【Shanghai, Ch】Diamonds Still Unpopular in the First Half of the Year: Why Aren’t People Buying Despite Price Drops?

According to Jiemian News, natural diamond miner and retailer De Beers Group released its performance report for the first half of 2024 (up to June 30, 2024) on July 25. During the reporting period, the group’s revenue fell 21% year-on-year to $2.2 billion (approximately 15.97 billion yuan), compared to $2.8 billion (approximately 20.325 billion yuan) in the same period last year. Sales of natural rough diamonds dropped 22% year-on-year to 11.9 million carats, down from 15.3 million carats in the same period last year. Weak demand in the United States and China, De Beers’ two major markets, is the main reason for the group’s production cuts and continued revenue decline. De Beers Group recently announced a downward revision of its 2024 natural diamond production forecast. Previously, the group expected annual production to be 26-29 million carats; after the revision, it is projected to be 23-26 million carats.

At the end of 2023, De Beers Group repackaged and promoted its classic “A Diamond is Forever” advertising theme in the US and Chinese markets. However, judging by the market performance in the first half of 2024, this new marketing campaign by De Beers has not made much of an impact in the Chinese market. The downturn in the natural diamond business has also brought De Beers Group to a crossroads.

Diamond consumption in the US market is being suppressed by economic uncertainty, declining consumer confidence, and the rise of lab-grown diamonds. However, De Beers Group pointed out that the divergence between the natural diamond market and the lab-grown diamond market is accelerating. The wholesale price of lab-grown diamonds continues to fall, forcing US lab-grown diamond retailers to repeatedly lower prices to remain competitive. This could lead some retailers to shift their focus back to natural diamonds, which offer higher profit margins.

In the past first half of the year, the diamond market has presented a rather striking phenomenon: despite falling prices, buyers remain scarce. Even diamond giant De Beers has taken a series of measures to try to reverse the situation, yet it has still struggled to boost sales. What exactly is going on?

First, despite a series of measures taken by diamond giant De Beers, including adjusting its marketing model, lowering prices, and shutting down its own lab-grown diamond production line in an attempt to restore market confidence, its sales performance remains poor. This phenomenon reflects that traditional marketing strategies are no longer effective in the current market environment. De Beers once successfully maintained high diamond prices and demand by controlling diamond supply and shaping the image of diamonds as a symbol of eternal love. However, with increased information transparency and the awakening of consumer awareness, the influence of such marketing tactics is waning. Consumers are beginning to view the value of diamonds more rationally and are no longer easily swayed by emotional marketing.

Second, diamonds once became a symbol of love and eternity thanks to their gorgeous appearance and carefully crafted marketing concepts. However, with the rise in global market awareness, consumers have gained a deeper understanding of diamonds. Marketing tactics can no longer as easily mislead consumers into believing diamonds are more valuable as they did in the past.

In the past, diamond marketing often focused on emphasizing their rarity and preciousness, closely linking them to important life moments like love and marriage. For example, the classic advertising slogan “A Diamond is Forever” successfully planted the seed in consumers’ minds that diamonds represent eternal love. But today, consumers have broader and more convenient channels for accessing information. Through platforms like the internet and social media, consumers can learn detailed information about every stage of diamond mining, processing, and sales, leading to a more objective and rational understanding of the true value of diamonds.

Furthermore, consumers have become more cautious and rational in their consumption behavior. They are no longer merely impressed by flashy marketing packaging but instead focus more on the actual value and cost-effectiveness of products. For high-value goods like diamonds, consumers engage in more deliberation before purchasing and are not easily influenced by marketing tactics.

Third, lab-grown diamonds have now fully emerged, posing a huge impact on the natural diamond market. Lab-grown diamonds are comparable to natural diamonds in terms of physical and chemical properties and quality, even surpassing them in some aspects. As a major manufacturing country, China has achieved full localization in the lab-grown diamond sector. This has not only significantly reduced the production cost of lab-grown diamonds but also improved production efficiency and product quality. With the continuous development and growth of China’s lab-grown diamond industry, the market supply of lab-grown diamonds has increased rapidly, and prices have become more affordable. For consumers, the price advantage of lab-grown diamonds is undoubtedly highly attractive when quality is comparable. They can purchase products with similar appearance and performance to natural diamonds at lower prices to satisfy their pursuit of beauty and decorative needs.

Fourth, from a long-term market perspective, diamonds are gradually returning to rationality. In the past, the surge in diamond prices was largely due to excessive market speculation and irrational consumption. However, with market development and increased consumer awareness, the understanding of diamond prices has become sufficiently profound. Consumers are gradually realizing that diamond prices are not entirely determined by their intrinsic value but are influenced by various factors such as market supply and demand and marketing strategies. In this context, consumers’ sensitivity to diamond prices has increased, and they are no longer willing to pay excessively high prices.

The era when diamond giants like De Beers could make easy money is gone. They must re-examine the market situation, gain a deep understanding of consumer demand, reposition themselves in the market, and formulate more reasonable pricing and marketing strategies. Only then might they be able to reverse the current downturn.