Editor’s Note
The latest sales figures from De Beers reveal a sharp downturn in the global diamond market, with rough diamond sales plummeting 82% year-on-year. This dramatic decline underscores significant challenges facing the industry, from shifting consumer demand to broader economic pressures. We examine the factors behind this slump and what it signals for the future of diamond retail.
Globally renowned diamond producer and retailer De Beers Group recently released its latest rough diamond sales data. For the sales cycle ending November 3, 2023 (the 9th sales cycle), De Beers sold only $80 million (approximately 582.84 million yuan) worth of rough diamonds. This represents a staggering 82% year-on-year plunge compared to the $454 million (approximately 3.308 billion yuan) sold in the same period last year, and a 60% sequential drop from the 8th sales cycle in October 2023.
This marks the sixth consecutive month of declining rough diamond sales for De Beers in 2023. After steady growth in the first quarter, rough diamond sales fell to $479 million in May (4th cycle), $456 million in June (5th cycle), $411 million in July (6th cycle), and $370 million (approximately 2.687 billion yuan) in August (7th cycle).
Ongoing challenges in major global economies and India’s continued ban on imports of natural rough diamonds have negatively impacted recent monthly sales. In a media statement, De Beers Group CEO Al Cook cited several key reasons for the lack of improvement:
In response, De Beers continued to reduce rough diamond supply during this sales cycle. Al Cook stated, “As the midstream works to re-establish equilibrium between wholesale supply and demand, De Beers has provided its Sightholders with full flexibility to defer allocations.”
In mid-August 2023, De Beers further relaxed its Sightholder purchasing policy, allowing them to defer up to half of their rough diamond allocations to 2024. Diamond industry media Rapaport reported, citing an anonymous natural diamond miner’s letter to clients, that Sightholders could “refuse rough diamonds larger than 2 carats” in the remaining September, October, and December 2023 sights.
Industry analysts widely believe this move shifts inventory risk onto De Beers itself to inject more confidence into the natural diamond market, in response to declining retail demand and increasing midstream inventory pressure for polished natural diamonds.
Concurrently, De Beers is ramping up marketing efforts to counter the existential crisis facing the natural diamond industry. The rise of lab-grown diamonds, adopted by numerous jewelry and fashion brands, poses a significant challenge to the values of scarcity, uniqueness, and eternity promoted by natural diamond brands. The US is the largest consumer market for lab-grown diamonds, and their retail popularity has grown in China in recent years.
In September 2023, De Beers’ lab-grown diamond brand Lightbox discontinued its lab-grown diamond engagement ring program, which had just launched in June 2023. De Beers explained in a statement that the commercial positioning of lab-grown diamond engagement products was likely unsustainable, as retailers would need to double the carat weight sold every two years to maintain fixed gross margins.
Days after announcing this discontinuation, De Beers revealed plans to revive the classic natural diamond industry slogan “A Diamond is Forever” for the 2023 holiday season. To support this, De Beers will invest an additional $20 million (approximately 145.7 million yuan) in the US and China, its key consumer markets, to “actively and effectively deliver ‘timely messages’ to end consumers, closely aligning with the festive gifting season.” De Beers explicitly stated this campaign aims to “interpret the ideology and consumption concepts of the new generation of end consumers.”
Chow Tai Fook Group, China’s largest gold and jewelry retailer, is also actively advocating for the value of natural diamonds. The group recently released its first “Chow Tai Fook 2023 Jewelry Consumption Trends Survey Report,” which found that 51% of consumers in mainland China and Hong Kong expressed a higher willingness to purchase natural diamonds compared to other non-gold jewelry categories. In mainland China’s first- and second-tier cities, 56% and 53% of respondents, respectively, showed the strongest interest in buying natural diamond jewelry.
Hui Hang Kit, Director of Chow Tai Fook Group’s Diamond Raw Material Management and Planning Center, told Jiemian News:
According to Chow Tai Fook, it was among the first Chinese jewelers to sell natural diamonds, partnering with De Beers as early as 1973. It acquired the US diamond brand HEARTS ON FIRE in 2004 and launched its own T MARK diamond line in 2012. Since 2023, Chow Tai Fook has developed more detailed plans for the natural diamond sector.
Hui Hang Kit stated, “Because we believe in the value of natural diamonds.”
Reflecting De Beers’ experience, China’s natural diamond retail market performance in 2023 has been unsatisfactory. Chow Tai Fook attributes this to two factors: the aforementioned macroeconomic challenges and consumer behavior of “buying when prices rise, not when they fall.”
Hui Hang Kit analyzed:
