Demand for diamonds over the long term is influenced primarily by affordability, which is closely linked to key economic fundamentals such as the growth of GDP and PDI. Additionally, the desirability of diamonds, both within the jewelry sector and relative to other nonessential goods and experiences, plays a significant role.
Historical data shows a close correlation between the demand for luxury goods, including diamonds, and real GDP and PDI. Affordability will continue to be supported in the long term by GDP and PDI expansion. However, a closer examination by country reveals a more nuanced picture. In the US, diamond demand has recently been somewhat stronger than PDI growth would indicate.
The natural diamond sector was notably robust after Covid-19 restrictions eased, benefiting from a rebound in weddings (a 12% increase in 2022 over the long-term average) and a heightened emphasis on emotional gifting and self-reward.
Conversely, in China, natural diamond demand has not kept pace with PDI growth. The country’s share of global diamond polished wholesale demand increased from 4% in 2000 to a peak of 18% in 2015 but receded to 12% in 2022. Beyond the economic fundamentals, diamonds’ desirability among consumers is strong relative to alternative goods.
However, diamonds face increased competition within the jewelry sector and from other discretionary goods and experiences (for example, leather goods, travel, and technology). In the US, consumer analysis shows that diamonds’ desirability remains high within the broader competitive set.
However, their desirability within the jewelry industry has decreased over time. Natural diamond demand has reduced following the entry of LGDs. In China, gold retains the highest desirability, with its popularity further increasing since 2020. In India, natural diamonds have surpassed gold in consumer desirability. The future trajectory of luxury goods, including diamonds, is increasingly influenced by millennials and Gen Z.
By 2026 they will represent approximately 75% of the luxury goods market. These younger consumers have a higher average spend per person. They also prioritize innovation, brand visibility, and sustainability in their purchasing decisions; and are more open to adopting new ownership models—for example through renting or buying second hand luxury items.
The regional and generational differences underscore the importance of understanding the specific growth drivers influencing diamond demand beyond macroeconomic factors.
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