Russia’s diamond industry has been a cornerstone of its economic strength for decades, with Alrosa standing as a dominant force in global supply. However, an industry-wide price scare is shaking its foundations. A relentless drop in prices—particularly for lab-grown diamonds, which have fallen by a staggering 75% over the past five years—is delivering a heavy blow to Russia and the diamond market.

While Western sanctions imposed in response to the war in Ukraine have undoubtedly complicated Russian diamond exports, the real crisis runs deeper. The market faces an oversupply of natural and lab-grown stones, intensifying competition and driving prices to unprecedented lows. Once seen as an alternative with stable pricing, lab-grown diamonds are now suffering from the same downward pressure, while mined diamond prices have dipped by 8% in the same period. This is paired with China experiencing weaker sales, further contributing to the supply instability

The crisis is not limited to Russia—industry giant De Beers is laden with its unsold stockpile valued at $2 billion as of late last year. The company has been forced to re-evaluate its pricing and inventory strategies in the face of a shifting market dynamic.

For Russian producers, particularly Alrosa, the challenge is twofold: navigating sanctions while contending with collapsing market confidence. The question is whether the industry can recalibrate, innovate, and find new avenues for demand before prices slide further. In an evolving luxury market where consumer priorities change, the diamond industry must adapt—or risk losing its sparkle altogether.