By  on December 19, 2017

The recent uptick in rough diamond demand signifies a comeback for industry players, but declining consumer interest in diamond jewelry paves a challenging road to recovery. In the seventh annual Global Diamond Report authored by Bain and Co., rough diamond producers are assuming the role of marketers by significantly investing in the promotion of diamond sales.The report was developed in partnership with the Antwerp World Diamond Centre.Its findings indicate that rough diamond companies may increase their marketing spend by about 50 percent over previous years to further “promote the diamond story” and planned to invest about $150 million in both generic and private-brand marketing in 2017, the firm said. And Millennial spending is of particular interest to the industry, as they collectively “prefer ‘experiential’ luxury to tangible goods, such as apparel, accessories and jewelry,” according to the report. Companies will tap into new marketing channels and ever-evolving consumer preferences moving forward.Bain and Co. found that demand for rough diamonds drove a 20 percent increase in revenues from 2016 over 2015. And “global rough diamond production volume remained relatively flat in 2016 at 127 million carats, extending the trend of the last eight years,” according to the report. Albeit, polished prices continued to decline, reflecting “soft consumer demand for diamond jewelry across key markets.” Domestic sales for polished diamonds fell slightly in 2016, while international sales were “roughly stable” in the same year. The report said that the U.S. remains to be the largest global diamond jewelry market, but sales were flat in 2016 after years of steady growth.Future growth in the industry is contingent upon steady demand for diamond jewelry and limited substitution of natural diamonds by lab-grown stones, according to the study. In 2017, the diamond value chain remained stable overall, but rough diamond suppliers posted a 3 percent revenue decline in the first half of the year due to lower-priced assortments that formed a large share of their sales. The firm said that revenues across the cutting and polishing segment will likely stay flat throughout the year, while revenues for major retail chains are trending up.Olya Linde, a Bain partner and one of the authors of the diamond report, said increasing demand for diamonds "is a high stakes game for the entire diamond value chain. Retailers are of course focused on making diamonds more attractive for consumers, but that’s only part of the story.""Continued softening demand could have significant economic implications for entire nations that depend on the industry as one of their sole sources of revenue,” Linde said adding that midstream players are “implementing new technologies, such as automated cutting processes and advanced digital mapping and modeling of diamond cutting, to optimize yields.”Ari Epstein, the chief executive officer of AWDC, said that the firm “initiates these reports because we believe an informed diamond community is a prepared diamond community, and the challenges we face in Antwerp are intertwined with those the industry faces globally, now and in the future. We view these reports as a small part of our commitment to play a leading role in safeguarding the health of the diamond industry as a whole, which starts with a clear understanding of where we stand and where we need to go.”Epstein continued, “Our local initiatives, whether they entail developing strategies to reinforce compliance and confidence in financial transactions, democratizing the supply of rough diamonds through a robust system of tenders, or steadfast efforts to increase consumer demand, are embedded in the objective of achieving a sustainable, ethical and thereby profitable diamond industry. This report is just one way we endeavor to realize that objective.”For More Business News From WWD, See:Fashion Search Engine Identifies Top Fall Color Trends

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