x
After the covid epidemic, what are the prospects for the jewelry market and, in particular, those with diamonds? This question is answered by a long and in-depth report by one of the largest consulting firms in the world, Bain & Company, based on input from the Antwerp World Diamond Center. Result: the pandemic has also affected diamond jewelry sales. But less than in other luxury sectors. And the conditions for a recovery are all there.
Diamonds. In summary, explains the Bain & C report, as regards the entire sector linked to the sale of jewelry and diamonds, revenues decreased from 15% to 33%. Operating margins fell, but with significant differences: from -1% to -22%. Despite these declines, however, the global retail diamond jewelry market ($ 64 billion) outperformed the personal luxury market, which contracted by 22%. On the other hand, the production of rough diamonds has dropped a lot, down by about 5% since 2019. But in 2020, production decreased by 20% compared to the previous year.
One of the consequences of the various lockdowns was the increase in rough diamond inventories, which grew to 65 million carats, before declining with fourth quarter sales to 52 million carats (+ 17% from stock level at the end of 2019). Still on the diamond market: rough and polished stones continued to come under pressure. The prices of rough and polished diamonds began to decline in 2018, and then decreased in 2019 by 7% and 4% respectively, due to excessive stock. In 2020, raw and polished prices fell by 11% and 3% respectively.
The sales. As is well known, lockdowns, travel restrictions and economic uncertainty have all contributed to reducing jewelry sales. Sales, globally, fell 15% in 2020, with most of the decline concentrated in the first and second quarters. In addition, the demand for diamond jewelry has become more localized due to travel restrictions. However, preliminary estimates show growing consumer confidence and an increase in retail activity.
Forecasts. And for the future? Consumers continue to see diamond jewelry as a desirable gift and a key element for marriage, the report explains. In a customer sentiment survey published by Bain, US consumers said jewelry and watches are among the top four gifts they would like to receive. Consumers in China and India ranked them in the top two. In the United States, China and India, 60% to 70% of respondents believe that diamonds are an essential part of an engagement. And after the pandemic ended, 75-80% of consumers said they wanted to spend the same amount or more on diamond jewelry than they would before the crisis. A fact that indicates a strong and continuous emotional connection with the history of the diamond.
Synthetic diamonds. What Happens With Lab Made Diamonds? Continued technological advancements, warns Bain & C, have contributed to double-digit production growth and lower retail prices for lab-grown diamonds in 2019 and 2020. The price difference between natural and lab-grown fancy color diamonds it is particularly surprising, up to ten times. Thus, major jewelry retailers are adding lab-grown diamonds to their product offerings, further positioning the category in the fashion jewelry segment and making it accessible to a wider range of price-sensitive consumers. In essence, the research explains, two different classes of buyers will be formed: those who look for jewelry with natural diamonds, which can maintain value over time, and those who buy jewelry with synthetic diamonds and less expensive for a simply aesthetic choice, linked to the fashion.
Other important factors are sustainability, transparency and social equity, concepts that have become priorities for consumers, investors and the value chain. They are now in the foreground for mining, trading and retail companies. In the United States, and particularly in China and India, younger consumers say that sustainability is part of their decision-making process and could influence the purchase of diamond jewelry.
