Millennials prioritize paying their debt over diamonds
The jewelry industry is adapting
Adapted from a story by The Washington Post’s Abha Bhattarai.
Lab-grown diamonds, quietly arriving in stores across the country, are increasingly marketed to younger Americans as an ethically sourced alternative to traditional diamonds. They cost about 20 percent less than mined diamonds and, according to experts, are indistinguishable to the naked eye. And yes, they sparkle. (All diamonds are made of just one element: carbon.)
The introduction of the mass-market diamonds could have sweeping implications for the $80 billion industry, which for decades has relied on the perceived scarcity of the stone to drive up values. Sales of lab-made diamonds, estimated to be about $150 million, could grow to $1.05 billion by 2020, according to a recent report by Morgan Stanley.
Jewelry manufacturers say they’re seeing dramatic growth. At least one jewelry manufacturer says its sales of lab-made diamonds are nearly doubling each month, as millennials in particular — a generation bogged down by stagnant wages and billions in student debt — opt for the lower-priced gemstones.
A ‘messy’ market
Millennials aren’t much interested in diamonds. They’re putting off getting married, and when they do get engaged, diamonds don’t seem to be the requisite tokens they once were.
The prices of high-quality diamonds have fallen by as much as 80 percent over the past 30 years, when adjusted for inflation, according to the RapNet Diamond Index, an industry benchmark.
Sales of diamonds have stalled in recent years — rough-diamond sales fell 25 percent in 2015, leading to a 15 percent drop in prices — and jewelers say the coming years are likely to be critical for the industry, as millennials hit peak spending potential and begin settling down.
In that vein, Amish Shah — president of ALTR, a division of R.A. Riam Group, a New York-based wholesale jeweler — has tossed out the notion that “a diamond is forever,” a tagline created to promote De Beers’s engagement rings in 1947. Instead, he has taken a decidedly different approach: trying to convince millennials that diamonds are about passion, not commitment. (That’s not to say the diamonds, which are chemically identical to the old-fashioned ones, won’t last forever.)
To illustrate the point, he brought on newly engaged couple Nick Viall and Vanessa Grimaldi from the reality show “The Bachelor” — a franchise not exactly associated with long-lasting relationships — to promote his line of lab-created diamonds.
“The whole culture surrounding relationships has changed — it’s not about being with someone forever anymore, or about Cinderella and Prince Charming,” he said. “Today’s relationships are messy, they’re intense. They’re about the here and now.”
How diamonds are artificially created:
- A paper-thin sliver of diamond, which jewelers call a seed, is placed in a high-heat, high-pressure chamber.
- Gasses work to transform the seed.
- Carbon atoms develop and attach to the seed, creating a diamond bit by bit.
- The diamond is cut and polished
- In total, it takes about eight weeks.
The technology has been in the works for decades — lab-created diamonds have long been used for industrial purposes — but it’s only in the past few years that laboratories have been able to consistently create gem-quality white diamonds, Shah said.
A matter of priorities
Roughly 70 percent of U.S. millennials say an engagement ring “has to have a diamond,” compared with 67 percent of non-millennials, according to a recent study by Bain & Co.
But even as young Americans hold traditional views, jewelers like Shah observe that their priorities are changing. A recent study by De Beers, for example, found that millennials would rather splurge on overseas holidays, weekend getaways and electronics before buying diamonds.
“The number one reason millennials are buying created diamonds? Because of the significant price discount,” said Aleksey Martynov, a principal in Bain’s Moscow office who studies the diamond industry. “Economy trumps all for now.”
But long term, the value of the earth-made variety may fare better.
“They won’t hold their value,” Dino Pampillonia, co-owner of Pampillonia Jewelers in Washington D.C., said of lab-grown diamonds. “Ten years from now, the technology will be cheaper and they’ll barely cost anything — kind of like flat-screen TVs. They don’t have any resale value, as far as I’m concerned.”
At Mark’s Jewelers, outside of Philadelphia, sales of lab-created diamond are up 40 percent this year. But it’s not just younger customers who are interested.
“We’re selling them to everyone from 20-year-olds to couples celebrating their 35th wedding anniversary,” owner Jim Brusilovsky said.
Hillary Gack had never heard of lab-created diamonds before Sunday, when her boyfriend of eight years got down on one knee to propose. He had picked out the ring a few weeks earlier, after months of searching for a diamond ring. When one finally caught his eye, he was surprised to hear it had been created in a lab — and even more surprised to learn it was within his budget.
“I never thought I would wear something so beautiful,” she said.
