1 product
BAIN / AWDC: "THE GLOBAL DIAMOND INDUSTRY 2020 - 2021".
Regular price $0.00Digital Report - immediate delivery to your email.
Date of Publishing: 2021.
No. of Pages: 54.
Welcome to the tenth annual report on the global diamond industry, prepared by the Antwerp World Diamond Centre (AWDC) and Bain & Company. This year’s edition covers industry performance in 2019, effects of the Covid-19 pandemic in 2020 and an update on consumer preferences and attitudes. We also assess potential recovery scenarios in 2021 and beyond.
The report begins with key developments along the value chain, including industry trends that were accentuated or accelerated by the global pandemic. We review factors that influenced rough diamond production and sales, midstream performance, and global diamond jewelry demand in major markets. We updated our long-term outlook for the diamond industry through 2030. The 2030 supply-demand forecast
considers announced production plans, recent changes in mining operations, potential additional sources of supply, expected changes in global and regional macroeconomic parameters, and potential impacts from labgrown diamonds.
___________________________________________________________________________________________
Contents:
1. Note to readers.
2. Recent developments in the diamond industry.
3. Cutting and polishing.
4. Diamond jewelry retail.
5. Key industry trends and effects of Covid-19.
6. Updated supply and demand model.
Figure 1. Revenues across the value chain trended downward in 2019 and 2020.
Figure 2. Covid-19 had major implications across the value chain, but repositioned the industry.
Figure 3. Profit margins were devastated across the value chain, except in the C&P segment.
Figure 4. Impacts of Covid-19 caused rough diamond sales to decline –33%.
Figure 5. In 2020, upstream inventories increased by ~17%, mostly driven by supply chain.
Figure 6: A slower decline of polished diamond prices vs. rough diamond prices supported stronger margins for the midstream.
Figure 7. Prices for higher-quality polished diamonds have outperformed lower-quality diamonds over the past two years.
Figure 8. Diamond production has been decreasing by ~5% since it peaked in 2017, with a drop of ~20% in 2020.
Figure 9. Production value decreased by ~30% in 2020, driven by declines in rough prices and production.
Figure 10. South Africa was the only country with increased diamond production in 2020.
Figure 11. Russia, Canada and Botswana had the biggest production decreases in 2020
Figure 12: Medium and large diamonds accounted for ~25% of production in carats but nearly 70%–80% in value in US dollars.
Figure 13: Reduced sales activity in the first half of 2020 put significant pressure on profitability, which is expected to improve by year end.
Figure 14. Covid-19-related restrictions resulted in ~26% reduction of C&P activities globally, with India recovering the fastest.
Figure 15. In India, net imports of rough diamonds decreased by 27% in 2019 and 23% in 2020; recovery began in Q3 2020.
Figure 16. Due to a significant decrease in rough diamond sales, midstream inventories returned to some of the lowest levels in a decade.
Figure 17. Diamond financing continued to decrease, aligning with reduced activity levels in 2020.
Figure 18: Consumers delayed discretionary spending during the pandemic, but diamond jewelry retail was less affected than the personal luxury market.
Figure 19. After single-digit growth in recent years, the global diamond market was materially impacted by the pandemic and economic downturn in 2020.
Figure 20. Despite challenges in 2019 and the first half of 2020, key markets are showing signs of recovery.
Figure 21. After a significant drop at the start of 2020, key diamond jewelry markets demonstrated recovery trends in the second half of the year.
Figure 22. In 2020, diamond jewelry outpaced other jewelry segments due to the relatively strong performance of luxury jewelry in Asia.
Figure 23. Luxury bridal and luxury non-bridal diamond jewelry were the top-performing categories in the diamond jewelry market.
Figure 24. Covid-19 shaped and accelerated key diamond industry trends.
Figure 25. Covid-19 impacted diamond jewelry purchasing via lockdowns and an economic recession and stimulated changes in consumer behavior.
Figure 26. The current economic crisis is expected to be deeper than the one in 2009.
Figure 27. Interest in diamond jewelry dropped for three months, then reverted to 2019 levels in July.
Figure 28. Most consumers plan to spend the same amount or more on diamond jewelry when the pandemic ends.Figure 29: Diamond jewelry recovery is expected in the next two to four years, with the market returning to its pre-pandemic level in 2022 or 2023.Figure 30. Diamond jewelry recovery depends on the epidemiology of Covid-19, government actions and consumer behavior.Figure 31. E-commerce experienced a major boost in 2020.
Figure 32. Consumer shopping preferences are slowly shifting to online, however, specialized brand stores remain the most popular channels.
Figure 33. Consumers would buy diamond jewelry online from trustworthy brands that offer additional discounts.
Figure 34. Digital is part of the purchasing experience for more than half of buyers; only 25%–35% of younger consumers make in-store purchases without it.
Figure 35. Covid-19 accelerated the convergence of online and offline channels, forcing retailers to retool the customer engagement experience for the new normal.
Figure 36. The diamond industry’s sustainability agenda is set by multiple stakeholders: consumers, international organizations, investors and local communities.
Figure 37. Between 60% and 70% of younger generations consider sustainability when making a purchase decision.
Figure 38. When purchasing diamond jewelry, sustainability concerns could be a deal-breaker for consumers.
Figure 39. Fair working conditions, conflict-free products, the environment and carbon footprint are the most important sustainability factors for consumers.
Figure 40. Across the value chain, industry players focused on green energy, sustainable water consumption and biodiversity.
Figure 41. Social efforts are focused on traceability, human rights and local community support.
Figure 42. Lab-grown diamond capacity is increasing across the globe; current production is around 6 to 7 million carats.
Figure 43. Retail price discounts for lab-grown diamonds vs. natural diamonds have slightly increased in the past year.
Figure 44. However, lab-grown diamonds still evoke mixed associations; most consumers deem them artificial and affordable.
Figure 45. Consumers across key markets do not see substantial differences in sustainability between lab-grown and natural diamonds.
Figure 46. The lab-grown segment is developing rapidly due to technological advancements and rising acceptance across the value chain.
Figure 47. “Diamond engagement ring” searches show stability despite downward-trending marriage rates; however, overall interest in “diamond jewelry” is declining.
Figure 48. In India and China, jewelry remains one of the most desirable presents.
Figure 49. Self-purchase emerged as a top reason to buy diamond jewelry in the US and China.
Figure 50. Diamond marketing is becoming more sophisticated as retailers and other players address both traditional and emerging pressures.
Figure 51. New marketing strategies should focus on intangible values and personalized communications.
Figure 52. Marketing spending in the diamond industry is around 1%–2% of retail sales and lags marketing efforts in other industries.
Figure 53.The Natural Diamond Council re-launched generic marketing efforts with new focused campaigns.
Figure 54. Marketing messages about exclusivity and rarity disproportionally resonate with consumers, while origin and sustainability trends are quite new.
Figure 55. A number of important recent trends will influence the whole value chain’s future.
Figure 56. Covid-19 impacted key markets in the short term, but the industry’s long-term macroeconomic and consumption outlooks remain positive.
Figure 57. Long-term scenarios for natural rough diamond demand and supply rely on key assumptions.
Figure 58. The long-term outlook for real global GDP and PDI is positive; both are expected to grow at 3% per year despite the Covid-19 recession.
Figure 59. Middle class and high-net-worth household growth in China and India will reinforce positive long-term demand.
Figure 60. Supply is expected to be almost flat over the next 10 years, with very few new projects coming online.
Figure 61. The supply-demand outlook is moderately optimistic.
___________________________________________________________________________________________