More than 75 years ago, mining giant De Beers began promising young couples in love that “a diamond is forever.” The market has since grown into a $96 billion behemoth, but it turns out today’s buyers are more concerned with prices than provenance.
Millennials and Generation Z are increasingly shaking up the legacy market, abandoning the naturally shiny rock for artificial, lab-grown alternatives. But despite claiming to be the most environmentally conscious generation to date, young people’s obsession with lab-grown diamonds isn’t because they prioritize the great outdoors, at least according to Pandora’s CEO.
“When we talk about product choice, there are only two things that actually drive behavior,” said Alexander Lacik, head of the world’s largest jeweler Fortune.
“You could say you do other things…” he adds. “But design is by far the most important aspect in the decision to purchase a product, and the second criterion is price.”
The Copenhagen-based company, famous for its charm, had no presence in the diamond industry until 2021. That is, until it realized it could “democratize” sparkling stones for the masses with affordable alternatives grown in the laboratory.
The company first tested the waters with its Pandora Brilliance collection on British high streets and, after a successful launch, then extended the range to the US, Canada, Australia, Mexico and Brazil.
Last year, revenue from sales of its lab-grown diamonds reached 265 million Danish kroner ($38.5 million), and by 2026 the Danish retailer aims to earn billions. Meanwhile, its stock price has nearly doubled in 2023 and shows no signs of slowing down: This week, Pandora’s stock rose to a record high.
“As a brand, we sell to 15-year-old girls and 65-year-old women,” Lacik says, with the caveat that it’s mostly millennials and Generation Z who buy his collection of lab-grown diamonds.
Even millennial A-listers, including Selena Gomez and Jennifer Lawrence, are fans of the man-made alternatives.
This only further proves Lacik’s point about design coming first when it comes to jewelry: “If it looked like shit, they wouldn’t wear it, unless I paid them a lot of money, which I never did.” just like that,” he jokes. “So it all comes back to that driver.”
It doesn’t hurt that they’re less expensive
With an estimated net worth of $160 million, Jennifer Lawrence clearly doesn’t adorn herself with Pandora’s lab-grown diamond jewelry to save money.
But of course for the average young customer it doesn’t hurt that they are 60% to 85% less expensive than diamonds mined from Earth.
For example, a traditional Pandora solitaire ring, with a sparkling 1-carat lab-grown diamond on a 14k white gold band, will cost you $1,750. At the other end of the scale, a minted alternative costs up to $16,000 at luxury brand Tiffany’s for the same size and style.
“It’s a question of value,” explains Lacik.
It’s not that customers are necessarily buying lab-grown diamonds to get big savings, but they are finding that they can size up and get more for their bag when they go man-made.
“Women like bigger stones, that’s how the world works, whether we like it or not,” Lacik laughs. “Clients, when it comes to their wedding engagement space, are opting to spend the same or similar amount of money, but for a significantly larger stone.”
“It’s not the price, it’s the value proposition,” he adds. “You have to consider: what do I get for the money I’m willing to spend?”
Sustainability is nothing more than a “nice to have”
Some millennials and Gen Zs proudly display their lab-grown diamonds on social media, saying their choice to ditch natural diamonds formed in the Earth’s crust is for ethical and sustainability reasons.
“I don’t really care if someone were to dig it out of the Earth, in fact, I’d rather they didn’t,” said one millennial influencer on TikTok, showing off the 4-carat cushion-cut stone on her wedding finger.
Another young boyfriend shared on TikTok that supporting the mined diamond industry was “not something I could ethically support for people or the planet.”
Contrary to what today’s youth say online, eco-friendliness is just the icing on the cake, Lacik said.
“ESG is an interesting feature and for people interested we have a good story to tell, but it is not the driver of the business,” says Lacik.
However, that doesn’t mean that companies shouldn’t worry about doing good. Undecided between one brand and another, Lacik believes that ESG factors could be the deciding factor for young customers.
Just don’t hold your breath on sustainability, sending sales through the roof, he added: “I’ll be dead before someone comes into my stores and says, ‘Can you show me your sustainable products?’ It’s just not on people’s minds when they buy in this category.”