Tuesday, September 5, 2023

Synthetic Diamond Disruption

Prices of synthetic diamonds have fallen dramatically.

About five years ago, lab grown gems sold at about a 20% discount to natural diamonds, but that has now blown out to around 80% as the retailers push them at increasingly lower prices and the cost of making them falls.

Synthetic gems have been around for decades, but it appears that their costs have recently fallen. The resulting price decreases have increased synthetic diamond demand considerably. This is causing the longtime incumbent monopoly on natural diamonds, De Beers, no small amount of pain.

In June 2022, De Beers was charging about $1,400 a carat for the select makeable diamonds. By July this year, that had dropped to about $850 a carat.

Will DeBeers become the most recent in a string of now defunct market leaders? We are used to seeing digital disruption of traditional retailers, e.g., Blockbuster Video, Borders Bookstores, and Encyclopedia Britannica. It is harder to find recent non-Internet related examples.

HT: Marginal Revolution

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