BAIN: "THE GLOBAL DIAMOND INDUSTRY 2021 - 2022".
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Date of Publishing: February, 2022.
No. of Pages: 29.
Following rocky conditions in 2020, the diamond industry proved to be brilliant and resilient, and delivered a spectacular showing in 2021. Every sector of the diamond industry performed very well in 2021 and emerged from the Covid-19-induced crisis well-positioned for future growth. In 2020–21, the diamond industry invested heavily in technology to gain operational efficiency, create marketing and consumer experiences that attracted buyers, and accelerate e-commerce schemes. Even smaller mom-and-pop retailers added online sales platforms to reach consumers who couldn’t shop in person or travel due to government-instituted health measures.
And consumers were ready to spend. They were flush with cash from buoyant capital markets and economic stimulus programs, and eager to spend it on meaningful gifts for their loved ones (or rewards for themselves). Diamonds hit an emotional chord, which had been carefully cultivated by years of targeted marketing campaigns and storytelling. Diamond jewelry was also easier to access than other luxury and experience-based spending options.
Strong retail demand for diamond jewelry drove up prices and profit margins along the value chain. As rough diamond sales increased, miners increased production volumes and pulled from inventories to keep cutters and polishers busy. Healthy demand and price recovery for polished diamonds helped the midstream achieve decade-high margins.
In 2021, the industry had a renewed sense of value, which it answered through partnerships, consolidation, and technology. Now, every player along the value chain must add value—or remove hardship—on the path from mine to market.
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Contents:
1. Foreword.
2. Recent developments in the diamond industry.
3. Rough diamond production.
4. Cutting and polishing.
5. Diamond jewelry retail.
6. Midterm forecast.
Figure 1: Across the value chain, revenues recovered in 2021 and exceeded pre-pandemic levels.
Figure 2: Profit margins recovered in every segment. Combined, the mining and retail segments generated $7 billion more in profit compared to 2020.
Figure 3: Rough diamond sales rebounded more than 60% in 2021, surpassing pre-pandemic levels.
Figure 4: Rough and polished prices reached the historic average in 2021 but lagged behind industry peaks.
Figure 5: Prices for higher-quality polished diamonds continue to outperform lower-quality diamonds.
Figure 6: Production increased 5% in 2021 but is below pre-pandemic levels, limiting rough diamond supply.
Figure 7: Australia was the only major diamond-producing country with a production decline in 2021, driven by the permanent closure of its only mine.
Figure 8: Russia, Canada, and Botswana had the biggest production growth in 2021.
Figure 9: Upstream inventories declined ~40%, driven by high demand and slow production recovery, and are near the minimal technical level.
Figure 10: Major players almost fully recovered profitability in 2021.
Figure 11: As Covid-19 restrictions eased, cutting and polishing activities surged 84% globally; India grew fastest at 94%.
Figure 12: In India, net imports of rough diamonds increased 49% and net exports of polished diamonds rose 15% compared to 2019 pre-pandemic levels.
Figure 13: In 2021, consumer discretionary spending increased, boosting personal luxury and diamond jewelry sales.
Figure 14: The global diamond market was materially impacted by the pandemic and economic downturn in 2020 but recovered at double-digit rates in 2021.
Figure 15: Online searches of diamond jewelry were higher than pre-pandemic levels throughout the first nine months of the year.
Figure 16: Despite the downturn in 2020, key markets grew dramatically in 2021 and exceeded 2019 results.
Figure 18: In 2021, diamond jewelry outpaced most other jewelry segments, thanks to strong performances in Asia and the US.
Figure 19: In 2021, the share of e-commerce sales continued to grow in the US and China.
Figure 20: Large retailers experienced multiyear-high EBIT margins in H1 2021.
Figure 21: Several new drivers will influence the diamond market in the short- to midterm.
Figure 22: H1 2022 is expected to be strong; then two recovery scenarios are possible.
Figure 24: Players across the value chain should be prepared for short- and midterm market readjustments.
Figure 25: To sustain demand, diamond jewelry marketing must capture more Elements of Value.
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