The natural diamond industry’s legacy operating model of scarcity driving desire and desire driving price is under strain, and as the industry moves forward, producers and traders are confronting pressures and changes that have reshaped diamond demand and redefined competition, says diamond industry expert and The Diamond Press founder Avi Krawitz.

The past three years have seen demand for natural diamonds stagnate and even decline in major markets such as China and the US, he points out, adding that this is the result of China’s economic slowdown, a global rise in the cost of living and the growing popularity of lab-grown diamonds.

These factors have negatively impacted the diamond mining industry, leading to it struggling with aligning its supply with the market’s lower demand for natural diamonds, says Krawitz.

“That’s led to excess inventory at both the mining level and also in the midstream . . . the [diamond miners] have been unable to sell a portion of their production so they’ve built up inventory and also their rough prices have come down,” says Krawitz.

On the supply side, he says that major players have reduced their production plans to align with demand dynamics, while smaller miners are under increased pressure from lower rough prices, resulting in several operations closing down.

Global production fell in 2025 and is expected to decline again this year, says Krawitz.

All this stems from the growing popularity of lab-grown diamonds, which sell at significant discounts to their natural diamond counterparts, he adds.

Consumers are being presented with a choice between a natural diamond of a certain size and quality, and a bigger or better-quality lab-grown diamond that is offered for the same price, or cheaper.

Wholesale prices of lab-grown diamonds have dropped sharply in the past five years, largely as a result of over-production, says Krawitz.

“You’ve got a lot of growers, mainly in India and in China, that are just pumping out lab-grown diamonds without much consideration for the levels of demand. That’s why the pricing of lab-grown diamonds has continued to fall and has fallen at a wholesale level,” he explains.

At a retail level, the diamonds industry is also seeing a shift in consumer behaviour, with younger buyers increasingly favouring lab-grown diamonds, points out Krawitz.

“The younger generation is more open to lab-grown diamonds, and that’s a challenge for the natural diamond industry,” he adds.

However, there is sustained demand for natural diamonds, but the market is increasingly segmenting toward higher-value, larger diamonds, while mid-range natural diamonds struggle to gain attention and sales.

“For now, it seems that the natural diamond market is being driven by slightly more affluent customers,” observes Krawitz.

This segmentation, he adds, is reshaping the industry, with jewellers forced to choose between focusing on high-value natural diamonds or becoming volume-driven by choosing to focus on laboratory-grown diamonds instead.

Marketing, Traceability

The industry is also seeing a shift towards more sustainable and responsible practices, whereby consumers are increasingly looking for diamonds that are sourced responsibly. “That is an opportunity for the industry,” he says.

Global events such as the Russia-Ukraine war and trade tariffs imposed by the US have accelerated a push for compliance and traceability in the industry. This, says Krawitz, adds another layer of complexity to the industry’s challenges.

The sanctions on Russian diamonds have forced the industry to adopt new tracking systems, ensuring that diamonds are sourced responsibly and ethically.

It is also forcing the industry to raise its investment in category marketing to stimulate demand for natural diamonds, notes Krawitz.

Initiatives such as diamond miner De Beers’ Desert Diamonds campaign aim to drive interest in non-traditional diamond colours.

Industry integrity agency the Natural Diamond Council is also working to promote natural diamonds, having appointed new CEO Amber Pepper in late 2025, and on the back of an increase in funding, including from new members such as Angola and Botswana.

Diamond origin and traceability tools are also being adopted to verify natural diamonds and build consumer confidence, points out Krawitz.

“The diamond industry is taking steps to give consumers assurance that the diamonds they purchase are ethically sourced and to give them the confidence to buy,” he says.

De Beers has also leaned into this natural diamond strategy by developing the Origin Diamonds brand that focuses on the traceability of natural diamonds.

Looking ahead, Krawitz predicts continued diamond industry segmentation, emphasising that stimulating demand is key to reviving the natural diamond sector and that the industry must be adaptable to changing consumer preferences and technological advancements.

As the natural diamond industry navigates these turbulent times, he says one factor is clear: adaptation and innovation will be crucial to regaining a footing in a rapidly evolving market.