Is the bridal market experiencing an earthquake?
Although that is clearly something an exaggeration, the fact remains that changes brought about by the lab-grown diamond (LGD) revolution together with extraordinary societal changes in the West over the past 30 years have made the once stable bridal market a much more complex landscape to navigate.
Advertising copywriter Frances Gerety came up with “A Diamond Is Forever” in 1947, and this stroke of marketing copy genius held sway for two generations at least. In brief, a diamond engagement and wedding ring were accepted as the basis for an engagement and marriage – along with the idea that the young man would devote several months’ salary to the purchase of the ring.
So what happened…?
The rise of lab-grown diamonds
Call them LGDs, man-made diamonds, synthetics or factory-made diamonds, but there is no doubt their popularity has skyrocketed over the past decade.
They have been taking an increasingly large part of the market from natural diamonds since around the middle of the last decade. Hundreds of millions of dollars have been invested in production facilities and marketing copy to back up LGDs. At the time of writing (the end of 2024), LGDs are expected to continue to attract buyers for the next few years.
Most of the production is taking part in India and China, but for the purpose of this article, we need to look at where most sales are taking place.
It’s no surprise that the major global market – as it is for diamonds more generally and jewelry in particular – is the United States.
Jewelry-analytics firm Tenoris data indicates that in the US, synthetics accounted for 44% of engagement-ring sales by volume in the January-July period. Even more startling is the by value figure which the data firm stands at 25%, compared with just 7.5% only four years ago.
The main reason for the popularity of bridal rings set with LGDs is what buyers – particularly younger buyers – see as a value for money factor. Gen Z and Millennials and continue to buy 2- and 3-carat synthetic center stones in particular. Those sizes of stones tend to be too expensive in the natural stone market a factor of approximately double.
In addition, younger buyers are attracted by the claimed advantages of LGDs: sustainability and low environmental and human-rights impacts. LGD manufacturers and sellers have launched aggressive marketing campaigns to underline these factors.
Simultaneously they have pointed to natural diamonds as suffering from being mined to the disadvantage of the environment.
Are LGDs losing their shine?
Although LGD sales remain solid, that is a very strong case for their demise. Prices have been falling quickly, especially in the wholesale sector where prices are being recorded as low as $99 a carat. Ironically, LGDs are a victim of their own success. Given the ability to manufacture them quickly and easily, they have somewhat flooded the market. As a result prices are on a continuous decline.
Although they continue to dominate the US bridal, continuously falling prices will inevitably lead many buyers to question their value.
For now, jewelry retailers are happy to continue selling LGDs due to the high profit margins. In some cases, they are hurrying to offload stocks before margins begin to tumble.
Are retailers being honest with consumers about the value of the LGDs they are buying? It’s reasonable to assume that some are not, although many say they are simply happy to offer consumers a choice between synthetics and natural stones.
Other retailers are quite blunt in dismissing LGDs – especially for the bridal market, saying there is no place for factory-made diamonds in the windows of high-end jewelers.
Societal changes slashing marriage numbers
In many ways, the diamond industry should be less worried about the impact of lab grown diamonds and more so with that of the drastic changes taking place in society. In particular, this relates to the huge decline in the number of marriages taking place. Large numbers of young couples refuse to see an official marriage ceremony, together with a diamond ring as part of it, as an essential element of today's lifestyle.
As relationships, living arrangements and family life continue to evolve for American adults, a rising share are not living with a romantic partner. A new Pew Research Center analysis of census data finds that in 2019, roughly four-in-ten adults ages 25 to 54 (38%) were unpartnered – that is, neither married nor living with a partner.1 This share is up sharply from 29% in 1990.2 Men are now more likely than women to be unpartnered, which wasn’t the case 30 years ago.
The growth in the single population is driven mainly by the decline in marriage among adults who are at prime working age. At the same time, there has been a rise in the share who are cohabiting, but it hasn’t been enough to offset the drop in marriage – hence the overall decline in partnership. While the unpartnered population includes some adults who were previously married (those who are separated, divorced or widowed), all of the growth in the unpartnered population since 1990 has come from a rise in the number who have never been married.
These changes relate not just the United States but also to other hugely important markets including Western Europe and China. Marriage is seen as somewhat outdated. Having children is regarded as an expensive business and house prices are seen as beyond the ability of young couples to achieve. And the result is declining marriage rates and a bid to save money.
The number of US weddings jumped to a 25-year high in 2022 following the COVID-19 pandemic and the isolation and loneliness that it caused along with the postponement of weddings. Now, however, nearly 17% fewer weddings are expected, according to The Wedding Report. The halcyon days of insatiable wedding demand are unlikely to return anytime soon, he added.
Final words…
There’s no real growth in the wedding industry as more people live together rather than getting married. The result is a flat market at best – and a long-time decline at worst.
As always for the diamond industry, it’s a matter of creating demand and finding new ways to appeal.
In this respect, the recent industry discussion about creating a $100 million global diamond promotion campaign becomes even more critical. We will wait to see the results of this much-needed initiative.
Abraham Dayan for Rough&Polished from Tel Aviv
