In this video Michael Girdley explains the dramatic decline of the diamond market, noting that natural diamond prices have fallen 26% year‑over‑year while lab‑grown diamond prices have plunged 74% in recent years. He traces the origins of the modern engagement‑ring industry to De Beers’ post‑World‑II cartel, which used mass‑media campaigns and supply restriction to embed the expectation of a costly diamond ring in American culture, especially among baby‑boomers. Girdley shows how that strategy succeeded because of high marriage rates and a cultural emphasis on material displays of love. He then outlines the forces that have eroded that demand: the rise of social media and ethical concerns about mining, a generational shift toward authenticity, experiences over possessions, and a steep decline in marriage rates. The advent of inexpensive lab‑grown diamond technology has removed supply constraints, flooding the market and further depressing prices. Girdley argues that while the current environment is bleak for jewelers, the market is cyclical; a future generation may again value conspicuous wealth, but that resurgence could be 30‑40 years away. He concludes with a personal anecdote about buying his own engagement ring, describing the purchasing process as painful but ultimately worthwhile because the ring holds lasting personal value.
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So absolutely interesting news out this week about the diamond market. It is in absolute freefall and in crisis. So if you haven't been following it, the stats are as follows. Mine diamonds, like they pull them out of the ground, they're natural, they're down 26% in prices year over year. And even worse, artificial diamonds, so the ones that they make with machines that are just as good as the mined ones, are down 74% just in the past few years alone. So kind of a crazy thing for a basically rite of passage purchase that people would make when they would go get married and buy a diamond engagement ring. Pretty crazy to see that something that people would spend tens of thousands of dollars on or even millions of dollars on to buy fancy ones is in total price cratering. And it's fascinating to see what's happening. And that's what this video is about. I'll talk about how we got here, what is going on in the market, and what can we learn from this as entrepreneurs. So, and at the end, I'll give you a hot take on how I feel about diamonds as a man who proposed with one. So that's what this video is about. Hang tight. Hi, my name is Michael Girdley. If you're new here, I am a business nerd. I love going for walks in my neighborhood, learning and talking about and teaching about different topics in business for people who are on the same journey that I've been on for the past 20+ years as a CEO, business owner, business creator, employer, and well, I was an employee for a while too. So if you like that kind of stuff and want to learn more about business and insights from it and the stories behind the stories, please subscribe. Also check out our newsletter. There's a link on my profile page. So I think a lot of people are surprised to learn that the concept of you know, diamonds as a rite of passage for somebody getting married. Uh, it's a relatively new phenomenon. It actually started just after World War II, uh, where a cartel named De Beers, who was South Africa-based, decided to come in and try to influence consumer behavior in the United States through basically mass media. And they went and did all kinds of stuff, uh, everything from, you know, placing newspaper articles to getting diamonds featured in in movies, to even having and paying for teams of folks to go out to schools and train young women that they should expect a diamond engagement ring when a young man was going to propose to them for marriage. Look, De Beers, pretty smart group of people, also not super scrupulous. And look, De Beers is a case study that marketing does indeed work. If you didn't already believe it, looking at, say, Nike and Coca-Cola, You know, the idea of being able to manipulate the public and get them to do certain things through basically the media. Man, De Beers put on a masterclass and every young lady seemed to grow up wanting to, expecting a diamond engagement ring when a man proposed. And of course, that man would need to spend real money on it. 2 months' salary was the guideline they would give people. But I also referred to De Beers as a cartel. So the idea of a cartel is you control supply. And that was one part— well, basically stimulating demand was one of the things De Beers did. But the other thing they had to do was to go control supply, because if you're going to have really high prices for rocks that are pulled out of the dirt in Africa, you need to make sure that people can't flood the market with those rocks. You have to control the supply. And here's the little wacky secret about diamonds. They're not actually that rare. If you go look at them geologically, there are a lot of things out there that are harder to come across than diamonds. And De Beers did something really smart. As a cartel, they went and limited the supply, and that was key to keeping the prices up. And so the strategy, like, it turned out to be totally genius because it hit America at a perfect time. Baby boomers as a generation are the most likely to marry generation in history. Uh, 96% of them, depending on how you look at the numbers, but up to 96% of them will get married at least one time in their life. And for a generation for whom physical objects is how you connote and express kind of appreciation and love for another person. The baby boomers were a perfect and fertile ground to target for the De Beers Corporation and everybody involved in the diamond business. And here's the thing, baby boomers also got divorced a lot, but they would love to get divorced and then get remarried. And 67% of the time when baby boomers got divorced, they would go get married again. And guess what they would do the second time around? Yep, buy another engagement ring. And De Beers would ride that trend all the way to the top. Um, yeah, sell them, sell them big dollar engagement rings. It's pretty genius. And look, even the kids of the, uh, of the baby boomers, so my generation, Gen X, born 1965 to 1980, we did our part too. We got married and, uh, heck, I'm Gen X. I bought my wife an engagement ring. I was happy to do it. And the younger folks that were kids of baby boomers did the same thing as well. Older millennials, kind of born 1980 to 1990, they did the same thing. They were very likely to get married and they went and bought engagement rings. And we all kind of followed the recipe you're supposed to. If you loved this woman or loved your potential spouse, you spent 2 months salary on them, which like, that's a lot of money, 2 months salary. And De Beers rode this trend all the way to the top, eventually generating $6 billion $1 billion a year in sales in the 2000s, selling to baby boomers, millennials, and Gen X. And what's interesting is all three of those generations, we were the last to be kind of highly susceptible to the things that had created the De Beers business from the beginning. Back when we were growing up, like I was growing up in the '80s, newspapers still mattered, TV still mattered, movies still mattered. These were the things that you could use to basically shape people's perceptions of things. And De Beers had proven to be a master at that kind of marketing. It's the same thing that Nike did, same thing that Coca-Cola did. But then everything changed. And I talk about a lot of this channel, the same thing that creates your business is the same thing that eventually kills a business. And in the case of De Beers and the diamond engagement ring market, uh, the thing that created it was the rise of kind of mass media and their exploitation of it to change people's minds. But with the decline of mass media and the rise of social media, like, that kind of ground totally flipped the script on De Beers and the idea of diamonds. And starting in the late '90s and early 2000s, media and eventually social media started to share different messages with young millennials, those folks kind of born kind of late '80s to mid-'90s, uh, and Gen Z. And what they started to tell those people was about the conditions that the miners and the environment went through in Africa where a lot of these diamonds were produced. And instead of wanting kind of gaudy shows of wealth like previous generations did, or feeling obligated to do it like my generation did, Gen X, uh, millennials, younger millennials, and Gen Z wanted to prioritize being authentic and wanted to prioritize doing things right by the environment and wanted to prioritize experiences over kind of, well, just wealthy displays of wealth, uh, that a diamond kind of proved it was. And the second thing killing demand and going against the diamond market is the decline in the marriage market. Um, the marriage rate back in the early 2000s was 9.8 per 1,000 people. Uh, that number decreased by over 50% over the next couple decades. Young people, they're either delaying or not getting married at all. Not good if you want to sell them engagement rings. But wait, there's more. Things keep going wrong for the diamond market. Uh, remember we talked about how technology enabled the, the De Beers Corporation to go get these diamonds cheaply out of the ground? Well, technology did not stop evolving over the years, and we are today at a point where the technology to grow your own diamonds— in other words, lab-grown diamonds— is easily available. I mean, this stuff's been around for the last 30 years where people do kind of the plasma thing and create diamonds. Well, you can go on Alibaba today and buy every piece of equipment you need to produce your own diamonds for $200,000. Basically the cost of a couple Teslas, and you could produce your own diamonds. And that is shown in the pricing. Uh, as I said before at the beginning of the video, prices for lab-grown diamonds are shrinking incredibly. They're down 74% in the last year alone. So that brings us to where we are today. People aren't getting married. If they are getting married, they don't want a gaudy show of affection that a diamond typically represents. And we have unrestricted supply. So the market is flooded with diamonds coming out of machines and laboratories that you can, well, get off Alibaba. So that's why we're seeing the price pressure. And man, it's a tough time to be a jeweler. So I do have good news, uh, which is that things always seem to go in trends with cultural phenomenons. So the good news is diamonds will eventually come back. There will be a reason to have them again, just because of the cyclicality of the way generations work. At some point, there will be a generation in the future that cares a lot about gaudy displays of wealth and for whom material possessions are the way to communicate emotion again. The bad news is it's going to be another 30 to 40 years until that generation is born and they're adults. So if you want to play the long game on diamonds, hang around. And look, buying a diamond for me was only slightly less painful than the process of buying a car. I hate going to car dealers, uh, because there's just no way that you can go into a car dealer, or in the case of a jeweler, go in there and feel like you didn't get robbed. There's just no way to get around that, uh, the way they do the whole process, the pricing, the measurement, all that kind of stuff. And I know there's people that have tried to fix that stuff, but for me, we bought one diamond as a couple, and that was our engagement ring, and And fortunately I won the battle where we never had to go back again. I still love her though. And in the end, my wife wears that diamond engagement ring every single day. And no matter what the cost was, it's worth it in my opinion. So for that, the diamond is indeed forever, at least in my life.
