Natural Diamonds Must Remain Desirable
June 24, 24
(IDEX Online) - The natural diamond industry faces an uncertain long-term future, says a report commissioned by De Beers, with restricted supplies and
But if one thing is certain, say the authors, US management consultants Boston Consulting Group (BCG), it's that a key challenge will be to ensure diamonds remain desirable.
The supply of natural diamonds is expected to decline (by approximately 1% CAGR over the next 10 years) as mines reach the end of their lives and restricted exploration budgets mean there's little in the way of significant new discoveries.
As for demand, natural diamonds are becoming more affordable, but face increasing competition from lab growns, from other gemstones, from gold and from discretionary spending on other luxuries and experiences.
Taken together, BCG forecasts a likely annual demand growth of 2 per cent to 4 per cent CAGR (compound annual growth rate) over the next 10 years.
"Given the instability of the past five years—which have seen increased demand for LGDs, the pandemic, the catchup effect after COVID restrictions eased, and a challenging 2023—understanding the industry outlook requires a fundamentals approach: the likely outlook on many factors is not necessarily a continuation of momentum," the report says.
"But unlike most non-luxury commodities, desirability is key to the long-term industry outlook. Demand, underpinned by some of the world's most recognizable historical marketing campaigns, faces recent challenges," it concludes.
"The industry structure is changing. Yet through analysis of the supply and demand fundamentals, one can see a positive outlook for the industry."