Rings get bigger as lab-grown diamonds catch up to naturals
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If you bought a diamond this year, there's a roughly 50% chance it was manufactured in a laboratory.
Why it matters: Lab-grown diamonds have radically transformed the jewelry market. But despite the cheaper alternative, the amount being paid for diamonds is actually rising — and the stones are larger than ever.
The big picture: Two things are happening at once: Lab-grown diamonds are getting more popular as they get cheaper, while people are spending more than ever on natural diamonds.
- Lab-grown diamonds are just as real as natural diamonds. They're just not as rare or unique. So the market has bifurcated, with roughly half of buyers preferring something perfect from a lab, and the other half still preferring something that maybe has romantic flaws.
By the numbers: For many years pre-pandemic (and pre-lab-grown diamonds), the average engagement ring cost somewhere between $3,200 and $3,600, per Edahn Golan, the managing partner at Tenoris, a diamond industry data company.
- Today, while lab-grown diamonds are cheaper than that, natural diamonds are getting bigger and more expensive, with the average such stone so far this year selling for $6,628. As a result, the average diamond overall sells for about $4,600 — well above the normal level before lab-grown diamonds appeared on the scene.
Where it stands: Because lab-grown diamonds are getting so cheap, buyers are no longer picking out the largest stone they can afford.
- There are lab-grown diamonds as large as 10 carats, but after a certain point they become unwieldy and impractical. Plus, people are less likely to see a truly enormous rock and believe it's a rare and valuable natural gem, so it will have less show-off value as a result.
- The revealed preference in the lab-grown market seems to be converging on diamonds just under 2 carats as the size buyers like the most. The average size for natural diamond engagement rings was 1.4 carats last month, Golan says — about 50% larger than before lab-grown diamonds appeared.
Between the lines: Because lab-grown diamonds are so cheap to manufacture, they have essentially no secondary-market value. Which is to say, once you've bought one, you won't be able to sell it.
- For that reason, most other countries with a culture of buying diamond engagement rings still buy natural diamonds. They might not retain all their value, but at least they'll retain some of it.
The flipside: Lab-grown diamonds are only getting cheaper.
- The lab-grown diamond industry initially wanted to compete with natural diamonds on the basis of clarity and unsullied provenance.
- Only when that didn't work did they switch to competing mostly on price.
Follow the money: The average lab-grown diamond was 1.2 carats and cost $3,887 in 2020. By 2024, the average size had grown 60% to 1.9 carats, but the average price had fallen by 30% to $2,657.
The big picture: A lot of the difference between people who buy natural diamonds and those who buy the lab-grown version is generational, Golan says.
- Older Americans grew up exposed to the legendary "a diamond is forever" marketing campaign, which ran from 1948 to 2008.
- A 28-year-old getting engaged today, however, will not have the same associations.
Zoom in: Younger American men are also much more likely to go ring shopping with their soon-to-be fiancée, Golan says, while pre-pandemic they were more likely to pick out a ring with the advice of, perhaps, her sister or best friend.
- It turns out that while a woman's loved ones will generally try to persuade a man to spend more, the woman herself will often prefer to save the couple money that could be more fruitfully spent elsewhere.
The bottom line: Frugal Gen Z-ers are happy with cheaper lab-grown diamonds. Older Americans are less likely to want to make the switch.
