SELL­ING DI­A­MONDS TO MIL­LEN­NI­ALS WHO DON’T CARE IF DI­A­MONDS ARE FOR­EVER

WHY MIL­LEN­NI­ALS ARE FREAK­ING OUT THE DI­A­MOND IN­DUS­TRY.

National Post (Latest Edition) - - FRONT PAGE - Sunny Free­man Fi­nan­cial Post sfree­[email protected]­media.com

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.”

PHOTO OF HABIB IS­SAWI, SPENCE DI­A­MONDS, BY PETER J. THOMP­SON / NA­TIONAL POST

SCREEN GRABS / YOUTUBE

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...

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.