Where is the international diamond market located

Bain report on the global diamond market

Diamonds sparkle again

Munich (ots) - After years of stagnation, the global diamond industry is back on a growth path

- After a moderate increase in 2017, the demand for the
precious stones, especially in 2018
- Americans and Chinese in particular have diamond jewelry

The diamond business shines in new splendor. After a phase of stagnation, the entire industry grew again by 2 percent in 2017 for the first time. At 151 million carats, the mines dug almost 20 percent more rough diamonds. The international management consultancy Bain & Company attributes the recovery in the industry in its "Global Diamond Report" to the overall positive development in the luxury market. Together with the Antwerp World Diamond Center
Bain has created this report for the eighth time.

In the USA and China in particular, diamond jewelry has found many new fans. In China, demand had stagnated since 2013. But now it is mainly millennials and young women who are enthusiastic about the expensive jewelry. They don't get this as a gift, but are increasingly buying them themselves.

Diamonds are forever

The positive development was already apparent in 2016. In the following year, all segments of the value chain grew significantly, from mine operators to processors and jewelry retailers. Bain partner and luxury market expert Oliver Merkel predicts: "This trend is expected to continue into the 2030s."

By the end of 2018, the diamond market had further increased momentum thanks to the high demand for jewelry from the wealthy. In the first half of the year, mine operators and jewelers in particular presented encouraging figures. Tourism and the appreciation of the euro brought a recovery to the European markets, which had been weak for years. In Japan, on the other hand, the positive development on the labor market resulted in greater demand for diamond jewelry. Even in troubled India, the first signs of an improvement in the diamond business can now be seen.

Boom in the mines

The eight-year stagnation in the diamond mines was finally overcome in 2017. However, the significant increase in production was initially limited to stones of low quality, so that the increase in sales was still rather low. This changed the following year. The output remained high, at the same time the prices per carat rose, as larger stones of even higher quality were in demand.

Among the processors who cut, grind and polish rough diamonds, the producers of smaller diamonds in particular benefited in 2017. The entire industry generated margins of 1 to 3 percent on average. The most efficient companies were even able to show around 10 percent of sales as profit.

Pay attention to decisive market trends

In order to be able to further increase their profitability, all market players should pay attention to three important industry developments:

1. Digitization: Through digital technologies, added value can be increased throughout the company. In marketing in particular, they open up numerous opportunities to better reach customers.

2. Artificial diamonds: Diamonds produced in the laboratory have established themselves on the market. Even the traditional manufacturer DeBeers sells the artificial stones - through its newly founded Lightbox. If the providers succeed in clearly differentiating the natural diamonds from the stones grown in the laboratory, for example by selling the latter as costume jewelry, the negative impact of artificial diamonds on market growth is likely to be minus 5 to minus 10 percent by 2030

3. Young customers: Marketing and sales have to adapt to the needs of Millennials and Generation Z. Young women have ever higher incomes and buy their own jewelry. These customer groups, which are new to the industry, base their purchasing decisions primarily on influencers, reviews and likes in social networks - a behavior that the industry is not familiar with from its previous customers.

Bain & Company

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