The natural diamond industry is currently facing a disruption that closely mirrors the existential threat the Swiss watch industry encountered during the 1970s quartz crisis. According to a new comparative study commissioned by the Dubai Multi Commodities Centre (DMCC), titled “The Swiss Parallel: A Comparative Study for Natural Diamonds”, the current disruption driven by lab-grown diamonds is happening approximately 50% faster than the quartz disruption.
Having crossed the critical threshold where lab-grown stones captured 61% of U.S. engagement-ring sales in 2025, the natural diamond industry has entered phase three (panic) of a five-phase disruption framework.
While the parallels are stark, the Swiss precedent offers a blueprint for revival, the report claims.
The Swiss watch industry survived by accepting the permanent loss of the mass market and pivoting to a premium, value-driven model supported by robust authentication and investment infrastructure. The DMCC-commissioned report argues that natural diamonds can pursue a similar path, but the window for coordinated action is rapidly closing, estimated at just 12 to 24 months (2026–2027).
The following excerpt distils the report’s critical data, comparative timelines, projected scenarios, and the strategic imperatives, offering a comprehensive roadmap for the industry to transition from unmanaged decline to a smaller, but highly valuable, premium market.
What happened to the Swiss watch workforce, firm count, and exports within a decade of the quartz crisis?
In 1970, the Swiss watch industry employed 90,000 people across some 1,600 firms... Within just over a decade, quartz technology cut that workforce by nearly two-thirds, closed more than 60% of those firms, and drove unit exports down from a 1974 peak of 84.4 million watches to roughly half that level by the early 1980s. Between 1970 and the mid-1980s, the scale of the contraction was stark. This was not a cyclical downturn. It was a structural displacement of an entire industry’s value proposition.
Why is the diamond disruption more severe than the quartz disruption?
Quartz matched the function of mechanical watches using a different technology. Lab-grown diamonds go further. They have essentially the same chemical composition, crystal structure, optical properties and physical properties as natural diamonds, while differences in growth structure, trace elements and defects permit specialist identification. They also cost 70 to 90% less. The disruptor is therefore not simply cheaper. It is a visibly and functionally comparable product with a different origin and growth history.
What is the "Expansion Principle" outlined in the report?
Disruption can grow a category rather than destroy it. For natural diamonds, the opportunity is not to defend today’s market at all costs, but to secure the premium tier of a larger market before others define it. The report elaborates that global watch production rose from roughly 250 million units before the crisis to more than 1.3 billion today, while total market value expanded from an estimated $10 to $15 billion to $75 to $135 billion.
What happens once a disruptor becomes the mainstream choice?
Once a disruptor becomes the mainstream choice, retailer incentives, consumer social proof and category language begin to align around it. At that point, the 'alternative choice' no longer looks alternative. It begins to look normal. Lab-grown diamonds accounted for 52% of U.S. engagement-ring sales, rising to 61% in 2025.
What does the five-phase disruption framework entail?
The framework consists of the following five phases:
· Phase 1: Knowledge (Swiss: 1969–1972 · Diamonds: 2015–2019)
Technology understood by industry insiders but dismissed as targeting different customer groups or lower-tier markets.
· Phase 2: Denial (Swiss: 1972–1975 · Diamonds: 2019–2022)
Market penetration is apparent but dismissed as temporary, niche, or solvable through marketing. Fragmented competition hinders coordinated action.
· Phase 3: Panic (Swiss: 1975–1983 · Diamonds: 2022–2026)
Market share declines, revenue falls and the incumbent faces an existential threat.
· Phase 4: Strategy (Swiss: 1983–1990 · Diamonds: 2026–2029 window)
Coordinated transformation strategy emerges, usually triggered by external crises. Volume decline accepted; investment in value differentiation.
· Phase 5: Recovery (Swiss: 1990–present · Diamonds: 2030–2035)
Outcomes could be better than pre-crisis performance for a small market share capturing most of the value.
The natural diamond industry is moving through these phases faster than the Swiss watch industry did.
Which phase of the five-phase disruption framework are natural diamonds currently in, and what does it entail?
Phase 3 (Panic). Market share declines, revenue falls, and the incumbent faces an existential threat. This is where natural diamonds are today. The timeline provided in the framework shows Swiss watches in this phase from 1975-1983 and diamonds from 2022-2026.
What are the three projected scenarios for the natural diamond industry by 2035, including their projected market share and timelines?
Scenario A
Transformation success (Swiss-style recovery): Market share in 2035: 20-30% by volume, 60-70% by value. Timeline: visible stabilisation 2028-2030, full recovery 2032-2035. Total cycle of 12-13 years…
Scenario B
Delayed adaptation (incomplete recovery): Market share in 2035: estimated at 15-20% by volume, 40-50% by value, with a partial premium capture and incomplete differentiation from lab-grown. Timeline: five to seven additional years of disruption before eventual stabilisation in 2030-2033 and partial recovery in 2033-2037.
Scenario C
Irreversible displacement (industry collapse): Market share in 2035: 5-10% by volume, 15-25% by value. An ultra-luxury niche… Timeline: irreversible decline between 2028 and 2030, consolidation from 2030 to 2035, settling permanently into an ultra-luxury niche without mass-market cultural relevance.
What is the first active move in the strategic imperatives, and why is it necessary?
The first active move is the most counterintuitive and the most necessary: stop defending the commodity tier. This is not surrender. It is a resource-allocation decision. The natural diamond industry is still spending capital, management attention and credibility defending sub-$3,000 stones against lab-grown diamonds. At current price gaps, that fight is structurally unwinnable. The 70-90% cost differential is not a messaging problem; it is the economics of manufacturing versus mining.
What does the report state is the sustainability argument for natural diamonds?
The sustainability argument for natural diamonds is not an environmental argument. Mining involves large-scale earth movement and has a material footprint that cannot be eliminated. The sustainability argument is a social and economic development argument that lab-grown diamonds structurally cannot match. In Botswana, diamonds contribute approximately 80% of export revenues and have directly funded the country’s transformation from one of the world’s poorest nations at independence in 1966 into an upper-middle-income economy anchored by sovereign wealth funds.
What are the four conditions required for comprehensive transformation and the estimated timeframe for the strategic window?
Comprehensive transformation requires four conditions: 1. Industry-wide participation above a critical mass threshold: partial participation produces fragmentation that undermines collective investments. 2. Coordinated investment of annual revenues over a multi-year horizon: the Swiss transformation took seven years from 1983 to 1990 to achieve stabilisation, with consistent investment throughout. 3. Sequenced execution rather than simultaneous deployment: building the rarity proposition before the investment tier, and building the investment tier before claiming investment returns. 4. Governance with sufficient authority to enforce commitments and prevent free-riding: voluntary coordination has not been sufficient at any point in the Swiss watch parallel, and there is no reason to expect it to be sufficient here.
[Regarding the timeframe], the 12-24 month window from 2026-2027 is not presented as a recommendation but as an analytical finding derived from the study’s assumptions about Generation Alpha’s future engagement-preference formation.
Mathew Nyaungwa, Editor-In-Chief, Rough & Polished
