Over 75 years ago, De Beers, a mining giant, introduced the concept that ‘a diamond is forever’ to young couples. Since then, the diamond market has grown into a $96 billion industry. However, it seems that today’s buyers are more concerned about price than the origin of the diamonds.
Millennials and Generation Z are disrupting the traditional diamond market by opting for man-made, lab-grown diamonds over natural ones. Despite being known as environmentally conscious, young people’s preference for lab-grown diamonds is not solely based on their love for nature, according to Pandora’s CEO.
“When it comes to product choice, only two things actually drive behavior,” said Alexander Lacik, the CEO of the world’s largest jeweler, in an interview with Fortune.
“You may claim other factors influence your decision, but ultimately, design is the most crucial aspect of your purchase, followed by price,” Lacik added.
The Copenhagen-based company, known for its charms, entered the diamond industry in 2021 with the Pandora Brilliance collection, offering affordable lab-grown diamond alternatives to the masses.
After a successful launch in the UK, the collection expanded to the US, Canada, Australia, Mexico, and Brazil. Revenue from lab-grown diamond sales reached 265 million Danish Krone ($38.5 million) last year, and Pandora aims to generate billions by 2026. The company’s stock price nearly doubled in 2023, reaching record highs.
“As a brand, we cater to 15-year-old girls and 65-year-old women,” Lacik noted, emphasizing that millennials and Gen Z are the primary consumers of their lab-grown diamond collection.
Even celebrities like Selena Gomez and Jennifer Lawrence have shown a preference for lab-grown diamonds, highlighting the importance of design in jewelry choices.
Affordability is a Key Factor
While Jennifer Lawrence, with an estimated net worth of $160 million, may not be choosing lab-grown diamonds for their cost-effectiveness, many young customers appreciate the significant price difference compared to mined diamonds.
For example, a 1-carat lab-grown diamond ring from Pandora costs $1,750, while a similar mined diamond from a luxury brand like Tiffany’s can cost over $16,000.
“It’s a matter of value,” Lacik explained. Customers find that they can get more for their money with lab-grown diamonds, allowing them to opt for larger stones without increasing their budget significantly.
“It’s not about the price point, but the value proposition,” Lacik emphasized. Customers look at what they get for the money they are willing to spend.
Sustainability Plays a Minor Role
Some millennials and Gen Zers showcase their lab-grown diamonds on social media, citing sustainability and ethics as reasons for choosing man-made diamonds over natural ones.
“Eco-friendliness is a bonus,” Lacik stated. While ESG (Environmental, Social, and Governance) factors are essential, they are not the primary driver of business.
Although sustainability may influence some young customers’ decisions, it is not likely to significantly impact sales in the jewelry industry.
