SELLING DIAMONDS TO MILLENNIALS WHO DON’T CARE IF DIAMONDS ARE FOREVER
WHY MILLENNIALS ARE FREAKING OUT THE DIAMOND INDUSTRY.
A diamond pendant is draped over a white T- shirt-clad 20- something woman as she runs through a corn field and swims with her clothes on while purring, “There was a moment in there that goodbye was inevitable … maybe we won’t ever get married and maybe we will.”
In another ad, the male narrator explains, “There was a time I panicked: Was this too much too fast … Who knows if we’ ll ever slow down, I’m not thinking about that right now,” after a woman brushes her threering diamond necklace over his lips.
Those little doubting soliloquies from a couple of new sepia- toned diamond ad spots may seem like the antithesis of marketing in an industry that has been injecting itself into marriage proposals since the 1940s, when DeBeers launched its famous “a diamond is forever” campaign and solidified a steady stream of demand for the precious gem.
But the millennial generation poses an existential dilemma for the industry: They tend to spend on experiences rather than luxury items, achieve financial maturity later in life and are less likely to get married than previous generations. DeBeers’ 2016 Diamond Insight report noted that millennials, defined in the report as those born between 1981 and 2000, are set to become the most important cohort for diamond jewelry retail sales, which dipped slightly to US$79 billion in 2015.
“The challenge is that diamond jewelry appears to be low on the buying lists among so- called millennials,” the report said. It advised industry players to “safeguard and nurture the diamond dream” in the face of potential challenges ahead.
The two ads above are part of the “Real is Rare” campaign by the Diamond Producers’ Association ( DPA) — its first- ever ad blitz — which attempts to reframe diamonds’ relevance for a generation less focused on forever and more focused on now.
Emphasizing both the “real” and “rare” nature of diamonds is a two- pronged strategy. It tackles the demographic shift that could signal a drop- off in consumer demand, as well as the rise of lab- created alternatives that could diminish the lustre of natural stone sales.
According to a 2016 American Express survey, 13 million partners propose on Valentine’s Day. But members of the ethically and ecoconscious generation who do get down on one knee are increasingly turning to nontraditional rings, including relatively new- to- market lab-created diamonds.
“Demand growth is slow with the millennial generation, for example, seemingly less attracted to diamond jewelry than previous generations,” said RBC Capital Markets analyst Des Kilalea, noting rough diamond prices will remain capped given new supply and lacklustre demand.
As a result, Kilalea added, the DPA has put stimulating demand for natural diamonds at the top of its agenda.
The DPA, which represents the seven biggest diamond miners, was created amid an industry-wide sales slump in 2015, with the goal of“sustaining long-term consumer demand and promoting the integrity of the industry,” said its chief executive Jean- Marc Lieberherr in an interview from India.
The“diamond is forever” campaign by De Beers, he said, tapped into post-Second World War consumer sentiment. Diamonds came to symbolize a craving for stability and the quest for timelessness.
The DPA launched its marketing campaign late last year in a deliberate effort to tap into a more modern and relevant meaning for a generation used to fleeting interactions.
Its consumer research found millennials seek meaning and authenticity in a digitally driven world where “everything is fast and disposable,” Lieberherr said.
“We’re reminding them that diamonds are about the love about the underlying emotion, the personal mo- tivation that brings these two people together, it’ s not about the ritual, it’s not about the convention that that’s what you do when you get married.”
The world’s largest diamond miners and geologists are so on message about the “real” and “rare” attributes of diamonds that they draw the same analogies: a natural diamond is an artist’s masterpiece; a lab- created gem is simply a reproduction, like the starry night poster a university student might hang in her residence room.
The threat of a smaller overall market for the precious gems has diamond miners trying to guard their market share against companies growing diamonds in labs, which are being rapidly adopted by a variety of retailers, from independent boutiques to some of Canada’s largest jewellers.
Synthetics, a small, but growing portion of sales at Toronto’s Jacob Mercari, which only started offering them within the past year, could be really disruptive, said vice- president Gregory Jacobson.
“Obviously there is a need for it in the market. I think if the customer is happy with the lab- created diamond, I don’t really see much of a difference between the two,” he said. “It makes sense that the miners would be more guarded about it, because they want to sell the diamonds they’re mining. They don’t want to have additional competitors in the market.”
Over at the flagship Spence Diamonds store in Mississauga, Ont., store director Habib Issawi said about two in five diamond pieces sold are grown in a lab. Spence calls them “artisan” diamonds and sells them as an “ethical alternative to mined stones.” More and more customers walk in asking about the artisan diamonds they hear about on Spence’s radio ads.
“The onus is really on us to educate the client that this is not a fake,” said Issawi, an expert in artisan diamonds. “The difference is it’s just a diamond that’s been created above ground versus below ground.”
Lab- created diamonds are created by subjecting a mined “seed” diamond to extreme heat and compression to culture new diamonds. The process has been in development for some 50 years, but has only recently reached the time-and costeffectiveness and quality for jewelry.
From a scientific perspective, they are nearly identical to mined diamonds. They have the same chemical and physical properties, and any differences between them and their mined cousin are indistinguishable to the naked eye.
Even an experienced jeweller can’t tell the difference without some “pretty sophisticated equipment,” Issawi said.
Their quality is on par with the top two per cent of the world’s mined diamonds and t here are no questions about their origins or whether any human rights abuses resulted from their mining, Issawi explains to customers.
But the selling point that really convinces buyers is that they get 30 per cent more diamond for the buck, he said. He points to a one-carat mined gem selling for $ 9,500 next to a 1.33- carat artisan diamond that sells for $9,200. For coloured diamonds, some of the rarest mined gems, the price difference can be closer to 10-fold.
“Now I think it’s to a point in which the consistency and the sizes have gotten to a level where you just can’t ignore them anymore,” he said. “The younger generation has been more eager to catch on to it because it’s revolutionary ... this is just another way of extending your dollar further without compensating on beauty, quality or anything.”
But David Johnson, midstream communications manager at The De Beers Group of Companies, said a diamond made in a lab in a matter of weeks will never rival the authenticity, nor the symbolic meaning of a gem that is billions of years old.
“Diamonds are the oldest thing you could hope to touch, so there’s a real sense of eternity and timelessness and history,” he said. “Consumers just don’t perceive that same value in laboratory-created material.”
DeBeers is also a player in the synthetic diamond market, but only produces them for industrial uses such as for drill bits or airplane windows, because, Johnson said, it does not see any real demand from jewelry consumers.
He believes synthetics will end up as mere costume jewelry, just as synthetic rubies and emeralds are used.
Despite the demographic and technological shifts threats facing the diamond industry, he is adamant that synthetics are not the “Uber” of the diamond industry.
Company research shows that consumer demand for synthetics is weak, and that millennials’ apparent lack of interest in diamonds is not supported by its studies.
But diamond producers realize they need to pivot away from the association between rocks as the ultimate symbol of heteronormative romance to focus on injecting diamonds into the milestones valued by modern customers, be they single, coupled, gay, straight, marriage-bound or not.
“Millennials still want to have that same ability to symbolize the things that are real and important to them in their lives,” Johnson said. “They still very much want to have those real authentic ways of marking important moments in their lives, even if they don’t mark them in the same way.”
A new diamond campaign targeting millennials is titled Real is Rare. The message this time around is a little more nuanced than the A Diamond is Forever theme of advertisements aimed at the Boomer generation, like the 1991 ad by De Beers at the top of...