Despite robust revenue growth in the global jewellery sector, the natural diamond upstream (mining and manufacturing) is facing stagnation due to a fundamental shift in product mix and inventory strategy. Jewellery sales are rising across key markets, but a shift toward lab-grown stones, higher gold prices and leaner inventories means that growth at the counter is no longer translating into stronger demand for natural diamonds upstream.

 Market Performance vs. Natural Diamond Demand

• Strong Retail Indicators: Major luxury conglomerates and commercial retailers reported significant YOY revenue growth (e.g., Richemont +6%, Titan Company +24%, Chow Tai Fook +18%).
• The Disconnect: While total jewellery revenue is rising, the natural diamond component of that revenue is shrinking. Diamonds now represent ~41% of total jewellery sales, down from 50% a decade ago.

Primary Drivers of Structural Disruption

• Market Share Erosion by Lab-Grown Diamonds (LGDs):
• • LGDs have achieved dominant penetration in the bridal segment (61% of US engagements in 2025).
  • Retailers are actively “leading” with LGDs, diverting unit volume away from natural stones.
• Segment Squeezing & Substitution:
  • Consumers are opting for larger LGDs at price points previously reserved for 0.50–1.50 carat natural stones.
  • This has hollowed out the “mid-market” natural diamond category, forcing upstream demand toward only the highest-value, large stones.
• Commodity Price Pressure (The Gold Factor):
• • Surging gold prices have absorbed a larger share of the consumer’s total “per-piece” budget.
  • Design Engineering: Manufacturers are reducing diamond counts or using smaller accent stones to maintain price points, leading to lower natural diamond volume per SKU.

Supply Chain & Distribution Evolution

• Retail Consolidation: The US market is seeing a 2%–3% annual decline in the number of jewellery businesses (JBT data). A smaller retail footprint naturally results in fewer aggregate “stocking orders.”
• Lean Inventory Management: * Transition from “Just-in-Case” to “Just-in-Time” replenishment models.

Retailers are maintaining tighter stock levels due to volatile pricing and high credit costs, buying only against confirmed consumer demand rather than speculative inventory building.

The New Normal for Upstream Stakeholders

The traditional “bullwhip effect” that previously benefited miners and manufacturers has been dampened. Growth at the retail counter no longer guarantees a surge in the midstream. The natural diamond supply chain must now realign for a lower-volume, higher-value environment until natural stones can reclaim a distinct value proposition relative to LGDs and gold-heavy designs.