The natural diamond industry navigated a challenging 2023. This followed a dynamic five years that saw greater demand for lab-grown diamonds (LGDs), disruption from the COVID-19 pandemic, the catch-up effect following the easing of restrictions, and fluctuations in stock levels across the value chain. Demand conditions remain uncertain in the short term.

In this context, a report by BCG examines long-term supply and demand fundamentals, aiming to bring greater transparency to the complex set of factors affecting the natural diamond industry.

The industry’s long-term outlook is supported by constrained primary supply, which is expected to decline as current mines reach the end of their productive life. Suppressed exploration budgets, a scarcity of large discoveries, and lengthy mine-development timelines will limit opportunities for significant new volume increases.

On the demand side, rising global real GDP, wealth, and personal disposable income underpin the affordability of natural diamonds. There is more uncertainty regarding the long-term desirability of natural diamonds relative to other discretionary purchases. However, recent developments in LGD supply, price, and retailer incentives point toward eventual differentiation between natural and LGDs as distinct categories.

These dynamics are not a simple continuation of past dynamics. The resulting uncertainty means the natural diamond industry cannot stay idle. Industry participants now have a unique opportunity to step up and support the desirability of natural diamonds. Effective and innovative marketing—including brand and retailer collaborations—will help to bolster the category. Differentiating natural and LGDs could be underpinned by a clear, industry-wide articulation of the differing value propositions, together with investment into detection technology. In addition, incremental demand pools could be activated in new, emerging markets.

We hope you find the report instructive in understanding the long-term natural diamond industry outlook.