De Beers has kept a cautious outlook for the coming year after its Diamond Insight Report signaled the diamond jewelry market contracted last year. The company, however, sees untapped opportunity in millennials.
“The rest of 2016 and 2017 are not going to be stellar years from a global GDP point of view or in terms of diamond jewelry consumption,” CEO Bruce Cleaver told Rapaport News. “It does feel that the rough diamond world is in a more stable place and that stocks in the midstream are more in balance, but we remain cautious in our outlook.”
De Beers has had a positive year, with its rough sales jumping 11 percent to $3.1 billion in the first half. That enabled the company to reduce its stock of rough built up last year off the back of a slump in revenues. Global rough sales to manufacturers plummeted 30 percent to $13.7 billion in 2015, according to the Insight report De Beers unveiled at the Hong Kong Jewellery & Gem Fair on Thursday.
Working inventory is “much more” in balance than it was at the beginning of the year, Cleaver added. The company maintained its production guidance of 26 to 28 million carats for this year and Cleaver stressed there’s no reason to make further adjustments. That after global diamond production fell slightly to 141 million carats, or by 10 percent to $17.5 billion last year, the report stated.
A Diamond is Forever in China
Cleaver expects the market to remain steady through the holiday season as he hopes the planned marketing campaigns by the Diamond Producers Association, De Beers and others will help lift demand.
De Beers is relaunching its “A Diamond is Forever’ marketing in China for the Chinese New Year season, having reintroduced it in the U.S. in time for Christmas last year. It anticipates the slogan will continue to resonate in both markets, particularly with millennials who De Beers notes is driving growth in diamond jewelry consumption.
Millennials spent more than $25 billion on diamond jewelry across the U.S., China, India and Japan, accounting for more than half the total retail value of diamond jewelry purchases in those top four markets, the report stated.
“Millennials are still 10 years away from their most affluent life stage and the generation comprises more than 220 million potential diamond consumers in the four main markets,” Cleaver said in the report. “The diamond industry therefore has a major opportunity on the horizon but it will only capitalize on it fully if it continues to innovate and invest across the value chain.”
De Beers estimated global diamond demand fell 3 percent to $79 billion in 2015, while the diamond content in jewelry sales dropped 2 percent to $24.7 billion.