What's up guys, this is Jesse Korby here at Jewelers Advantage, and today we are here to talk about the diamond market. So, if you are new to the jewelry industry, this is a great time to be getting into the industry. It might not seem like it through the course of this presentation, but what I want you to hold with you this whole way is that there is opportunity because there is change.

So when you enter into an established industry such as Fine Jewelry, if you're new, you want change and you want to align with those changes. If you're a more established player, say somebody that's been around in the industry for four generations, then you actually need to listen up the most of all because you're so close to the forest that you're not going to realize that there are huge mistakes that some people are making in this industry. And the biggest mistake would be believing in things because you want to believe them, not because they're true.

Okay, so let's talk about the diamond market. We're going to talk about lab diamonds, we're going to talk about natural diamonds, but more than talking about the data points that you could get in any newsletter from any diamond marketplace, we need to actually use common sense and talk about the psychology of what is happening in the mind of the buyer in the jewelry industry. Most of the time, 90% or 95% of people are going to focus in on the topics of the jewelry industry that pertain to the B2B seller. Maybe they're a diamond dealer or something like that. People are going to talk about the diamond market as if it's a normal commodity market, like we're talking about coffee or soybeans or something like that.

The big difference here is that the value of diamonds, in as long of a timeline as you would ever be able to remember because it's as long as any of us have been alive, it's been manufactured. It's a manufactured perception. So I'm not going to give everybody the full history here of De Beers, but the idea is that we have to remember and put our finger on the pulse of what is actually real and remember that "A Diamond is Forever" is a marketing campaign. It's not actually real.

Remember that "A Diamond is Forever" came about in 1947 because De Beers needed to manufacture demand in diamonds. They weren't selling, there was no actual real demand for them. So they came up with the best marketing campaign of all time, which is "A Diamond is Forever," and that has lasted since 1947. You have to think about this for a second. If we go back to the end of World War II, when your granddad was off killing Nazis, their belief about what fine jewelry was would be fundamentally different than in the decades that followed, certainly, and then especially in the 2020s.

If you think back, that was a time where finding a pearl that was the right size could have impacted global markets. And then cultured pearls happened, and then through the years, pearls become a much different status symbol—or not even a status symbol. They kind of just become a fashion item. So let's understand here and appreciate that when it comes to the psychology and perception of a particular product, there is no permanent shelf life. There is no permanent shelf life, and anything that has a market is susceptible to some type of market collapse. We're not guaranteed to have a diamond market.

Now, people are heavily invested into it. If you get into any of the various online communities on social media for the jewelry industry, you'd think that this is an actual real debate rather than something that's so clear-cut of what's happening between lab diamonds and natural diamonds. Because people are so invested into natural diamonds in some places, they have to believe that there's a future with them. Right?

So this idea that lab diamonds are an investment, from a psychological perspective, that's not guaranteed. Back in 1947, gemstones would have been something that people would have heard stories about growing up. They would have been a collectible, some type of an investment vehicle, because the customers didn't have as many options at that point. Now, you can get on social media and have your attention pulled in a million different directions on tons of different things that you'd be collecting. People weren't collecting action figures in 1947. They probably weren't collecting baseball cards the way they are now.

I know they had baseball cards and they had stuff like that back then. If you have cards from back then, they're probably worth a lot of money. But if you had a collectible that was a baseball card or an action figure or crypto, who's to say that NFTs won't eventually find their way to becoming a successful investment vehicle or collectible? There's just different options now. There's different options now, and there's different attitudes generationally of what matters.

So what was paired with "A Diamond is Forever"? This was the marketing message. There was also a unique selling proposition that was attached to that marketing message back then. This is like the underpinning logic that goes with the emotion. Every marketing campaign and sales strategy has this. What De Beers did was they tied that it must be three-month salary. Imagine them sitting in the office just being like, "Well, how much are we going to charge for these diamonds?" So they must have been laughing their asses off, sitting there going, "Why don't we just tell them they have to spend three-month salary on this little stone?" We might as well aim for the stars because we're not making money off of these diamonds anyway. Let's tell them it has to be three-month salary for a particular size of diamond, and a diamond is forever. So there's the emotion, and if you don't do this, you're somehow less valuable as a man. That's a compelling argument. Hit them right in the ego.

So this was all made up, guys. Remember that this was all made up. So when we think about the newsletters that come about from the various diamond marketplaces that are all run by older generations that have older ways of thinking, the talking points that I've heard in the industry are: "Well, is anybody really going to want to give a cheap item like a lab engagement ring, $1,200, as a gift? That's not an appropriate gift for an engagement ring. You're supposed to spend three-month salary on it." Is it a suitable gift? That's an industry talking point. That is an industry talking point. That is called drinking our own Kool-Aid. That's called getting high on our own supply.

The most dangerous thing that you can do in this industry is believe the marketing messages that are intended for the customer. This isn't for you. This is for the customer. So when we talk about, "Is it a suitable gift?" Well, this is why I know that this isn't true and real. This is all just people echoing what they hear in the newsletter from the marketplace, from people that are reporting on the news of the diamond industry that are also selling you diamonds. Could there be a conflict of interest there?

So, is it a suitable gift? What about what the customer says? What do they get a vote? What about the customer? What do they think when we're talking about lab diamonds or natural diamonds? When people bring up the idea of, "Oh, well, lab diamonds are just going to be like the new CZ. It's going to be... the pricing is just going to keep going down and down, and then that's not going to be a real item," and there's like this kind of like arrogant laughter going back and forth in that type of messaging. I just see the conversations, hear the conversations, and so on.

This is the thing that people are forgetting, that lab diamonds are not like CZs because they don't scratch or break down or what have you. They are identical on the molecular level to a natural diamond. So when people are asking the question, "Is it a suitable gift?" this person is going to be asking questions to a real salesperson that is going, and the customer is going to say, "It's a real diamond though, right?" And rather than it being with CZ, where you have to say, "Well, no, it's not. It's beautiful, but this isn't a real diamond," the salesperson can say, "Yes."

Is it a real diamond? The answer's yes. So what happens then in the heart and mind of the customer when they hear that? They're not educated. They don't have a GIA diploma like you do. You could go into, I guess, a long list of reasons why they could maybe be different products, but is that going to change the way that the customer feels? They're just seeing, "Well, wait a second. That means, so, this one is cheaper, and this one—the natural one's more expensive, but I can get the bigger one that looks like the big beautiful rings on social media if I get the lab and then it's going to cost less?" Yes, your answer is going to be yes to the customer.

So then they're going to choose the lab diamond, and they have been. So beyond the psychology of it, the basic stats are: sales of lab diamonds are up 12.5% in 2025, and since 2020, because of manufacturing efficiencies, the cost of those lab diamonds have declined by 75%. So demand is increasing, and then it's only becoming more efficient to manufacture them and flood the market with more of them, and they look just like the natural stones, and at the molecular level, they are basically just like the natural stones.

So then on this side, we have the data being that, well, sales are down 7%, so just a slight decline, and then the price has not dropped as dramatically as lab diamonds. At a 75% drop since 2020, it's down just 8%. So basically, it means that it's going to be much more efficient to produce lab diamonds, and because there's more demand, it's going to be less friction to getting that sale. And because of the lower cost, I saw a lab diamond the other day priced at $75 for one carat. A one-carat engagement ring at Tiffany & Co. could be between $12,000 and $16,000. Why would the customer choose to spend that much money?

So we have to think of this just from a human behavior perspective. When people bring up this talking point of, "Is it a suitable gift?" this would be the first time in human history that a human has been presented with the options of either option A or option B, and option A looks practically the same as option B, but you get more of it for cheaper. But then they're going to decide because of a moral reason that they want to spend more money. When have human beings ever decided, because of the morality of something, that they want to spend more money on something? Like, a lot more? It's not going to happen.

So what is going to happen is that this relationship between these two products will continue. When people say it's going to split into a market, the customer has a choice. So they're going to—there's going to be two distinct markets. There's going to be the customer that wants lab diamonds and the customer that wants natural diamonds. They're all just part of the same diamond market. It's just that the customer has a choice. It's not going to delineate out into the two, because if these numbers keep changing and moving, one becomes much more profitable to produce, and then the customers that—or, excuse me, the businesses that are selling these, that have a more efficient product that they can sell, have more money potentially left over for advertising. And then this product ends up getting promoted more than this product while making more money.

So yes, there's a line drawn in the market right now. It might seem like there's two markets right now, but it's because they're doing battle right now in the same diamond market.

So there's a lot that we could go on with this. I just don't want this video to be an hour long, but the idea here is that we don't get to decide what the customer is thinking and feeling. We can decide what to communicate to them, and if it resonates with what is natural for them to think and feel, then the marketing works. Then you can actually justify the unique selling proposition. In this case, the three-month salary, but it's not there anymore. All they know is that it's a real diamond. It looks good on social media. I can get the bigger one if it's lab, and there isn't a big stigma.

This here, "Is it a suitable gift?" that's an industry talking point. That's not a stigma in the hearts and minds of the customer. That's something that we're saying because we don't like it. The customer hasn't come out and said like, "Hey guys, whoa, whoa, we got to pump the brakes on these lab diamonds because this isn't right. Okay, we need to be—" "Give more suitable gifts to people." We need to get back to spending more money.

I know I can't afford a house right now or a car, but like, hey, I'm with the love of my life, and we're going to be spending—we're going to be big spenders on this engagement ring, because I really got to let her know how I feel. Doesn't that sound like nonsense? That sounds crazy.

So the point is the customer knows that it's a real diamond. They've been educated on it. The answer now is always yes when they say, "Is it a real diamond?" And then what does that mean is actually going to happen? This isn't a doom and gloom video. I'm not here to say that the jewelry industry at large is going to tank because humans have been wearing jewelry forever, and we still have gold, and we still have silver, and we still have platinum acting as very viable anchors to the value of the jewelry.

It's just that diamonds are probably not going to be the premier material to pair with those metals long-term. There's no guarantee that that happens forever. So there's trends with other precious stones gaining more popularity. There's going to be plenty of people that want to buy lab diamonds. Maybe we end up seeing something that's much more like cultured pearls with lab diamonds. Maybe the investment stones are kind of like rubies. That's how they could go, but you can take this to the bank with all of this chaos, and that's what it is. It's just absolute chaos and pandemonium in the market.

We can expect that if lab diamonds have momentum that shows no signs of slowing down, and the customers are not outraged by these lab diamonds, it's only the jewelry industry that is outraged and wants to protect natural diamonds. It's just Darwinism at that point. And if everybody is selling the same things, or at least is kind of wed into the same chaos, then what is going to be the differentiator? It's going to be who can tell the best story. Brand wins.

Go on Prada's website right now and check out their jewelry, lab diamond jewelry in 18 karat gold from Prada, among the top 10 most valuable luxury brands in the world. Okay, that's brand winning. If you're a new jewelry business entering the market, you need to get very aware of how you're going to have really great content on social media and tell a story that is going to be your own version of "A Diamond is Forever." Something that brings about emotion, and this could be the type of customer that you sell to, the type of community that you're selling into.

Your "A Diamond is Forever" is going to be completely different. You're going to tell a completely different emotional story and your USP, in the case of De Beers, it was, "Well, the logic is this needs to be three months salary because a diamond is forever." You would also need your own unique selling propositions about what are the features that make the jewelry special. Maybe you're completely getting away from diamonds because, like, this is crazy. I'd rather just get into selling sapphires, or I've always really loved opals. Maybe I'll just focus in on that or moonstones or whatever. There's a lot of choices, right?

It's all going to come down to having the same blueprint as De Beers, of pulling emotion in your own way, underpinning that with logic in your own way, and having a story that is tied to what the customer wants to buy. Pay attention to what the customer wants, not what a bunch of people in the jewelry industry are saying. We all need to do the market manipulation thing. It worked for decades upon decades, but the most dangerous thing that you could do in this industry is believe something because you want to believe it, or believe something because other people want to believe it and you're not thinking for yourself.

You have to be thinking more about what does the customer want to buy, and what is actually going to be profitable? Where is the puck moving? I do not think that we are going to see some kind of miraculous shift and change in the customer's thinking that results in an actual real data-driven uptick in a new adoption and new revolution of natural mined diamonds. Not happening. It sounds crazy to even say that, because life is always changing, the world is always changing, and markets are always changing.

So if you need stability, be thinking about what are the natural gemstones that people might prefer as an alternative to diamonds. We're in a brand new world now where maybe the old belief systems no longer are taking hold anymore, and people have more options. They're finding out about new products, and they're ready to try something new. So let's be ready to adopt something new in 2025. My name is Jesse Korby here at Jewelers Advantage, and we will see you in the next one.