The Diamond Insight Report 2016, released on September 14, 2016  by The De Beers Group of Companies said that  Millennials (those aged between 15-34 in 2015) acquired more jewellery than any other generation in 2015, spending well over US$25 billion on diamond jewellery in the four largest consumer markets – the US, China, Japan and India.  This, the report said was despite the segment “facing more financial challenges than their parents’ generation”. The Millennials now account for almost 50% of the total retail value of new diamond jewellery acquired in the four largest markets.

“In the top four markets, which account for 73 per cent of global diamond jewellery demand, the potential Millennial market for diamond jewellery is more than 220 million people,” De Beers said. “Meanwhile, the Millennial generation is not expected to reach its most affluent life stage for another 10 years, meaning this demographic also represents the diamond sector’s largest growth opportunity.”

The report recommends that “In order to unlock this potential the industry needs to find appropriate ways to engage Millennials’ inherent need for self-expression and interconnectivity.”

Bruce Cleaver, CEO, De Beers Group, in his Foreword summed up the period since the first Diamond Insight Report was published two years back in 2014. While that year was a record one for diamond jewellery demand at the retail level, it also saw strong demand for rough diamonds. The year 2015 saw contrasting performances for these two segments.  

“With the first half of 2016 showing signs of more stable conditions returning, it is clear that volatility in the diamond sector is not a short-term phenomenon, but the new normal,” said Cleaver. 

The report elaborates upon the various challenges faced by the midstream segment as well as the pressures at the upstream mining segment.

While hailing the resilience of the sector under difficult conditions, Cleaver said: “But the pace of change is quickening and, as a sector, we cannot look to the past for solutions to tomorrow’s challenges.”

Pointing to another aspect of change he said: “As our research with Millennials shows, tomorrow’s consumers are not the same as yesterday’s.” 

The report said that consumer diamond jewellery demand in 2015 remained “robust” at US$ 79 billion – though slightly lower than the 2014 level --  driven by a five per cent growth in the US.

“China, the second largest market, also saw growth, albeit at a lower rate (three per cent in local currency),” the report elaborated. “In India, consumer demand slowed as a result of a more restricted consumer credit environment and overall weakness in consumer spending.”

Turning it gaze to the future trends the report makes a number of observations. 

“The diamond industry is likely to continue to experience increased sales and price volatility,” the report avers. “Organisations across the value chain will need to improve the way they forecast and plan to navigate this trend successfully.”

For the manufacturing sector too, caution is advised. “The midstream will continue to come under pressure periodically; financially robust and transparent diamantaires with scale, differentiated business models, and/or strong collaborations with downstream players are most likely to thrive.”

The report concludes that consumer demand growth will continue to be generated from the US and Asia, particularly China and India, driven by increasing household income over the next 10 years.