Although the pandemic has significantly impacted the luxury industry, some sectors are feeling the negative effects less than others. This is the case of the diamond industry, which has shown unpredictable trends, according to the 10th AWDC and Bain & Co report entitled “The Diamond Industry Shines Under Pressure” .
In the midst of the economic crisis, the consumer’s attraction for diamonds persists.
“Our research indicates that 75% of consumers intend to spend as much or more on diamond jewelry as they did before the pandemic“, said Olya Linde, partner at Bain & Co.
For the year as a whole, diamond jewelry sales showed a slight decline of 15% compared to 22% in the personal luxury market. The decline is due in particular to the almost total cessation of activities across the entire value chain in the first month following the outbreak of the pandemic.
It was in the fourth quarter, thanks to the holiday season, that sales picked up again with the return of consumers to retailers, increasingly both online and in stores. Consumers spent money they could not afford to spend on travel or other luxury experiences and retreated to other products, such as diamonds, which they see as a solid investment.
Also, it appears that the markets of China and the United States have been the mainstays of the diamond market. The report therefore focuses in detail on this phenomenon and explains it by the world of wedding and engagement, which places this gemstone at the top of the list of desirable gifts.
Bain & Co found that social impact, ecological concerns and sustainability in general have accelerated in consumer behavior, thanks to the crisis.
The emergence of healthy values
“The diamond industry has shown remarkable agility in the face of a crisis and the pace of change has accelerated“, said Ari Epstein, AWDC CEO, “Throughout the diamond value chain, players have adapted quickly and diamond jewelry consumers have shown that they appreciate the end product and are willing to invest in it, even in difficult times. We expect the industry to recover and come out of the storm stronger“.
Initially, the large miners were able to respond positively to the economic necessities of consumers who cancelled a large number of sales. The miners showed understanding and allowed their long-time customers to postpone their purchases.
Second, the digital transformation has led to increased efficiency and transparency, but has also developed new partnerships between miners, the middle sector, and the retail trade for the marketing of diamonds. One example is the collaboration between Lucara Diamonds, HB Antwerp and Louis Vuitton.
Bain & Co also expects these changes to continue in 2021, allowing for a full recovery of the industry. According to the report, the industry has shown glorious resilience and is entering 2021 with healthier finances and inventories and a recovery in prices for both raw and polished products that continued in the first month of 2021.
Some figures …
Since the health crisis, global diamond production has fallen to 111 million carats (-20%), a sharp drop from the average annual decline of -5% since 2017.
The total volume of traded goods amounts to 164.4 million carats, or 85% of the 2019 volume, with a value of just under US$25 billion.
Trade in rough diamonds remained remarkably stable at 78.2 million carats (-1% year-on-year), exceeding 2019 levels by 23% in volume and 18.4% in value in the fourth quarter.
Exports of polished products to major consumer markets increased significantly (China +200%, USA +56%) compared to the pre-pandemic period of January 2020.
Featured Photo : © Presse
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