Consumption of diamond jewellery falls 4 per cent in one year

NEW DELHI: Diamond jewellery consumption in India dropped by 4% over the last 12 months, dragged down by restricted consumer credit, weakness in consumer spending and a strike by jewellers, according to De Beers, the world’s largest diamond producer by value.

De Beers Insight Report 2016, which was released on Wednesday, also said millennials accounted for almost half of the $5.5-billion worth of consumption in the country.

“This is our third insight report, and what is noteworthy is that the millennial consumers who have not yet reached the most affluent stage of their life love diamonds as much as their parents,” Gareth Mostyn, executive head of strategy for De Beers, told ET. “In the four leading markets--the US, China, India and Japan--millennials spent nearly $26 billion on diamond jewelry last year.”

The miner expects India and China to drive positive consumer demand over the next 10 years but at lower levels than previously assumed. According to the report, the overall diamond jewelry business in 2015 was worth $79 billion, with India contributing around $5.5 billion.

De Beers’ report said 2015 was a challenging year for the diamond industry, with global consumer demand slowing down and the industry facing squeezed margins and working capital challenges, which affected purchase and sale of rough diamonds. Cost pressures also increased, as a large share of production came from deeper mines.
The report said consumer demand will continue to be generated from Asia, particularly China and India, driven by higher household income over the next 10 years, and the US, the world’s largest market.

Millennials in all main markets were identified as most important cohort for diamond jewelry purchases in the report. “Despite the challenges, we are positive on the diamond jewelry market in India with the growing affluence of the middle class and the rising millennial base here. The cutting and polishing industry here is second to none. We are expanding our grading laboratory in Surat, which was set up last year, and will tie up with the Gems and Jewelry Export Promotion Council for the first time for marketing campaigns here,” said Mostyn.

Last year, 68% millennials purchased diamond jewelry in China, 47% in India, 41% in the US and 29% in Japan. Among socio-economic classes in India, excluding the elites, 55% of Indian millennials picked gold first while 23% showed preference for diamonds, the report said.