Lab-grown diamonds go luxury — and rock the industry

By the numbers: As lab diamonds have gained popularity, the cost of all diamonds has dropped.

• About 63% of independent jewelers in the U.S. sell lab diamonds, which is up from 58% a year ago, according to a recent survey by trade publication InStore.
• The 2022 price bump of natural diamonds was caused by record demand for — and short supply of — natural diamonds in 2021, independent diamond industry analyst Paul Zimnisky tells Axios. Part of the cause: Many people used federal pandemic stimulus money to buy natural diamonds.

Of note: In 2018, the FTC determined that lab-grown diamonds are diamonds.

• According to the Gemological Institute of America (GIA), which grades diamonds, lab-grown diamonds have the same chemical and physical properties as natural diamonds.
• GIA stopped calling lab-grown diamonds "synthetic" in 2019.

Meanwhile, jeweler Jean Dousset, the great-great-grandson of Louis Cartier, sees an opportunity: luxury lab-grown diamonds.

• He spent his career in natural diamonds, but this year opened a bespoke lab-diamond showroom in West Hollywood. In his view, making designer diamonds "hasn't taken anything away from the mystique and the beauty of diamonds … it just reset the [price] scale."
• The endeavor came out of Dousset's frustration with the idea that buyers often had to compromise with diamond purchases, because of stone scarcity, cost or both.
• At his eponymous showroom, Dousset sells engagement rings with designer lab diamonds ranging from 1 to more than 18 carats for $1,500 to $76,300 (before the settings).

"The diamond industry is going through an existential crisis," Dousset tells Axios.

• After the industry was "set in its ways for hundreds of years … technology and the human imagination have been able to replicate nature perfectly," he says.
• He says that "mined diamonds are not the future," and customers — including the "empowered" women buyers he markets to — have embraced lab diamonds.

Between the lines: Expectations around engagement rings are shifting.

• Jewelers and experts tell Axios they've seen more millennial women shopping for engagement rings with their partners, and they are increasingly asking for lab-grown options.

What they're saying: "I want a pretty fat ring. … If I have the ability to go within a price range and have the diamond that I'm looking for and that I can customize, why not [go for a lab diamond?]," Jennifer Ali, a millennial woman and vice president at a global financial service firm, tells Axios about engagement ring shopping.

• As for the argument that a natural diamond is a "better investment," Ali says, "I don't look at [an engagement ring] as something that I'm going to sell later, right? This is something that is more sentimental. … It's a part of our love story."

• Among the places that Ali and her boyfriend are browsing: Ring Concierge in New York City, which was founded by a millennial woman and is big on Instagram.

Separately, ethical reasons factor into why many customers say they buy lab-grown instead of natural diamonds.

• Although natural diamonds "still involve disrupting the surface of the earth," the idea that mined diamonds are mostly "blood diamonds … is not representative of a large majority of the industry," Zimnisky says.
• Lab diamonds don't require extraction, but they do require "a tremendous amount of electricity," Martin Rapaport, diamond industry expert and chairman of Rapaport Group, tells Axios.
• The reality is that most people buying lab diamonds are doing so primarily because of cost, Zimnisky says.

What we're watching: Lab-grown diamonds — with their essentially unlimited supply — could eventually get as cheap as hundreds or even tens of dollars a carat, according to Rapaport.

• A potential benefit of prices continuing to drop: Diamonds could be used in more practical ways, from processing chips on phones to inverters on electric vehicles, says Zimnisky.
• But when it comes to natural diamonds, "Now we go back to the old days, where diamonds were exclusive," Rapaport says.
• Time will tell if relatively affordable lab-grown diamonds can sustain a luxury status.