A diamond necklace in the Harrods department store in London.
Leon Neal | Afp | beautiful images
“A diamond is forever,” but perhaps not for the growing number of consumers who are abandoning gemstones in favor of lab-grown gems, gold and even colored gemstones. other.
The slogan was coined by diamond giant De Beers IN 1948, captures the impression of safety and romance. But not all relationships stand the test of time.
The company’s largest shareholder British American De Beers divestment plan as it restructures its business after rejecting a takeover offer from BHP. Anglo American CEO Duncan Wanblad told Financial Times that selling De Beers will be the “hardest part” of the company’s radical restructuring.
“Diamonds are not really relevant anymore despite De Beers’ strong legacy under Anglo,” said independent diamond industry analyst Paul Zimnisky.
“Anglo will ultimately do what its shareholders want, and it appears they want to focus on a longer-term strategy on items that support building green infrastructure, e.g. copper”.
Demand for diamonds gradually decreases
Demand for diamonds has fallen as its appeal fades in a key consumer market: China.
Falling marriage rates as well as the growing popularity of gold and lab-created gemstones have both reduced China’s demand for diamonds. Market research company Daxue Consulting. The end of pandemic restrictions also saw consumers redirect their spending towards travel experiences rather than diamond products.
Diamond prices have fallen 5.7% this year Zimnisky rough diamond indexdown more than 30% from its all-time high in 2022.
De Beers once commanded one monopoly on the diamond market, but its market share has declined. Economic conditions forced the company to reduce prices by 10% at the beginning of the year, Bloomberg Report cited sources.
“Last year was a much more difficult period for [diamond] Marcelo Esquivel, Anglo American’s head of communications, told CNBC: “The economic challenges, the lull in post-Covid relations and the growth in the supply of lab-grown diamonds are all influence demand conditions”.
The core problem is the rapid growth of lab-grown diamonds.
Ankur Daga, founder and CEO of luxury jewelry e-commerce company Angara, said the preference for lab-grown diamonds also played a key role in lowering prices. natural diamonds.
“The core problem is the rapid growth of lab-grown diamonds,” he said. Daga added that in the US, the second largest consumer of diamonds, half of the stones used in engagement rings will be lab-grown this year, up from just 2% in 2018.
The diamonds are grown in a laboratory Can be up to 85% cheaper than natural diamonds, which are made in a controlled environment using extremely high pressure and temperature. This process replicates the way natural diamonds are forged deep in the Earth’s crust. According to data provided by Zimnisky, synthetic diamond sales increased from just 2% of the global diamond jewelry market in 2017 to 18.4% in 2023.
Additionally, demand for diamonds as investments has gradually decreased, Daga said. Diamonds have been considered an inflation hedge for the past 50 years, he explained. But that reason to invest has largely faded as prices have plummeted.
An industry ‘in trouble’
“The diamond industry is in trouble,” Daga told CNBC, adding that he believes natural diamond prices could fall another 15%-20% in the next 12 months.
Some are a little more hopeful.
“There is no doubt that there are some challenges in the diamond industry, but they are not insurmountable,” said Anish Aggarwal, co-founder of specialist diamond consultancy Gemdax. .
He noted that diamonds are a discretionary product and that it is a case of “creating demand” for it, as is the case with other luxury segments such as high-end watches and handbags.
Similar to natural diamonds, man-made diamonds are graded based on the 4Cs – clarity, color, cut and carat weight.
Lionel Bonaventure | Afp | beautiful images
“The industry hasn’t done large-scale catalog marketing in almost 20 years,” Aggarwal said. And we are seeing the consequences of that,” he said, adding that the diamond industry will need to do more to rekindle Chinese consumer demand.
This requires a cohesive marketing approach, Aggarwal added. Likewise, Zimnisky reiterated that meaningful marketing in the industry could turn the diamond market upside down.
Just recently, World’s largest jewelry retailer Signet Jewelers announces marketing partnership with De Beers to boost demand for natural diamonds. Signet expects engagement to increase 25% over the next three years.
Anglo American’s Esquivel also noted that higher engagement and increased disposable income will help ease challenges in the market.
“This is the world’s largest diamond miner and the world’s largest diamond retailer working together, so this is very important and could really boost the industry,” Zimnisky said. than”.
