The protracted decline of the diamond market is due to a host of factors. Most of these factors were outlined in press releases by De Beers and other diamond miners, dating back to the second half of 2023 and early 2024, and had been repeated regularly ever since with an addition of current events such as the war in the Middle East. But another fundamental factor that remained unaddressed has also brought the market to its current state.
For a number of reasons, both external (the depletion of rich diamond deposits and the rapid development of a diamond cutting and polishing sector in India) and internal (unusual De Beers’ behavior on the market, only partly explained by Anglo American’s problems), the industry’s focus has shifted from a high-end segment of diamonds to a more affordable one. Intensive sales of low-end polished diamonds and the lack of generic marketing resulted in losing the uniqueness and status by polished diamonds in the eyes of a key consumer group, stated Martin Rapaport, a market guru, during a panel session at JCK 2026.
To regain the former status, a return to basics, in the literal sense of the phrase, is necessary, through implementing what Rapaport succinctly expressed using a formula “fewer better diamonds for fewer better customers”, that is, abandoning the pursuit of high sales by volume in favor of exclusivity, superior quality, and serving a select group of wealthy clients.
This, at the very least, interesting formula is far from implementation. The key news for the diamond industry - De Beers’ abandonment of its rough diamond pricing policy and the price reduction for the entire polished diamond range to the price levels in the secondary market - seems like an element of value destruction rather than an attempt to initiate a recovery process.
Democratization of the diamond industry
The current decline in polished diamond prices differs from the situations in 2008-2009 and 2020, when all asset classes suffered during full-scale financial and economic crises. However, we are now witnessing a decline amid the growing prices for other assets: from January 2023 to May 2026, the RAPI index for a 1-carat diamond plummeted by a total of 48%, while gold prices soared by 163%, and the S&P by 88%.
Decline in key diamond trade indicators from 2023 to 2025:
Source: Rapaport’s presentation at the JCK 2026 Rapaport Breakfast.
But the odd thing about it is that polished diamond sales volumes are declining alongside their falling prices. It is this indicator that is most telling, according to the founder of the Rapaport Group.
Net polished diamond imports into the USA slumped by 79% from 2016 to 2025:
The simultaneous decline in prices and volumes is contrary to the laws of economics. “You’ve been taught your whole life, lower the price and you’ll get rid of goods. We lowered the price, and fewer people want to buy the goods. Can we understand why that’s happening?” Rapaport asked.
The fact is that polished diamonds, at their core, were and remain Veblen goods, he states. Veblen goods are a type of luxury goods with their popularity increasing with their price, which seemingly contradicts the normal laws of demand. They are named after Thorstein Veblen, an American economist and sociologist, who described this contradiction.
Typical Veblen goods are Rolex watches, the price and demand for certain Rolex brands rise simultaneously when Rolex creates artificial scarcity. A more common example is the demand for gold in 2025-2026, when increasingly more people - seized with FOMO (fear of missing out) - began to consider buying it as the precious metal’s price rose.
Meanwhile, the behavior of major polished diamond suppliers, for various reasons, has been inconsistent with the diamonds’ role and status for a long period of time - and the market response was prompt.
“Do you people understand what we’re selling here? Diamonds are extremely rare, scarce, valuable, super staff for rich people. You see the line over there in that Rolex store? Why are there people on line? Because there’s a scarce thing. It’s a Rolex. ... Diamonds are special. And higher price should increase demand if you have a Veblin good,” Rapaport said.
In the classic diamond market of the 1970s, polished diamonds were full-fledged Veblen goods, Rapaport recalls. De Beers spent $220 mn a year on marketing, with the focus on wealthy customers, which created a favorable atmosphere among the most affluent customer segment and encouraged diamond purchases. Moreover, the focus on marketing high-end diamonds to wealthy individuals fostered the demand from the middle class, stimulating their appetite for diamond jewelry that was traditionally affordable to the upper class only. Buying large-diamond jewelry made one feel “like those rich guys”. At that time, 80% of mined diamonds were industrial ones, and only 20% were considered gem-quality diamonds. Diamonds below J and I colors were not subject to certification at all.
The classic diamond market in the 1970s:
Everything changed when a multimillion-dollar diamond cutting and polishing industry emerged in India, and it began to shift its focus to processing rough diamonds that were then considered industrial-quality ones. Imports of polished diamonds from India increased sharply, and the near-gem category of diamonds emerged on the market, accounting for 60% of mined diamond volumes.
Growth in polished diamond imports from India since the 1980s:
The diamond industry became more democratic. Light brown polished diamonds came into use in jewelry. Diamond jewelry appeared at Walmart for $99. Many industry players began to make higher profits, selling cheap near-gem quality polished diamonds at Walmart compared to selling high-end polished diamonds at Tiffany’s. At the same time, De Beers stopped its generic diamond marketing in the 2000s. The marketing system has essentially been turned upside down, abandoning the concept of Veblen goods and the idea of diamond exclusivity.
According to Rapaport, democratization (the rise in sales of lower-quality diamonds) has led to polished diamonds losing their uniqueness, while the middle class has lost its ambition-driven demand for prestige and status expressed through the purchase of high-end diamond jewelry. If everyone has low-end polished diamonds, what’s so special about them?
While this policy was largely inevitable due to the changing structure of diamond producers’ output (“mining companies have a problem with what to do with those 60% of the near-gem quality diamonds”), strategically, it is comparable to the behavior of an imprudent farmer who ‘roasted the goose that laid the golden eggs’, according to the founder of the Rapaport Group.
Back to Basics
Rapaport is convinced that the only structural solution to the current crisis is a return to the traditional model. It’s necessary to make the demand curve go back to its original position - and to return to spending on marketing high-end diamonds to wealthy people. “We must market fewer better diamond for fewer better customers. Natural diamonds are for rich people who want to spend money,” says Rapaport.
By focusing on these customers, the market can be revived, and the middle class will continue keeping up with the wealthy and purchase lower-end polished diamonds. “The more you sell the rich guys, the more you are going to open up the middle market for the GHI, VS, SI goods,” Rapaport believes.
Due to this shift in approach, the diamond market will once again respond to the classic situation that triggered its creation and from which it has now drifted, that is, when someone looking to make the best use of the money wants to acquire something rare, exceptional, beautiful, meaningful, and emotionally significant.
“We have to change our mindset from selling quantity over quality,” Rapaport stated.
He cited the example of Mikimoto Kokichi, the ‘founding father’ of commercial cultured pearl farming, who burned several tons of low-quality pearls in public at one stage of his business. In a situation of potential overproduction, this helped prevent a decline in prices for this commodity and cemented his reputation as a seller of exceptional-quality pearls.
Returning the focus on a smaller quantity of more high-end diamonds makes perfect economic sense. Gem-quality rough diamonds accounting for 20% of volume accounts for 75% of revenue, and likely even up to 90%, according to Rapaport. The focus should be on these 20% of goods and 20% of customers generating the bulk of revenue - then it’s possible to approach the “fantastic” situation of the 1970s, when the willingness to buy polished diamonds increased with their rising price, he says.
Revenue distribution between the gem-, near-gem-, and industrial quality rough diamonds:
Polished diamonds remain Veblen goods, which is also proven by the fact that their price falls as sales volumes decline. Therefore, lower prices result in lower demand. Of course, this does not apply to the most premium assortment - large-size flawless D color diamonds sold at Christie’s auctions, notes Rapaport.
Buyers value rare polished diamonds because they are high-end, he is convinced. “You are here to sell rich people expensive products. That’s the real diamond business. I am not against other people selling other things, but if you really want to understand diamonds, you’ve got to understand the idea of Veblin product, which is rare and it’s scarce and powerful and beautiful and luxurious and it’s what real people with real money want... Our job is not to put diamond ring in every finger. Our job is to sell diamonds, that are amazing, that are WOW! Our job is to create a Veblin good, where when you raise the price more people want to buy it."
The great wealth transfer
What is the basis for optimism and hope for a market recovery? “We will witness the greatest wealth transfer in human history,” Rapaport recalls of the coming redistribution of capital - transfer of generational wealth. The wealth transfer will be primarily from the post-war generation (Baby Boomers) to younger generations, including the Generation Z. Over the next 25 years, $105 trillion will change hands, that is, approximately $4.2 trillion per year will be inherited.
The main owners of wealth will be Generation X and millennials, with $39 trillion and $46 trillion, respectively. While millennials are often stereotyped as people that didn’t want to get married, “women are getting older, they’re deciding they wanna have kids and they are rich,” says Rapaport.
The average inherited money for this ‘wealth transfer’ is $750,000. Rapaport asks, what will an adult with a job and a comfortable standard of living spend this unexpected old money on. He answers that jewelry will play a crucial role. But to achieve this, it’s necessary to convince heirs that jewelers possess special and rare goods retaining their value.
Therefore, marketing and the overall approach must be more exclusive and focused on a specific client base, Rapaport notes. The engagement rings remain its cornerstone as they continue to symbolize a sincere commitment to the relationship between a man and a woman, offering women not only emotional value but also a guaranteed financial security. The latter is especially true for high-end fine diamonds highly prized in the Arab culture. Added to this is the positive role rough diamonds play in diamond mining regions, providing jobs and infrastructure facilities.
The future redistribution of capital offers opportunities both for major retailers of high-end diamonds and for smaller-scale jewelers. Thanks to their specialized expertise, they can help heirs authenticate and appraise antique jewelry pieces and watches they inherit, Rapaport notes, or profit from buying and selling such valuables.
Continuing with the idea of marketing high-end polished diamonds to wealthy individuals, he wryly commented on De Beers’ Desert Campaign. This democratic campaign promotes natural polished diamonds in natural earthy and sunny hues, such as champagne, cognac, and sunset brown, to a younger audience. These are set against flawless colorless diamonds - traditionally higher premium stones, but they can be manufactured using current methods of synthesis. While Rapaport believes the diamond industry should focus on marketing high-end diamonds to wealthy individuals, and the Desert Campaign can also be used for diamond promotion. Rapaport doesn’t rule out that such polished diamonds, like Swarovski crystals, could be the first step in the introduction of new consumer categories to luxury jewelry, but such campaigns won’t be a counter against - antidote for - a crisis. The remedy is a focus on the high-end diamond segment, where the diamond industry will reintroduce the market to the idea of the exclusivity of natural polished diamonds through intensified sales, Rapaport insists.
Sergey Bondarenko for Rough&Polished
