How has the diamond market benefited in the current decade

 

The diamond industry proved its resilience, by delivering excellent figures in every segment of the gems and jewellery industry in the last decade, and is even well-positioned for the future. While the diamond industry like all other industries suffered during the Covid-19 crisis, it still managed to keep its sheen sparkle. Amidst lockdowns, travel restrictions and economic uncertainty diamond market and diamond jewellery market witnessed sales down by 15 per cent in 2020 with most of the decline happening in the first and second quarters. With store closures, the diamond industry saw many players like KGK Group going online and their retail sales pivoted online, and benefited from consumers who could not spend on travel but chose diamond jewellery instead. 

Demand returned during the third and the fourth quarter, culminating in a strong festive and holiday season across the globe.

Festive and Holiday Season

The boost was driven by holidays, jewellery sales saw a 5–10 per cent and 15 per cent –20 per cent rise in the fourth quarter, respectively, year-on-year. The diamond industry performed better than the global luxury market in 2020, with only a 15 per cent drop compared to a 22 per cent decline in luxury.

The Pandemic Effect

Let us have a look at the pandemic’s effects, the industry’s impressive recovery, and the possibilities ahead. In the past two covid-years, the diamond industry and its player like KGK Group invested heavily in technology to gain operational efficiency and create consumer experiences that attracted buyers.

 

Post Pandemic

In 2021, the diamond industry witnessed a huge spark, revenue increased 62% in the diamond mining segment, 55% for cutting and polishing, and 29% for diamond jewellery retail—all saw a rise above pre-pandemic levels (+13%, +16%, +11%, respectively). After every crisis, the diamond industry recovered with high double-digit growth within 12 to 18 months and this trend has been consistent.

Demand for diamonds was strong throughout 2021, strong retail demand for diamond jewellery drove up prices and profit margins. It was a chain wherein rough diamond sales increased, miners increased production volumes and cutters and polishers got work. Combined, mining and retail, jewellery players like KGK helped in generating $7 billion more profit in 2021 compared to 2020.

The pandemic has improved the management of the rough diamond industry. Pre-pandemic, prices of roughs moved sharply versus polished diamonds, leading to a stocking-up of the rough diamond. The pandemic led to a correction in the inventory of roughs last fiscal, and the trend continued.

A Decade-High Growth

The diamond jewellery market experienced a decade-high growth of 29% in 2021 because of continuing consumer desire for emotional buying, festive gifting even in difficult times, increased savings and restricted travel – all of them together boosted diamond jewellery purchasing post-Covid.

The Road Ahead

The diamond market as predicted stayed strong throughout the first half of 2022, supporting growth across all segments. Continued rebound and short-term readjustment are two possible reasons for the positive rebound. In the “continued rebound” scenario, the diamond jewellery industry is expected to continue to flourish, in the years ahead.