Creating the “New Normal” in diamond markets
By Tom Wildhern
ANTWERP, November 22, 2009 – The “new normal” diamond market will be demand-driven rather than supply-led, but a sustained recovery from the financial crisis will depend on effective marketing and economic revival.
Chaim Even-Zohar, moderator of the 2009 Antwerp Diamond Symposium (Copyright: Donald Woodrow 2009)
Industry leaders at last week’s Antwerp Diamond Symposium agreed that the world’s top suppliers did a good job of curtailing output during the economic crisis, and banks kept credit lines open and helped to prevent major financial catastrophes, but the demand outlook is the wild card.
De Beers voiced concerns that consumption of diamonds in the youth market was struggling, and delegates called upon the industry to step up generic marketing of diamonds and share the cost burden more evenly.
“Ignoring the problems that confront us, is going to make them worse,” said Anish Aggarwal, Managing Director of consultancy Gemdax.
On the supply side, producers are playing their part.
Diamond supplies are tight after the leading producers of rough diamonds, notably De Beers and Alrosa, cut output to protect prices and confront the crisis.
Sergey Oulin, Vice-President of Alrosa, said talk of a possible sell-off of diamonds by Alrosa or Russia’s state-owned repository, was unfounded.
“This is not the time to rush for an extra, unwise profit,” he said.
Diamond jewellery sales look set to stabilise in 2010, but are below pre-crisis 2007 levels.
Global retail consumer demand is projected to inch up 0.4 percent year-on-year in 2010 after a 9.7 percent fall in 2009, said Chaim Even-Zohar, Principal of diamond information group Tacy Ltd.
“Confidence is still very low,” he said. “The consumer isn’t really back yet.”
Pranay Narvekar, an India-based economist,
addressing the 2009 Antwerp Diamond Symposium
(Copyright: Donald Woodrow 2009)
Marketing campaigns will need to do a better job to connect with the Ipod generation.
Prospects for economic recovery in the United States, the world’s top diamond jewellery market, are in focus.
Attention is centred on the progress of the U.S. economic stimulus package amidst worries over high unemployment, and a possible resurgence of inflation and erosion of purchasing power.
Market research shows that demand for diamond jewellery will grow quickly in emerging markets such as China and India, but in these markets value for money may be just as important as the emotions in influencing purchasing decisions.
The research also points to the growing importance of ethical consumption in diamond jewellery markets.
A woman wants total satisfaction that a diamond’s journey from mine to finger, did not entail exploitation of diggers or environmental degradation.