The Quiet Margin Migration. Where Diamond Industry Profits Moved in 2026
Investors see a sector in decline. The data shows something different. A value chain analysis of where the diamond industry's profit pools moved between 2020 and 2026, and where they go next.
This analysis reflects industry observations and does not constitute investment advice. The author is the founder of a direct to consumer lab grown diamond brand and discloses this position within the framework presented below. All data is cited from independent third party sources.
The investor narrative on the diamond industry in 2026 is structural decline. Anglo American is divesting De Beers after writing down its carrying value by $1.6 billion.1 Wholesale rough prices have fallen approximately 30 percent since 2020.2 Lab grown wholesale prices have fallen 74 percent across the same period. Manufacturing centers from Surat to Antwerp have announced consolidation. Signet Jewelers has guided down on margin pressure across consecutive quarters.
The narrative is correct on the facts and wrong on the conclusion. The diamond industry did not lose $84 billion in annual retail spending. The category remained roughly flat through the period the headlines were proclaiming collapse.3 What changed is not the size of the pie. What changed is who eats which slice.
Tracing where the profit pools migrated across the eight stage diamond value chain between 2020 and 2026 is more useful to investors than the collapse narrative. The migration is asymmetric. It rewards specific positions, punishes others, and creates new margin pools the headlines have not yet named.
"The diamond category did not lose $84 billion. The margin pools redistributed. The investors who understand where to position now will own the next decade."
The thesis of the 2026 margin migration
How is the diamond value chain structured in 2026?
A polished diamond passes through eight monetizable stages between extraction and end consumer. Mining. Rough trading and sightholder distribution. Cutting and polishing. Wholesale distribution. Independent certification. Traditional retail. Direct to consumer retail (a stage that materially expanded between 2020 and 2026). Resale and secondary market (an emerging stage in 2026).
In 2020, the margin pool was concentrated. Mining captured an estimated 20 to 25 percent of category profit. Traditional retail captured 35 to 45 percent. The middle stages (cutting, polishing, wholesale, certification) split the remainder. Direct to consumer and resale were rounding errors.
By 2026, the distribution has inverted at the ends. Mining and traditional retail have lost share of category profit. Lab grown manufacturing briefly captured large spreads, then compressed. Direct to consumer brands have absorbed the structural arbitrage between current wholesale economics and unchanged retail markups at legacy operators. Certification has emerged as a stable utility margin riding lab grown volume growth. Resale is forming a new pool the industry is only beginning to size.
Where did the margins move between 2020 and 2026?
Mining lost. Anglo American's $1.6 billion De Beers writedown is the most visible signal. Alrosa is under sanctions pressure. Mid tier producers face capital allocation questions. The mining margin pool has compressed an estimated 40 to 60 percent.4
Cutting and polishing compressed. Manufacturing capacity expansion of approximately 280 percent in lab grown CVD and HPHT production between 2019 and 2023 overshot near term demand.5 Industry consolidation announcements have followed. Margins per carat polished have fallen across both natural and lab grown supply chains.
Traditional retail compressed. Wholesale costs fell. Retail prices stayed near 2020 levels at most legacy operators. The arithmetic ran out. Signet Jewelers has guided down margins across consecutive quarters. LVMH and Richemont jewelry segments face the same pressure but benefit from brand moats that protect Tiffany and Cartier from full margin compression.
Direct to consumer captured. The category emerged from rounding error in 2020 to estimated low double digit percent of global engagement ring category in 2026. The Knot Worldwide 2026 Real Weddings Study reported that 61 percent of US engagement rings now feature lab grown center stones, a 239 percent increase since 2020.6 Direct to consumer brands captured the structural arbitrage between current wholesale economics and unchanged retail markups at legacy operators.
Certification became a utility margin. The International Gemological Institute now processes lab grown diamond grading at roughly 5x the volume of natural diamond grading.7 Each certified stone carries a per stone grading fee. Volume scaled. Margin per certification remained stable. The pool grew accordingly.
Resale began forming a new pool. Lab grown retention values of 10 to 30 percent of original purchase price have established a baseline secondary market.8 Platforms processing diamond resale at scale (Worthy, IDoNowIDont, emerging entrants) are sizing the opportunity.
Which public companies are positioned for the migration?
Cannot match DTC pricing without margin destruction. Scale and service moat provide partial offset.
Already captured DTC margin pool. Forward growth depends on category expansion versus share gains.
De Beers divestiture liberates capital from a declining business. Validates the migration thesis.
Tiffany insulated by luxury brand premium. Watch jewelry segment growth as a leading indicator.
Cartier holds similar position. Hard luxury moat protects but mid range jewelry under pressure.
The framework does not constitute investment advice. The relative positioning is analytical, not prescriptive. Each company's outlook depends on factors well beyond the margin migration framework presented here. The framework adds one lens to existing analysis.
Where will diamond industry margins move next?
Three further migrations appear likely between 2026 and 2028. Resale infrastructure will scale as the lab grown installed base matures and secondary market liquidity improves. Certification volume will continue growing as lab grown adoption rates rise in markets currently under penetrated (Europe and Asia). And the direct to consumer brand competition will intensify, compressing DTC margins as new entrants arbitrage the same retail markup gap that founded the original opportunity.
For investors, the implication is straightforward. The category is not contracting. The map is. Positions that paid in 2020 do not pay in 2026. Positions that did not exist in 2020 are the margin pools of 2028. Tracking the migration is more useful than chasing the headlines.
Margin migration FAQ
Frequently asked questions about the 2026 diamond industry margin migration framework.
Has total diamond industry revenue actually fallen since 2020?
Global diamond jewelry retail spending has remained near $84 billion annually through 2025 according to Bain and Company's Global Diamond Industry Report series. The category has not collapsed in topline. Specific stages within the value chain have lost margin pool share while others have gained. The narrative of industry decline conflates topline category spend (roughly stable) with margin distribution (significantly reshaped).
How is the framework different from existing diamond industry analysis?
Existing analysis tends to focus on either price movement (wholesale rough trends) or topline category growth (retail spending). The margin migration framework focuses on profit pool distribution across the eight stage value chain. It tracks where the margin sits rather than how much the underlying commodity costs or how much consumers spent. The lens is useful because it identifies which positions in the chain capture economics independent of category growth assumptions.
Why is certification considered a structural beneficiary?
Independent certification (primarily the International Gemological Institute for lab grown, the Gemological Institute of America for natural) charges per stone grading fees. As lab grown adoption increased, certification volumes grew roughly 5x. The per certification margin remained stable. This produces utility style economics: volume up, margin per unit stable, total pool grows. Certification became a structural beneficiary of category growth regardless of which retailers captured the end customer.
What is the disclosure on the author's position?
Garrett McMartin is the founder of Draco Diamond Corporation, a Canadian direct to consumer lab grown diamond brand. The brand sits within the direct to consumer stage of the value chain analyzed in this framework. The analysis does not constitute investment advice and does not recommend specific positions. The framework reflects industry observations and is published for editorial and analytical purposes.
References
- Anglo American plc. 2024 Annual Report. De Beers carrying value impairment disclosures. The company subsequently announced its intent to divest the De Beers business.
- Edahn Golan Diamond Research. Wholesale Price Tracking. 2020 to 2026. Cumulative rough wholesale decline derived from quarterly tracking series.
- Bain and Company. The Global Diamond Industry Report series. 2020 through 2025 editions. Global retail diamond jewelry sales tracked at approximately $84 billion annually with modest variation through the period.
- Anglo American plc. 2024 De Beers segment impairment disclosure. Industry analyst estimates on mid tier producer compression aggregated from public filings and trade press.
- Industry production data on CVD and HPHT capacity expansion 2019 to 2023, aggregated from manufacturer reports and SkyQuest Technology lab grown diamond market analyses.
- The Knot Worldwide. 2026 Real Weddings Study. February 2026. Survey of 10,474 US couples married in 2025.
- International Gemological Institute grading volume disclosures and industry estimates. Lab grown to natural grading ratio derived from IGI press releases and trade press coverage.
- Liori Diamonds. Lab Grown Diamond Value: The Honest Truth About Resale Worth in 2026. Resale value retention range analysis. Aggregated platform data from Worthy and IDoNowIDont.
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