021.
This growth is threatening the success of the natural diamond market, which peaked in 2022. In June that year, diamond miner De Beers was charging about US$1,400 per carat for select diamonds. Now, the diamond market is down roughly 33% from its all-time-high, according to the Ziminsky Global Rough Diamond Price Index.
“The diamond market remains weak after a torrid couple of years post the 2022 market peak,” Emanuel Datt, CIO at Datt Capital, says.
“Broadly, lower-specification diamond categories and cuts have suffered the most with only larger, investment grade diamond specifications holding firmer. This reflects a flight to quality in a weak market overall, and reflects the consumer shift away from natural diamonds.”
And Datt says capital markets are noticing a broader shift in consumer preferences towards more affordable, lab-grown diamonds.
“It’s an uphill battle when lab-growns have both ethics and price going for them. That’s always going to be difficult to compete with.”
Jordan Cullen, founder, Cullen Jewellery
“This is evidenced by the disproportionate price drop in consumer grade diamond categories. Diamond demand can be volatile depending on consumer sentiment and economic conditions; both which have been consistently negative since 2022,” he says.
And De Beers is feeling the pinch. In its 2024 update, De Beers said it had sold US$380 million worth of rough diamonds in its fourth sales cycle, compared to US$446 million worth during the previous cycle. It also lowered its production guidance for the 2024 full-year to between 26-and-29-million carats,…
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