Consumer demand for diamonds grew by 2 percent to 3 percent in 2012, according to De Beers estimates, a considerable drop from the 10 percent rate recorded in the previous two years. The markets were negatively impacted by weakening macroeconomics and policy uncertainties in India and China, as well as consumer caution in developed markets, according to the company in its annual consumer demand overview report.
The survey measured growth according to polished diamond wholesale prices in U.S. dollars. Sales in China rose between 8 percent and 10 percent, which was the best performance, while demand in the U.S. and Japan grew 5 percent to 6 percent. The market in India contracted by 5 percent in dollar terms, largely due to the depreciation of the rupee. However, diamond jewelry sales in rupee in India rose 9 percent, while sales measured in yen increased 2 percent in Japan.
The U.S. remained the largest diamond consumer market with approximately 37 percent of the marketshare, down from 42 percent in 2007. China represented about 11 percent of the market, followed by Japan with 10 percent and India with around 9 percent.
De Beers explained that global retail stock levels in all key markets were slightly lower than in 2011, reflecting greater retail caution and a drive toward higher inventory efficiency.
The company also noted a consumer shift in demand toward smaller polished goods of lower-quality as shoppers increasingly become more price sensitive in reaction to higher diamond prices.
Bridal and engagement rings continued to be the best selling products in the U.S. No clear leading product categories were evident in India and Japan, however, but De Beers reported that non-bridal multi-diamond rings were much more popular there than in other key markets. In China, solitaire diamond products were prevalent catering mainly for bridal and wedding anniversary occasions.
Retailer feedback indicated that the most popular category of polished diamonds varied in different markets. In the U.S., the focus was on 0.50 carat to 0.99 carat, H+, SI goods, while in China the most popular range was 0.30 carat to 0.49 carat, G to H, VS diamonds. In Japan, the best sellers were 0.18 carat to 0.49 carat, H+, SI goods and in India they were 0.02 carat to 0.07 carat, G to H, VVS to VS stones.
De Beers expects slightly better growth in 2013 supported by a steady U.S. market and an improved outlook for India. Growth rates in China are expected to consolidate, while demand in Japan is forecast