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By
DPA
Translated by
Barbara Santamaria
Published
Dec 13, 2017
Reading time
3 minutes
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Global diamond industry needs to step up marketing efforts, report says

By
DPA
Translated by
Barbara Santamaria
Published
Dec 13, 2017

Diamond jewellery is no longer a top priority for luxury consumers. The younger generation, in particular, now prefers to make trips to exotic destinations instead of investing in diamonds. As a result, global sales of diamond jewellery stagnated in 2016, according to the seventh annual report on the global diamond industry prepared by the Antwerp World Diamond Centre (AWDC) and Bain & Company.


Photo: Wikimedia



In the US, the largest global diamond jewellery market, demand was almost flat in 2016 following several years of consistent growth. Sales in China fell as a result of the sharp depreciation of the yuan, while in the important Indian market, a strike by jewellers and the abolishment of the 500 and 1,000 rupee notes dampened growth. Only the Japanese diamond jewellery market showed growth in US dollar terms.

The short-term future of the diamond jewellery trade doesn’t seem too bright either. For rough-diamond producers, 2016 was an improvement on the previous year, as they sold off high inventories accumulated in 2015 at cheaper prices, driving a 20% increase in sales. Rough-diamond production volume remained relatively flat in 2016 at 127 million carats, however sales declined 2% in the first half of 2017.

Midstream players, who cut and polish diamonds and in some case turn them into jewellery pieces, are currently experiencing no significant growth. The decline in the prices of polished-diamonds translated into a slight revenue drop in the cutting and polishing segment in 2016.

‘A diamond is forever’: This slogan drove constant growth for mine operators, producers and jewellery makers for the largest part of the 20th century. But from early 2000s, the industry has neglected the need to support growth with marketing. Generic marketing spend by rough-diamond producers has decreased from 5% to less than 1% of total sales of rough diamonds, and promotional efforts have shifted to private brands instead of the industry as a whole. This has led the rough-diamond industry to lag behind other luxury products such as handbags or cosmetics.

To reverse the trend, rough-diamond players plan to launch a new marketing campaign for the industry. In 2017, investments of about $150 million (127 million euros) were planned for both generic and private-brand marketing, representing a 50% increase over previous years. “There is a lot at stake worldwide for the industry,” says Bain partner and luxury expert Serge Hoffmann. “If demand continues to fall, all those economies that depend largely on the diamond business are at risk.”

However, their margins can be increased by midstream players when demand falls. In 2016, for example, the midstream segment achieved this by lowering the prices of rough-diamonds. Additionally, they are constantly working to optimise their processes and improve their efficiency. “With new technologies such as automated grinding or digitally calculated cutting plans, midstream players can reduce their costs,” says Hoffmann.

The industry’s efforts to improve marketing and make production more efficient are followed by an upbeat mood in the market. “Given the strength of the global economy, we expect a slight upward trend for jewellers in individual markets this year,” adds Hoffmann. “The prerequisite for a long-term positive future for the industry, however, is that demand for diamonds must continue to grow strongly and natural diamonds must stop being substituted by lab-grown stones.”

Bain & Company, founded in 1973, is one of the world’s leading management consultancies. Bain has 55 offices in 36 countries and employs 7,000 people worldwide.

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