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In the two years that have passed since the publication of De Beers’ inaugural Diamond Insight Report, the world has experienced continued economic uncertainty and moderate levels of economic growth. Over this period, diamond jewellery demand has remained strong. Indeed, it has been higher over the past three years than any other three-year period.

The diamond industry has faced recent challenges, particularly in 2015.

While global consumer demand slowed down, the midstream faced squeezed margins and working capital challenges – both of which impacted rough diamond purchases and sales.

Upstream, cost pressures increased as a larger share of production came from ever deeper mines.

Some of these trends are likely to continue over the next decade as volatility becomes the new normal as a result of fluctuating global growth.

Nine fundamental trends are likely to shape the industry over this period and these are explored here.

After five years of uninterrupted value growth of global diamond jewellery demand – and following a record level in 2014 – demand (in US dollars) fell slightly in 2015 to US$79 billion. This was due primarily to the stronger US dollar and slower growth in China and other emerging markets.

While consumer demand for diamond jewellery remained relatively robust in 2015, the trading environment for rough diamonds was tougher, with midstream businesses experiencing a range of interconnected issues that led to severe ‘inventory indigestion’.

However, a number of actions were taken by the industry to address issues related to supply, demand and profitability, and this has seen a return to more normal trading conditions in 2016.

2016 sees three new diamond mines begin production, which are expected between them to add around seven million carats annually to global production once fully operational.

Despite experiencing less favourable economic conditions than preceding generations and progressing more slowly along the traditional life path, Millennials do express strong desire for diamonds when they reach financial and demographic maturity.

In 2015, Millennials spent nearly US$26 billion on diamond jewellery in the largest four markets combined, representing 45 per cent of the total retail value of new diamond jewellery acquired in these markets.

Demand for diamond jewellery from Millennials in the US alone rose from US$10 billion in 1999 to US$16 billion in 2015.

In the top four diamond jewellery markets of the US, China, India and Japan, which account for 73 per cent of global demand, the potential diamond buying Millennial market is more than 220 million people, 39 per cent of the diamond buying population in these four countries in 2015.

As such a large cohort, Millennials are already driving global consumer demand, yet they also represent a source of considerable future potential for the sector.

In order to unlock this potential the industry needs to find appropriate ways to engage Millennials’ inherent need for self-expression and interconnectivity.