India’s economic success has increased incomes across the domestic social spectrum and given more Indian women the ability to become diamond jewellery consumers. Currently, diamond jewellery in India is concentrated in the highest socioeconomic classes (SEC) A and B in urban areas. Within these classes, women are the main decision makers when it comes to diamond acquisitions. The De Beers survey on which this report draws therefore included women in three distinct groups: SEC A/B non-Elites; Elites; and Super Elites (see Fig. 14).
Diamond jewellery ownership in India in 2013 stood at 10 per cent of the SEC A/B non-Elite and 93 per cent of the Elite population. Among the Super Elites it was 100 per cent. The vast majority of diamond jewellery owners (89 per cent) had only one piece of diamond jewellery, while only five per cent had four pieces or more. This highlights that India is growing through new consumers entering the category every year and that it has tremendous potential for both attracting new consumers and selling multiple pieces to existing owners.
The vast majority of potential consumers of diamonds in India are in the non-Elite group. However, looking at the contribution of these consumer segments to overall diamond jewellery demand in value terms, a different picture emerges (see Fig. 15). The Super Elites, who comprise less than one per cent of diamond purchasers and less than five per cent of the number of pieces bought, contribute an estimated 40 per cent to total value of diamonds purchased. However, over time the contribution of this consumer segment to overall diamond demand value in India has declined – in 1999 it stood at 75 per cent. Over the same period, the share of SEC A/B non-Elites in overall demand value increased from 15 per cent to almost half, pointing to the growing importance of this volume segment.
As the primary decision makers about diamond jewellery purchases, Indian women buy mainly for themselves. Indeed, 73 per cent of purchases come via this route, with just over a quarter of women buying for someone else.
Surprise gifting from male partners in India is limited, with only two percent of women reporting this kind of gift in 2013.
Non-bridal diamond acquisitions account for the vast majority of diamond demand in value terms in India. The definition of bridal women in the De Beers study includes women who got married in the survey year and mothers of brides in the same period. Bridal diamond jewellery is the jewellery acquired by these women specifically for the occasion of the wedding in the survey year.
In contrast to other main diamond markets around the world where bridal jewellery includes solitaire diamond engagement rings and eternity-type wedding bands, bridal jewellery in India comprises mainly large gold pieces with numerous small diamonds.
The non-bridal segment makes up 96 per cent of total demand among Indian women in SEC A/B non- Elite and Elite groups (see Fig. 16), compared with 68 per cent of the total women’s diamond market in the US, for example. The non-bridal segment is also growing quicker than the bridal sector in India, expanding at four times the rate of the bridal sector since 2002. This contrasts sharply with the US, where the bridal segment has taken share from non-bridal over the same period.
Within the non-bridal segment, 89 per cent of demand value is derived from married women’s purchases, which corresponds to 85 per cent of the total value in SEC A/B non-Elite and Elite groups. Single women contribute the remaining 11 per cent of demand value.
The largest diamond consumer segment by age in India is the 26-35 age group (see Fig. 17), which accounts for a third of all female diamond jewellery purchasers and for 29 per cent of value. This group is followed by the 36-45 year old segment, which constitutes about a quarter of purchasers and value.
In the past 10 years, a greater number of mature Indian consumers have purchased diamonds. In 2013, those aged 46-55 represented 17 per cent of purchasers, almost a 25 per cent increase in share compared with 2002. This segment contributes considerably more to the value (23 per cent) than its share of purchasers (17 per cent). The opposite is true of the youngest age group 18-25, where 21 per cent of purchasers contribute 18 per cent of value. This is because of the different average spend in these groups: in 2013 the youngest spent on average INR76,000 (about US$1,300) on a diamond jewellery piece, while those aged 46-55 spent on average INR1.5 lakh (about US$2,600). The difference in spend is driven partly by the size of the main diamond in the piece acquired: on average, the youngest women buy jewellery with polished diamonds of 0.18 carats, while the average diamond size in the older segment is 0.27 carats.
People in the older age group buy a considerable proportion of diamond pieces for gifts – 40 per cent, within which 19 per cent are for daughters and a further seven per cent for daughters-in- law. Thus, younger women, become important acquirers of diamond jewellery both through self-purchase and gifting.
The motivations driving diamond purchases among these two age groups also vary significantly. Younger women buy much more frequently for a personal milestone, such as a birthday, with 21 per cent of all purchases in this group being motivated in this way, compared with 12 per cent in the older group. Women aged 46-55 buy much more often to celebrate a relationship milestone, however, with 46 per cent of purchases meeting this need, compared with 30 per cent in the younger group. Younger consumers are also more self-indulgent and 13 per cent of diamond pieces they buy are to cheer them up during a difficult time, while for the older women this accounts only for nine per cent of purchases.
The second most powerful purchase driver for the older women is impulse – 34 per cent of pieces bought are either a good deal, a unique design or a nice treat. It can therefore be seen that both groups are prone to emotional drivers, but to a different extent and of a different nature.
India’s diamond jewellery purchases vary by region and type of city. The north of India accounts for 49 per cent of buyers, followed by the south of India with 24 per cent. Tier 1 cities, with populations of four million or more, account for 58 per cent of all diamond jewellery purchasers, followed by Tier 2 cities, with populations of one to four million, which account for 30 per cent of buyers (see Fig. 18).
In terms of product type bought, rings have gained share among diamond jewellery pieces purchased in India in recent years and, with almost 50 per cent share in 2013, they are the most popular product (see Fig. 19). In second position, also gaining share, are nose rings, which represent about a quarter of all pieces bought. Earrings, as the third most popular diamond product, have lost ground and in 2013 accounted for about one in five pieces. The preferences of the Elites are distinctly different, with higher shares for earrings (26 per cent), necklaces (15 per cent) and bracelets (five per cent).
An often used definition of middle class in India is households with annual income in excess of the equivalent of US$10,000. However, looking at income levels in relation to diamond purchasing rates, an ‘inflection point’ can be observed where households begin to contribute to a greater share of diamond purchases than their share of the potential consumers of diamonds (see Fig. 20). The De Beers survey found that this inflection point is at approximately INR25,000-30,000 per month (US$5,000-6,000 per year), just above the current national median Indian household income of US$4,000.
Another important threshold among Indian consumers is the monthly income at which they enter the Elites – above INR40,000, as at this level of affluence multiple diamond piece ownership increases significantly to over a third of consumers. These women have already acquired perhaps more than one piece of entry level diamond jewellery with multiple smaller stones and are focused on acquiring more significant diamonds, such as larger solitaire pieces, or higher-end multiple diamond pieces, such as bracelets.
The number of households earning above the first ‘inflection point’ of US$5,000-6,000 is expected to grow by 7.5 crore (75 million) over the next decade15 to reach 17.8 crore (178 million) by 202416. The non-Elite households are forecast to increase by over a third to 16.3 crore (163 million) and make up 51 per cent of all households by 202417. This presents a considerable volume growth opportunity for the Indian jewellery retail sector, as this income group is likely to purchase mainly smaller diamonds, but to do so in high numbers reflecting their population size.
The strongest value growth is expected to be from the Elite and Super Elite segments. The number of Elites is expected to treble over the next decade to 1.2 crore (12 million) households. The Super Elites are expected to quadruple over this period and reach over 30 lakh (three million) households by 202418. As both of these segments consume larger, higher-value diamonds, they will drive the value growth opportunity in India.
A healthy growing economy is a precondition for the continued increase of the middle classes and India’s economy has a positive medium-and long-term outlook. India’s GDP growth is expected to outpace China’s for the first time in 2015 (see Fig.21) and India’s growth is expected to continue to outpace that of China over the next half decade19. This will be driven by India’s favourable growth fundamentals, including wages and incomes that should rise faster than China’s and a labour force that will overtake China’s in size by 202520. In terms of its share of world GDP, India could overtake the EU and the US by 2044 and 2049, respectively21.
15 Calculated based on nominal (ie non-inflation adjusted) terms
16 Oxford Economics Forecasts, June 2015
17 Oxford Economics Forecasts, June 2015
18 Oxford Economics Forecasts, June 2015
19 IMF World Economic Outlook, April 2015
20 UN Population Division
21 PwC, ‘World in 2050’, February 2015