13 September 2018
Millennials and their younger peers Generation Z have emerged as the world’s largest consumers of diamonds, according to De Beers, the world’s main producer.
The two groups accounted for two-thirds of the record $82bn in demand for the gems last year, and dominate consumption in the US and China, De Beers said in its annual report on the industry.
The future of the business depends on how successfully it can market diamonds to these two generations, who have different spending and consumption habits from older consumers, the Anglo American-owned miner said.
“The shift of consumer power to millennials and Gen Z presents considerable opportunities to the diamond industry, provided it commits to understanding these generations and adapts its marketing approaches to incorporate the needs and priorities of young people,” De Beers said.
Diamond miners need to “align their values” with the younger generations who favour ethical consumerism and reject gender stereotyping, Bruce Cleaver, chief executive of De Beers, which mines in Botswana and Canada, said.
“It is a growing imperative that corporate responsibility and positive social impact should be at the heart of business strategies and the driving force behind every decision we make,” Mr Cleaver said.
Millennials and Gen Z accounted for 63 per cent of diamond jewellery demand in the US in 2017 and nearly 80 per cent in China, De Beers said.
The report comes as miners face growing competition from laboratory grown diamonds, chemically identical stones that are often marketed as a more ethical alternative. Some of the largest jewellers from Swarovski to Warren Buffett’s Borsheims now stock lab grown stones.
De Beers in May said that it would start selling lab-grown diamond necklaces and earrings in September under a new brand called Lightbox, though it won’t target the bridal jewellery market.
Lab grown stones account for about 2 per cent of the global market and have yet to make a dent in its growth.
Global demand for diamonds rebounded last year, growing by 2 per cent compared to a year earlier, De Beers said. That followed a 0.3 per cent rise in global demand in 2016, and a 1.5 per cent decline in 2015.
US demand drove the increase, rising by 4.2 per cent to $43bn, De Beers said. In local currency terms, China’s demand rose by 3 per cent to RMB 66bn. But diamond demand fell by 2.5 per cent in India and by 2.9 per cent in Japan, it said.
De Beers said rising trade protectionism “poses a potential longer-term risk” to demand, but it expected 2018 to show favourable growth due to strong consumer sentiment.
Millennials refers to anyone aged between 21 and 39, while Gen Z counts those up to 20 years of age.
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