Everyone is talking about the Millennials because of the considerable size of this age cohort and the fact that this generation is due to reach its most affluent life stage in about 10 years’ time (Fig. 18).
This report is a unique in-depth exploration of the Millennial generation, from a diamond-specific perspective. It draws on original research commissioned by De Beers in the top four diamond markets in the world – US, China, India and Japan – where more than 75,000 women were interviewed over the past three years to find out more about their desire for diamonds, their diamond acquisition behaviour and the drivers behind it.
This report compares Millennials’ relationship with diamonds with insights gained from consumers of the same age group in the 1990s, to build a long-term picture.21 In the top four diamond markets of the US, China, India and Japan, which account for 73 per cent of global diamond jewellery demand, the number of Millennials (men and women) approach one billion. Of this number, more than 220 million22 have the level of affluence allowing them to be actual consumers of diamond jewellery.
While Millennials in these four very different countries display their own national and cultural characteristics, they also share values and contribute to the same consumer trends across geographies.
This chapter examines Millennials’ attitudes and aspirations and considers how these translate into desirability and demand for diamonds in the US, China, India and Japan.
Millennials are not interested in diamonds.
Diamonds are high on the Millennials’ wish list to receive as gifts. As the Millennial age cohort is a declining proportion of the population and is yet to mature financially, it has a less obvious presence in the diamond sector.
Millennials in the US are less interested in diamonds than their parents and grandparents.
US Millennial age group’s share of diamond demand in volume and value has remained stable since the late 1990s.
Millennials are very different from older generations when it comes to romance and the romantic significance of diamonds.
Millennials share many of the same views and attitudes to life, love, marriage and family, and lifetime values as older generations, but these manifest themselves later in their lives, as they reach financial maturity later.
The ageing population is a significant demographic trend – in all major diamond markets, except India, the proportion of people aged over 34 in the overall population has increased, while the 15–34 age group has lost share over time.
Across the top four diamond markets combined, Millennials made up 34 per cent of the total population in 2015, compared with 40 per cent back in 1990 (Fig. 19).
In 2015, the Millennial generation spent nearly US$26 billion on diamond jewellery in the US, China, Japan and India combined. This represents 45 per cent of the total retail value of new diamond jewellery acquired in these four markets. Millennials’ share of the total diamond jewellery value was particularly high in China at 68 per cent; in India it was 47 per cent, in the US 41 per cent and it was the lowest in Japan at 29 per cent. This highlights that Millennials in these markets contributed a greater share of sales value than the share of population that they represent.
Millennials in the US alone account for over 60 per cent of this generation’s diamond jewellery purchases in the top four markets (Fig. 20).
The US Millennials’ disproportionate share of demand for diamond jewellery comes alongside claims from some industry analysts and media23 that this generation is ‘losing touch’ with jewellery and diamonds. So what’s the truth?
Despite being better educated, Millennials today are facing more employment and financial challenges than their parents’ generation – this delays their journey through the traditional life events of marriage, home and children.
The belief that younger generations are turning away from diamond jewellery stems from the fact that, despite being on average better educated than people of the same age were in previous decades, lower proportions of Millennials find themselves employed. Overall, their real income level is lower than Generation X’s was in 1998. As a result, US Millennials have progressed more slowly along the traditional life path of college, job, marriage and children. In 2014 only 28 per cent of Millennials were married, a figure which is more than 40 per cent lower than it was for the Baby Boomer generation (Fig. 21).
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While Millennials do not consume traditional luxury products in the same way as their counterparts of 20 or 30 years ago, research shows that when they reach demographic and financial maturity, they display strong demand for diamonds, just as previous generations have done. In fact, US Millennials’ nominal demand for diamond jewellery rose from US$10 billion in 1999 to US$16 billion in 2015. Despite the overall population ageing and the financial challenges facing the young, 18–34 year olds have maintained a relatively stable share of volume and value of diamond jewellery demand since the late 1990s (Fig. 22).
21 The Millennial generation is defined as people born between 1981–2000, or aged 15–34 in 2015 (Fig. 1). This report uses the 15–34 range but, where there are references to De Beers-commissioned research, which focuses on adult consumers, the Millennial range has been narrowed to 18–34 year olds. When comparisons are made over time, the same age group at the respective moment in time has been analysed. The historical period of 1990 to 2015 has been used to compare generational data, as it was deemed to be sufficiently long to reliably identify intergenerational trends.
22 Overall, in the top four diamond markets there were a total of 985 million Millennials (men and women) in 2015. That’s a little over a third of the total population, excluding babies and the under 4s – and is a sizeable market for consumer goods. In the US and Japan, the size of the potential market for diamonds includes the whole of the Millennial cohort, but in the emerging economies of India and China it is restricted to certain higher socio-economic groups. In India, for example, only the top two socio-economic segments A and B and the more affluent ‘Elites’ societal segment are part of the diamond target population. In China, the definition of the target population is limited to the most-developed 126 cities in Tiers 1–3. In total, this brings the potential Millennial market for diamonds across the US, Japan, India and China to 223 million people. That considerable figure is the Millennial population covered by De Beers-commissioned research in this report.
23 CNBC, Jeff Daniels, Blame Millennials: Diamond jewelry business in a rough spot, http://www.cnbc.com/2016/06/16/blame-millennialsdiamond-jewelry-business-in-a-roughspot.html