The Journal. - Are Diamonds Even a Luxury Anymore?

Episode Date: July 24, 2025

Global diamond company De Beers spent decades convincing couples that true love required a diamond. But now, lab-grown diamonds that are identical to naturally-mined ones are flooding the market with cheaper options and reshaping the diamond business completely. WSJ’s Jenny Strasburg takes us inside the showdown in the diamond market, and we speak to a ring shopper weighing her options. Jessica Mendoza hosts. Further Listening:-One American Company Taking on China's Rare-Earth Dominance-Can Pepsi Make a Comeback?-How Target Got Off TargetSign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

There's a slogan about a gemstone that I've been hearing my entire life. You've probably heard it too. A diamond is forever, De Beers. A diamond is forever. The tagline of the original global diamond company, De Beers. It was the early version of put a ring on it. Right. My colleague Jenny Strasburg has been reporting on the diamond business, so I gave her a call.

Where did the idea of a diamond engagement ring come from? What's the origin story here? In 1947, the slogan that everybody knows, a diamond is forever was born, and it's become one of the most iconic advertising, marketing slogans of all time. What it really did is it put into the popular culture this idea that if you love someone, here's how you show it. And the idea that this gemstone would be a symbol of love, commitment, elegance, timelessness,

you know, that was really a manufactured idea to sell diamonds. And it worked extremely well. It was brilliant, some might say. It was. It was. Throughout most of the last century, De Beers was the main supplier of diamonds to the entire world. At its peak, how much control did De Beers have over the diamond market?

I mean, most of it, right? 80 to 90 percent. Kind of depends on who you ask, but really vast majority. De Beers controlled the diamond market back when a diamond was something that you mined out of the ground. But the industry has been shaken up by new technology. Today, if you're looking to source diamonds, you don't need a mine. You can create them in a lab.

And that's slashed the value of both diamonds and the company best known for selling them. Their value has been challenged by all these market forces. With diamond prices falling, customers looking elsewhere, and a market flooded with cheaper alternatives, De Beers' iconic brand is in need of rescue. The challenge? Convince a new generation of customers that natural diamonds are a luxury worth investing in. The CEO, Al Cook, he used the words, huge con. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.

It's Thursday, July 24th. Coming up on the show, how De Beers lost its sparkle. a minute expense report? You will. Custom saddles and dog training services are not within policy. What are you talking about? SAP Concur uses advanced AI to audit and automatically detect out-of-policy expenses. It's the breakthrough I needed to focus more on our future. These are my future expenses? Yes, and self-defense classes are out of policy. All need self-defense classes? You will. For what? It's a big dog. SAP Concur helps your business move forward faster. Learn more at concur.com. This Friday. May I speak freely?

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De Beers convinced the world that a diamond was forever, and buyers were willing to shell out big bucks for them. But in the early 2000s, people started to question the real cost of their forever. And there was controversy and increasing awareness around what became known as blood diamonds. Blood diamonds, like in the 2006 blockbuster starring Leonardo DiCaprio, which helped bring the dark reality

of the diamond trade into the spotlight. Tell me, how is that? Who do you think buys the stones that I bring out? Dreamy American girls who all want a storybook wedding and a big shiny rock. Audiences across the US came to see how diamond sales were being used to fund bloody civil wars in Africa, especially Sierra Leone and Angola. And it really brought it to life just how families were torn apart and countries were

being just torn asunder by this thing that was a luxury for wealthy people. A lot of that criticism fell on De Beers because of its huge role in the market. De Beers and other industry players started to develop processes that would ensure or try to ensure that diamonds were sustainably and responsibly mined, that wars weren't being funded by sales of diamonds. And it was really a reform time for the industry and a test for the industry. But in the 2010s, a new kind of diamond started going mainstream. What are lab-grown diamonds?

Broadly speaking, how do you make them? How does it all work? We're talking about chemically the same as a mined diamond, just created in a lab under extreme pressure, extreme heat. So recreating that in an industrial machine. Lab-grown diamonds have actually been used in industrial processes since the 1950s. Diamonds are the hardest known material, so they're really useful for sawing, drilling, and grinding.

And after years of technological advances, lab-grown diamonds started getting cut, polished, and turned into jewelry. What's the difference? Are lab-grown diamonds essentially real diamonds? Well, chemically, yes. So they are. They have the same hardness, the same sparkle, the same 100% carbon makeup. So lab-grown diamonds are real diamonds.

It's just that they're made by humans and machines, not the earth, and in a lot less time. And only you know the difference, right? I wanted to understand if the difference between lab-grown and mine really matters to buyers, so I reached out to someone who's been waiting her whole life to shop for an engagement ring. Hi, my name is Kayla Goosby. I live currently in Los Angeles, California, and I am 32 years old in a month. Oh. In less than a month, actually.

Well, I want to start off by asking about your love life. How did you meet your partner, and how long have you two been together? I actually met my partner on a dating app, and we've been together for five years now. Wow. I love it when the apps work. Right? Me too. Kayla had found the perfect guy,

and they'd agreed they wanted to get married. But first, she wanted to make sure she had the perfect ring. Is an engagement ring something you've always wanted? Yes, an engagement ring is always something I've wanted. I've always believed that I wanted to pick out my wedding ring. I wasn't into wearing the wrong wedding dress or having the wedding, per se,

but I've always wanted to be the girl to pick out her own wedding ring. So it was the ring for you, it was all about the ring, not any of the other stuff. It was all about the ring, yep, it was all about the ring. And why a ring specifically? What is it about the ring. Yeah, it was all about the ring. And why a ring specifically? What is it about the ring that really spoke to you?

There's other things that's new coming out in our generation. Could have thought about a tattoo. But the ring ultimately was the one. That's the one that you put on your finger. That's the one that everybody knows, remembers, and that's the one that, you know, ultimately people see you as, okay, she's taken, that's the one. Had you heard the slogan, diamonds are forever? Yeah. Yeah.

Going into it, I never knew about a lab-grown diamond. I only knew about the natural. So my mind is thinking natural is where it's at. More options have been good for shoppers like Kayla, but it's been bad news for De Beers. So bad that De Beers' parent company, mining giant Anglo-American, wants to get out of the diamond business by selling its majority stake of De Beers. What is Anglo-American going to get for this company? Will it be a sale to a strategic buyer? Will it

be an IPO? You know, I think all options are on the table, but it is a process that could extend into next year. And they really hoped to maybe be further along. Because of the struggling diamond market, Anglo-American has marked down the value of its stake in De Beers by a whopping 45% over the past couple of years, or $4.5 billion. De Beers is in the process of talking to potential buyers and has been considering other options. Did it come as a surprise to the industry how quickly consumers would pivot to lab-grown diamonds versus natural ones? I think it did to a lot of people in the industry, and it also was a bit of a, like,

how could this be happening? How De Beers is fighting back is next. These days, shoppers can find lab-grown diamonds online, in shopping malls, and even in budget big-box stores. Jenny calls it... The democratization of diamonds for a mass audience. And nothing says mass audience like Walmart. So Walmart entered the lab-grown game in 2022 and game changer. There is just a mind-boggling array of diamonds that you can buy.

Suzanne Kaptner, my incredible retail coverage colleague in the US, who's the expert on retail, she actually talked to Walmart for this story. And they told us that these lab-grown stones now make up half of their diamond jewelry assortment. Half. So from nothing to 50%, the impact of this flood, and it really is a flood of lab-grown diamonds, in the past, especially five, six years, has really changed the pricing of the entire market,

both mined diamonds, natural, mined, and lab-grown. Lab-grown diamonds were always less expensive than natural ones. But the technology needed to make them has only gotten cheaper and easier to come by. They're now being mass-produced at factories in China, India, and elsewhere. So the price of a lab-grown has plunged.

The cost of a one-carat diamond is down 86% since 2016. And the price of natural diamonds has dropped as well. The U.S. is a very important market for De Beers. And if you can go to Walmart and pick up dog food and motor oil and a tennis bracelet on the way. And also like some diamond studs that are lab grown for a fraction of the prices as

you would pay. Their goal is not to compete with Walmart. The goal is to have the De Beers name, even more so than it is now, be a consumer-facing, luxury retail brand. That's led De Beers to adjust its strategy. Work harder to convince consumers that natural diamonds are just more precious than lab-grown because they're rare. This is one of the challenges that De Beers faces and Al Cook, the CEO, is working very hard to reiterate the idea that rarity is value

and something special is not what you walk into Walmart and buy that was created over three weeks and then put on a boat from India. Right, there's sort of a romance to the process of a diamond making its way from under the earth to your finger as a symbol of somebody's love for you. Right, and that romance is exactly what they're trying to rekindle now. They're trying to make that the acceptable version of value. If it didn't come from deep within the earth, it's just not the real thing. De Beers is leaning into that idea in its recent marketing campaigns.

Because just like your journey, a natural diamond is worth the wait. De Beers CEO Al Cook told Jenny that jewelers who sell lab-grown diamonds at a steep markup are being dishonest with their customers. He said that they masquerade their products as rare, even though lab-grown diamonds are now widely available. That's why he called elements of the lab-grown diamond market a huge con. And he said that's a problem. People are getting ripped off by believing that they need to walk into a jeweler

and pay thousands of dollars for a diamond that they could go to Walmart and get for $100 or $200. De Beers says there's not a lot of difference between those lab-grown diamonds, but the company says there is a noticeable difference between lab-grown and natural diamonds, even if it doesn't seem that way to the naked eye. And De Beers is now trying to help jewelers make it easier to show customers that difference.

So they have this machine called Diamondproof, trying to help jewelers make it easier to show customers that difference. So they have this machine called Diamond Proof, and it's about as big as a large air fryer, and it can sit on a jewelry store counter. De Beers says the machine scans a diamond, and usually, seconds later, it reveals whether or not it's natural. The company hopes this moment gets in a shopper's head. If this machine can tell so easily, then don't you care that it's so easy to tell the difference between the two?

So that's the message. This fits the whole theme of differentiation, that these are not the same thing. The other part of the strategy? Emphasize that natural diamond mining practices can provide a significant economic boost to the country's mining them. De Beers is stepping up marketing alongside Botswana, its biggest source of diamonds, to drive the point home. Botswana is a minority owner in the company. They're big partners, Botswana and De Beers. And so part of the hope is the real and authentic and the way to support these countries that

are so dependent on diamond mining. And if we want to help these countries modernize and do all that they want to do for people who live there, you know, this is the way to do it. Is this all working? How are things looking for De Beers as a company? I mean, it's been really, really tough. So last year, more than half of the engagement rings

purchased in the US had lab created diamonds. Wow. And that's up about 40% from 2019. That's according to a survey by The Knot, the wedding planning website. Less than 1% of the market was lab grown in 2016. Last year, lab grown made up about a fifth of global diamond jewelry sales.

Wow. That is a huge rise in a decade, less than a decade. So that's less than a decade from 1% to about 20%, and that's global. Sellers of lab-grown diamonds say companies like De Beers are stuck in the past and in self-preservation mode. And for some shoppers, like Kayla and her partner, tradition isn't the deciding factor.

And so what did you decide to go with in the end? Natural or lab grown? So I went with lab. Ah. And why go with the lab grown option? What tipped the scales for you in the end? I don't want anyone to, I don't want it to be, I don't want nobody to die over this diamond.

It's not that serious for me. But ultimately, it's just a ring that I'm going to put on my finger. It's still of substance to me. And I'm more so focused on getting the house. Like, that's my thing right now. So the price point helped. The price point was a big factor in it all. You're not bothered, you know, some people who are critics of the lab-grown diamond would

say, you know, it's not a quote-unquote real diamond. Yeah, that doesn't bother you? No, because I don't care what people think. At the end of the day, it's between me and my union, you know, and at the end of the day, if we're both satisfied, we're both happy with the decisions that we made, then, you know, that's all that matters. Well, do you have the ring yet? Can we see it? I don't know. Actually the ring, he put it up somewhere. He didn't give it to me before he left.

Oh, it's hidden. It's hidden, yeah. It's gonna be really nice. Congratulations, Kayla. Thank you. I know it hasn't quite happened yet, but it's basically about to. So congratulations. So excited for you. Thank you. That's all for today, Thursday, July 24th.

The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Suzanne Kappner. Thanks for listening. See you tomorrow.