De Beers’ Group chief executive Philippe Mellier said the diamond industry has very favuorable global prospects in the medium to long-term and the U.S. market was set to play a central role in the industry’s bright future.
“…our data shows that global diamond jewelry demand reached a new record high of $81 billion in 2014. This proves that the diamond dream is still very much alive and, following the concerns over how the Great Recession may impact diamond buying behaviors, it is great to see that consumers spent more on diamond jewelry last year than ever before,” he in a speech last Friday at the 2015 JCK Las Vegas Show.
“Alongside this, the data also paints a continued picture of some global growth. The increasing demand for diamond jewelry was not a cultural phenomenon confined to a particular part of the world – this indicates diamonds’ universal appeal and the industry’s ability to tap into sources of demand wherever they may be.”
In 2014, positive growth for diamonds in local currency terms was achieved in each of the five major consumer markets, which together represent around 75 percent of global demand.
“Again, this is an excellent achievement as it shows how consumer desire for diamonds can be maintained worldwide in what was – and still is – a fragile, if recovering, global economy,” said Mellier.
“It is also impressive that growth was maintained in locations that have varying levels of maturity and differing consumer preferences.”
He said as the industry move through the economic cycle, they continue to see the historical pattern of diamonds exerting an increasingly strong pull on consumers’ desire, with diamond demand having grown healthily for the last few years.
“So, the global picture has been positive in recent times. But of course today we have a particular interest in how the U.S. has performed within this worldwide picture,” said the De Beers boss.
“Well, turning to the US specifically, there are also several reasons for satisfaction at how things have developed. One thing that I believe surprised many people is that the U.S., despite being easily the largest and the most mature consumer market, posted the strongest growth last year with 7 percent growth year on year.”
Mellier said in terms of the global share of demand by country, strong performance in 2014 also meant that the U.S. was now heading back toward to its pre-recession global share of diamond demand.
“There may be some ‘new kids on the block’ when it comes to diamond demand around the world, but it seems as though as things stand, no one gets the glamor of diamonds quite like the American consumer,” he said.
“And while a strong U.S. economy has clearly helped demand across the retail scene in recent times, there were some particularly positive signs for jewelry in 2014.”
Confident
Mellier said there are strong grounds for optimism when one considers the global diamond demand outlook.
He said historically, growth in demand for diamonds in the U.S. had a close correlation with increases in GDP.
Forecasts are for strong U.S. GDP growth over this period and data also indicates a significant uptick in U.S. private consumption, as well as healthy growth in personal disposable income.
“In addition, diamonds’ share of the U.S. consumer’s wallet has been increasing since 2009 and is forecast to continue to grow. So, the macroeconomics clearly point to a lot of further potential,” said Mellier.
“It is also interesting to consider the forecast growth in the base of affluent U.S. consumers over the coming years. Affluent consumers are expected to be the engines of U.S. diamond jewelry demand growth and the number of U.S. households with annual income over $100,000 is expected to increase by a compound annual growth rate of almost 5 percent through to 2019.”
This means that around 10 million additional affluent households would be created by 2019 in a country that currently has just 115 million households in total, he argues.
Apart from the U.S., Chinese tourists were well known to undertake a lot of their luxury spending overseas and forecasts are that, by 2019, the numbers of Chinese tourists visiting the U.S. would see a compound annual growth rate of almost 20 percent.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
