What a crazy year we’ve just experienced. Who would have believed it could get even more extreme after a few years of Covid? We are so busy dealing with the day-to-day essentials that we forget how important it is to stop and reflect.
A war. For the first time in 20 years since the attack of 9/11 did the world experience such a dangerous scenario – not to mention the human suffering and massive supply line disruptions leading us towards a recession.
Employment has now become a significant problem. So many industries are in dire need of qualified people and, due to the lack of immigration, the employees are, in many cases, in the driver’s seat because there are not enough people to fill the vacancies.
Travel has gone ballistic with prices often double what they were, but the hunger and desire to travel are driving demand with the obvious trade-off of other luxury services and products. I believe we haven’t fully felt its effects.
A Crypto crash of $150 billion. That’s 150,000,000,000. I wrote it out like that because it’s an unfathomable amount of money that’s been lost. All this talk about salvaging it or getting something back is a farce, in my opinion. When companies go bankrupt with physical assets like properties, by the time the liquidators are finished, you are lucky to see two cents on the dollar. Does anyone really think money and crypto will ever be recovered? Yeah, right.
Let’s reflect on the diamond jewellery space.
While there is no doubt that the natural versus lab grown diamond issue was part of most conversations, there were strong opinions on both sides. What cannot be denied is that those who moved quickly cashed in, making margins of 200 percent, something few retailers have seen for a very long time, if ever.
It was surprising how so many wholesalers worldwide who claimed they would never deal with lab grown, capitulated and helped their retailers source stones, saying things like, “if my customers are asking for it, how many times can I say no?” And that’s exactly the reason why so many retailers who sat on the fence ultimately made the decision to sell them as well.
Now we sit and watch. The prices of lab grown diamonds are continuing to decrease. How will the retailers position themselves? What will the price ultimately be? Will natural diamonds make a resurgence? Will the coloured gemstones continue to make ground? The only thing we know is that we don’t. The market is a crystal ball. No one could have foreseen how big a chunk lab grown diamonds could have taken from the engagement ring market. The general diamond merchant didn’t feel a slowdown in normal sales, so what was the problem? The answer is our diamond segment has grown, and they may have missed this segment, as there was clearly a lack of better goods in the market, so demand for natural diamonds continued to remain strong.
I recently returned from a trip to London for an executive meeting of the World Federation of Diamond Bourses. We were privy to a presentation by David Kelly, the CEO of the Natural Diamond Council.
The key insight that David shared with us was that we should not be surprised that the young brides of today are gravitating towards the lab grown diamond. As they are very much into the Instagram moment, if it’s big, bright and beautiful, they are keen to spend the extra cash on other things, such as travel or buying a house. Their research suggests that the major growth for natural diamonds is the female self-purchase.
The US statistics revealed a massive increase of 67 percent in self-purchase between 2019 and 2021, a jump from 12 billion to 20 billion. This is fundamentally women buying diamonds for themselves. In the same timeframe, the bridal market of natural diamonds only grew from 13 billion to 15 billion, which is only a 14 percent increase.
I challenge you all to ask yourselves, to what extent are you targeting the person who wants to purchase a natural diamond as a reflection of achieving something special or commemorating an important moment in their lives?
For those unaware, the Natural Diamond Council is an entity formed by major producers, such as mining companies. It was previously called the Natural Diamond Producers Association, and its mission was “to advance the integrity of the modern diamond jewellery industry and to inspire, educate and support customers”. I would strongly suggest that anyone in our industry unfamiliar with these resources check out their website. It has tremendous content and phenomenal web traffic.
Lastly, my trip involved visits to the London Diamond Club, The Israeli Diamond Exchange and breakfast with Young Diamantaires in Antwerp. Needless to say, meeting close to 100 diamond people in two weeks left me overloaded with information on trends, technology and sentiment in the mid-stream and retail markets they supply.
1/1 Rami Baron and Boaz Moldawsky, President of Israel Diamond Exchange
I recommend you go out and travel, meet and greet, and have a meal to learn more about what is happening. It is invaluable.
I wish you all an amazing Xmas trade and feel free to reach out if you have questions.