Mumbai: Women may start blending natural and lab-grown diamonds (LGDs) into their jewelry collections, which could lead to a gradual rise in the popularity of LGD-studded pieces. This change is likely to be driven by factors such as education, disposable income, and shifting fashion trends. With LGDs priced much lower than natural diamonds, the jewelry industry is set for transformation. The affordability of LGDs could alter consumer purchasing behaviors, offering more choices and reshaping the dynamics of the traditional diamond market, according to a Kotak Institutional Equities’ report.
At the same time, while gold continues to be seen as a store of value, its investment forms may change. Financial gold products, such as gold exchange-traded funds (ETFs), could capture a larger share of household investments, potentially lowering demand for physical gold jewelry. As these trends evolve, the jewelry industry is poised for adaptation and growth.
Although gold has traditionally been viewed as a long-term store of value, LGDs are emerging as an affordable alternative in the jewelry market, which could shift the way Indian consumers approach their gold and jewelry purchases. Despite the growing popularity of equities as an investment, gold remains dominant in Indian households. Over the past decade, Indian families have invested about USD 300 billion in gold, compared to USD 194 billion in equities, reinforcing gold’s role as a preferred savings asset.
The rise of LGDs and the move toward financial gold could pose challenges for jewelry companies in three key areas. First, revenue growth could be impacted if households reduce their purchases of physical gold jewelry in favor of gold ETFs. Second, profitability may come under pressure as LGDs, which are cheaper than natural diamonds, take a larger share of the market. Finally, the stock valuations of major jewelry companies could be affected if these trends materialize, as current valuations do not fully reflect these potential shifts. While gold is expected to maintain its status as a store of value, Indian households’ perceptions of jewelry are clearly evolving.
