De Beers Research Insights Highlight Opportunities for Long-term Diamond Jewellery Demand Growth In China
De Beers Group today released its tenth annual Diamond Insight Report, focusing on the outlook for diamonds in China and how the industry can support long-term demand for natural diamonds in the country.
While consumer demand for diamond jewelry in China has softened in recent years following the COVID-19 pandemic and subsequent macroeconomic challenges, the report highlights the potential for greater demand as the economic outlook improves, with up to 200 million Chinese consumers set to enter the middle class by 2030 and an expected rise in household disposable income of more than a third over the same period, as well as how best to cater to the needs of different Chinese consumer groups.
The report reveals that while desirability for natural diamonds remains strong among Chinese end clients, ranking among the top three most desired luxury purchases, there is a gap between intent to acquire and actual acquisition rates. This gap represents an opportunity for the diamond industry, which can be captured by responding to the consumer insights contained in the report.
The report identifies several specific opportunities for the diamond trade in relation to different consumer groups, geographies, and retail approaches in China. Key insights include:
Millennials are the generation that spends disproportionately more than others on diamond jewelry. Younger Millennials prize quality and purity as the most important features they seek in diamond jewelry, followed by the size and cost of the piece. Design and color also play a significant role in their decision-making. For older Millennials, design, and size take priority, closely followed by purity and price. For both groups, the uniqueness of a piece and the ethical responsibility of the brand are also factors. Retailers should therefore focus on a strong design ethos with top-quality diamonds and competitive pricing while ensuring they communicate their commitment to ethical practices.
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The share of market value Gen Z represents almost doubled between 2020 and 2022, from five percent to nine percent of sales. Gen Z is characterized by greater use of digital media, heightened interest in sustainability considerations, a continuing journey to financial maturity, and a propensity to purchase diamonds to mark birthdays. Retailers can maximize the potential of the Gen Z demographic by establishing strong digital touchpoints, showing their alignment with Gen Z values, launching flexible payment options or offering lower-priced entry-level pieces, and offering special birthday promotions or personalized pieces that make for unique birthday gifts.
Affluent consumers are more likely to buy diamond jewelry to celebrate significant relationship milestones, particularly wedding anniversaries. However, they are selective in their choices, with design playing a pivotal role. One in four of those who did not purchase diamond jewelry in 2022 stated that they couldn’t find a design they liked. This may help explain the gap between the strong desire for diamond jewelry among affluent consumers and their actual acquisition; as such, a greater focus on designs that reflect this group’s preferences can present an area of opportunity.
Further growth opportunities:
- The 55-65 age group:
The 55–65 age group is an important and growing cohort, contributing approximately nine percent of the total market value in Tier 1–3 cities. The self-purchase behavior of the 55–65 age group is particularly noteworthy. This demographic does not shy away from rewarding themselves with diamond jewelry (29 percent vs. 17 percent for 18–54). In terms of product preference, this group shows a clear inclination towards necklaces and non-bridal rings.
Tier 4 cities:
The estimated market value of Tier 4 cities represented about 10 percent of the total demand for diamond jewelry in 2022. Diamond jewelry acquisitions in Tier 4 cities are more likely to be non-bridal (85 percent of pieces) and gifted (88 percent of pieces), with more than a third of acquisitions (35 percent) being for wedding anniversaries, compared with a quarter in Tiers 1-3.
Al Cook, CEO of De Beers Group, said: “De Beers Diamond Insight Reports draw on our unique understanding of diamonds, developed over our long history. And there is no country where history has moved as fast as China. From being a relatively small player on the world diamond stage at the end of the last century, China now represents the largest market for diamond jewelry outside the United States. So, our aim for this, our tenth Diamond Insight Report, is to focus on China. We aim to look at its development, to cut through short-term volatility, to understand evolving customer desire for jewelry, and to identify opportunities for the future.”
The report also includes the annual diamond value chain dashboard, which contains authoritative data on the performance of the diamond industry’s upstream, midstream, and downstream segments in 2022.
Source: De Beers Group