Diamond jewelry has been a luxury for centuries. The first known diamond jewels can be traced back to India in the four century B.C. After all these years, diamonds remain one of the most popular gems on the planet.
However, the demand for diamonds can fluctuate from year to year. Jewelers and other industry professionals must pay close attention to trends to anticipate future purchases and keep up with demand.
Bain, McKinsey, Moti Ferder (from Lugano Diamonds) and other experts who have taken a pulse to the market say that the overall demand for diamonds is likely to remain stable through 2018. However, many factors play a big role, such as the type of diamond and the region they are sold in.
Here are some important market trends to be aware of.
Overall Diamond Jewelry Market is Expected to Remain Stable through This Year
In December, Bain published a report showing that the overall market for diamond jewelry remained mostly unchanged in 2016. The researchers didn’t find any signs that revenue had changed. They don’t expect revenue to rise or fall significantly this year either, although they won’t know for another year, since industry data lags a year.
Demand for Rough Pieces is Growing Sharply
Bain, McKinsey and other research groups are trying to understand the sudden interest in rough diamond pieces. Sales of these pieces rose 20% between 2015 and 2016.
Last summer, Paul Ziminsky, a diamond industry expert, gave his take on the topic. Ziminsky said that a variety of factors played a role. The economic fallout of 2008 didn’t immediately hit the diamond market, but industry revenue plunged a year later. It seems that some people may have turned to rough diamond pieces over polished ones as they became more price sensitive in the aftermath of the recession.
A growing supply of diamonds from Asia also played a role. The social liberation of China gave the world more access to rough diamonds.
Sales of Polished Pieces Fall
Demand for polished diamonds has been falling for the past several years. Bain said that this trend continued in 2016 and is likely to endure in 2018 and beyond.
Global Industry Growth is Pegged at 6% a Year, While Regional Demand Varies
McKinsey predicts that the global diamond market will grow by around 6% a year through 2020. They predict that the market will be worth around $310 million by 2020.
However, the demand is different in every region. The market in the United States has been the largest high end diamond market for years, but is not growing significantly. Bain and McKinsey both found that the market for diamonds in the United States remained flat in 2016. The flat growth was surprising, since economic growth has been much more robust. Meanwhile, the market in India and other Asian markets is rising. The market for diamonds in India fell 9% in 2015, but recovered the following year. Researchers found that the Indian diamond market is likely to emerge stronger in the years to come.
A new generation of consumers from Asia, especially India and China, along with the United States are going to be a very important part of the growth story for the diamond industry over the next several years, explains Moti Ferder, “Millennials are expected to further boost the diamond industry.”