The diamond industry is facing challenges as prices have dropped by 6% this year. A jewelry CEO attributes this decline to the rapid growth of lab-grown diamonds.

The allure of diamonds has dimmed in the eyes of consumers, and experts are raising concerns.

Ankur Daga, CEO of the e-commerce jewelry company Angara, expressed grave concerns about the diamond industry’s state in an interview with CNBC. Prices of diamonds have plummeted by 5.9% this year, according to the Zimnisky Global Rough Diamond Price Index, and Daga predicts further decline. He anticipates a 15% to 20% drop in natural diamond prices over the coming year. Even industry titan De Beers, renowned for its “Diamonds are forever” slogan, experienced its worst performance in two decades. Its parent company, Anglo American, announced plans to divest from its diamond subsidiary, which it owns 85% of, signaling significant challenges ahead.

CEO Duncan Wanblad acknowledged De Beers’ struggles, attributing them to macroeconomic factors rather than fundamental issues. The pandemic initially boosted the diamond industry as home-bound consumers indulged in luxury purchases. However, as the pandemic subsided, demand dwindled. Additionally, shifting attitudes toward marriage, particularly among Gen Z, have dampened the market for engagement rings. Instead of splurging on high-priced items, consumers now prioritize experiences.

But perhaps the most significant disruption comes from within the industry itself: the rapid ascent of lab-grown diamonds. These synthetic gems, created in controlled environments, cost significantly less than their mined counterparts, appealing to cost-conscious younger consumers. Concerns about environmental impact and labor practices in traditional mining further bolster the appeal of lab-grown diamonds. With advancements in technology, these gems can now be produced in a matter of hours, swiftly gaining market share.

According to industry analyst Edahn Golan, lab-grown diamonds already account for 13.5% of diamond jewelry sales in the U.S., the largest diamond consumer. Daga predicts that half of all engagement rings sold in the U.S. this year will feature lab-grown diamonds.