{"id":28258,"date":"2024-10-16T14:07:56","date_gmt":"2024-10-16T08:37:56","guid":{"rendered":"https:\/\/gjepc.org\/solitaire\/?p=28258"},"modified":"2024-10-21T08:53:12","modified_gmt":"2024-10-21T03:23:12","slug":"global-luxury-slowdown-could-point-to-more-cyclical-than-secular-downturn-for-diamonds","status":"publish","type":"post","link":"https:\/\/gjepc.org\/solitaire\/global-luxury-slowdown-could-point-to-more-cyclical-than-secular-downturn-for-diamonds\/","title":{"rendered":"Global Luxury Slowdown Could Point to More Cyclical than Secular Downturn for Diamonds"},"content":{"rendered":"

The global luxury market, including diamonds, appears to be facing cyclical, rather than permanent, headwinds. Diamond analyst Paul Zimnisky<\/strong> explores why these shifts suggest a temporary downturn, echoing trends in other luxury sectors.<\/em><\/p>\n

Those in the diamond industry have recently been inundated with media attention and discussion around how weak the market has been. At the forefront of conversation is the competition that lab-grown diamonds have inflicted on natural diamonds \u2013 which some see as the primary factor driving natural diamond prices down some 30% from the high reached in early-2022.<\/p>\n

However, when it comes to a major globally distributed product like diamonds, the market is complex and drivers behind market behaviour are usually multivariate. This is likely the case in the current downturn.<\/p>\n

For instance, the diamond industry is hungover. Record demand for diamonds in 2021 and 2022 was subsequently met by a reversal of the same catalysts that drove the buying frenzy.<\/p>\n

For example, record government economic stimulus deployed during the midst of the pandemic had run thin by early-2023. And, lockdowns, which kept consumer spending options restricted for almost three years \u2013 to the benefit of hard luxury like diamonds \u2013 were for the most part liberated around the same time.<\/p>\n

This created an adverse effect in diamond supply\/demand dynamics which was compounded by the fact that many people had already bought their full share of diamonds in the boom years \u2013 by 2023 most consumers were simply ready to spend their money elsewhere.<\/p>\n

Further, in 2023 China (the diamond industry\u2019s second largest consumer market) effectively ground to halt and has yet to recover. According to anecdotes from supply chain participants, diamond demand in China is down in excess of 50% over the last two of years \u2013 and most of this can be attributed to large, macroeconomic variables.<\/p>\n

Other luxury products have shown similar demand volatility in recent years which could be indicative that the diamond industry is facing more cyclical headwinds rather than a cataclysmic secular downfall.<\/p>\n

According to luxury watch website Subdial, a second-hand Rolex price index is down almost 20% over the last 24 months \u2013 even higher-end Patek Philippe is down closer to 30%.<\/p>\n

\"\"
Paul Zimnisky speaking in Mumbai in October 2024. Source: Bharat Diamond Bourse<\/figcaption><\/figure>\n

On Bloomberg TV<\/em>, the CEO of fine watchmaker Breitling recently cautioned that \u201cmany brands are (too) dependent on the Chinese market,\u201d metaphorically adding \u201cyou need to have a plane with four, five engines, (so) if one engine doesn\u2019t work, the others are working.\u201d<\/p>\n

In September the Wall Street Journal<\/em> reported that the fine art market is \u201ctanking\u201d due in part to \u201chigher interest rates and inflation\u201d as well as buyer \u201csticker shock after years of ever-higher prices.\u201d The report further cited that \u201cnewly wealthy\u201d art buyers in Asia have been relied upon to \u201cmop up\u201d pieces at \u201cthe highest levels,\u201d however now with China slowing, that support is not there.<\/p>\n

Looking ahead, in September Bloomberg<\/em> reported that Richemont\u2019s Johann Rupert \u201capplauded\u201d luxury watch companies for showing supply \u201crestraint\u201d amidst softer demand conditions over the last year \u2013 a move familiar to those in the diamond trade. Rupert noted that the high-end watch industry is \u201cacting very responsibly by constraining production.\u201d Richemont is the world\u2019s second largest luxury conglomerate and owns watch brands Piaget, IWC and Vacheron Constantin, as well as, high jewellers Cartier and Van Cleef & Arpels.<\/p>\n

In the Bloomberg<\/em> interview, Breitling\u2019s Kern said that he is \u201cquite confident\u201d that the luxury industry has \u201chit bottom,\u201d notably acknowledging India as a bright spot: \u201cthe market is there, the wealth is there.\u201d \u00a0Kern finished by implying that Breitling has plans to open more stores in India in the near future.<\/p>\n

\n

Paul Zimnisky, CFA is an independent diamond industry analyst and consultant based in the New York metro area. For regular in-depth analysis and forecasts of the diamond industry please consider subscribing to his <\/em>State of the Diamond Market<\/em><\/a>, a leading monthly industry report; an index of previous editions can be found <\/em>here<\/em><\/a>. Also, listen to the <\/em>Paul Zimnisky Diamond Analytics Podcast<\/em><\/a> on Spotify or Apple Podcasts for exclusive full-length conversations with special guests from the gem and jewelry industry. Paul is a graduate of the University of Maryland’s Robert H. Smith School of Business with a B.S. in finance and he is a CFA charterholder. He can be followed on X <\/em>@paulzimnisky<\/em><\/a> and on YouTube <\/em>@paulzimnisky<\/em><\/a>.<\/em><\/p>\n

Paul will be speaking at the Angola International Diamond Conference on 23 October in Saurimo and at European jewellery show INHORGENTA on 22 February, 2025 in Munich. He will also be in Milan and Rome in February 2025 and can be contacted at <\/em>paul@paulzimnisky.com<\/em><\/a> to arrange a meeting. <\/em><\/p>\n

Disclosure: At the time of writing Paul Zimnisky held a long equity position in Brilliant Earth Group and Newmont Corp. Paul is an independent board member of Lipari Diamond Mines, a privately-held Canadian company with an active mine in Brazil and a development-stage asset in Angola. Please read full disclosure at <\/em>www.paulzimnisky.com<\/em><\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The global luxury market, including diamonds, appears to be facing cyclical, rather than permanent, headwinds. Diamond analyst Paul Zimnisky explores why these shifts suggest a temporary downturn, echoing trends in other luxury sectors. Those in the diamond industry have recently been inundated with media attention and discussion around how weak the market has been. At…<\/p>\n","protected":false},"author":7,"featured_media":28259,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[107,79],"tags":[],"thb-sponsors":[],"class_list":["post-28258","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retail","category-viewpoint"],"acf":[],"yoast_head":"\nGlobal Luxury Slowdown Could Point to More Cyclical than Secular Downturn for Diamonds - Diamond jewellery magazine<\/title>\n<meta name=\"description\" content=\"Solitaire International Magazine: Get the best diamond jewellery magazines in India. 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