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Diamond Insight

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March 2015

2014 Diamond Jewellery Demand and Outlook for 2015

Global diamond jewellery sales grew 3% to a new record high of $81 billion in 2014

2014 saw positive growth in consumer demand for diamond jewellery in local currency terms across all of the top five markets, which together account for about 75% of global demand. At constant exchange rates, growth amounted to almost 5% globally. Growth at current exchange rates was 3% due to the US dollar strengthening against the currencies of some of the main consumer markets.
 

The US was the fastest growing market for diamond jewellery in 2014, up 7%, followed by China, up 6%.

US
The US diamond jewellery market continued to grow at a robust rate, due to strengthening of the economic recovery, growing job numbers, an improving stock market and, towards the end of the year, declining oil prices increasing consumers’ spending power.

China
China was the second fastest growing diamond market after the US. Whilst this was slower than in 2013, it still represented substantial growth given the consumption base grew so rapidly in recent years. This slower pace of growth in diamond jewellery sales was due largely to the slowing down of the economic growth rate. Chinese consumers’ growing preference for travel and luxury shopping abroad compensated for some of the domestic slowdown.

India
The Indian market returned to positive growth, up 3% in local currency terms, as government reforms began to take hold and improving macro-economics boosted discretionary spending. However, Rupee depreciation against the US dollar pushed the growth rate into slightly negative territory (-1%).

Japan
The Japanese market exceeded expectations, achieving positive local currency growth (+2%), driven by the upsurge in Q1 spending prior to the consumption tax increase. However, the sharp depreciation of the Yen against the US dollar eroded that to negative growth of -11% in US dollars.

Gulf
The Gulf region, and particularly UAE, saw lower tourist numbers and weaker spending from key overseas nationalities, such as Russians and Chinese. However, demand from local residents was stable and grew in low single digit numbers.

GLOBAL POLISHED DIAMOND DEMAND SHARE BY MARKET

USD at Polished Wholesale Prices

In terms of global share of demand for polished diamonds (measured by analysing the Polished Wholesale Price value of diamonds contained in diamond jewellery), the US remained the largest market, increasing its share to 42% in 2014 (compared with 40% in 2013). China, including Hong Kong and Macau, remained the second largest market with 16%. India and the Gulf region were the next largest markets with 8% shares, followed by Japan with 5% (slightly down from 6% in 2013).

2014 Holiday Season

  • De Beers-commissioned retailer research showed that demand growth picked up during the 2014 holiday season in India and the Gulf, where expectations going into 2015 are for continued strengthening of growth rates.
  • In the US, China and Japan, Q4 2014 saw some softness in each market. The slowdown in China and Japan was the result of weaker macro-economics.
  • In the US there was a trend towards less concentration of Christmas gift shopping immediately before Christmas, driven by early retail promotional activity.

OUTLOOK FOR 2015

  • The macro-economic environment and trade outlook indicate further growth in diamond jewellery sales across all main markets in local currency terms.
  • Optimism is highest in the US and India, while in China expectations are that growth will pick up as the year progresses beyond the Chinese New Year and Q1.
  • Lower oil prices and high consumer confidence, especially in the US, could boost growth in demand for diamonds.