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Global demand for diamond jewellery reached a record high of $79bn (£48bn) in 2013, according to the inaugural Diamond Insight Report published today by De Beers.
However the report claims that “substantial investment will be required in diamond production, technology, and branding, marketing and retail standards” if the industry is to sustain its recent levels of success.
The firm says demand is expected to continue to grow over the long term, driven by the ongoing economic recovery in the US and the growth of the middle classes in developing markets such as China and India.
Sales of polished diamonds in the US increased by 7% in 2013, while both India and China have seen their domestic jewellery markets grow by a compound annual growth rate of 12% in local currency between 2008 and 2013.
However the report says that the share of advertising has been reduced due to increasingly strong and sophisticated competition from other luxury categories.
Global rough diamond production in 2013 increased by 7% in carat terms compared to 2012 levels to a total of around 145 million carats, but this figure is below the 2005 peak of around 175 million carats.
The report highlights that a forecast reduction in supply from existing sources will likely not be matched by new production coming on-stream in the years ahead, and diamond supply is expected to plateau in the second half of the decade, before declining from 2020 onwards.
The report also claims that the extraction process is becoming increasingly complex and costly as mining moves deeper into the earth.
A further challenge is presented by the three principal input costs – labour, electricity and diesel – which have all seen increases well above local inflation levels in the main diamond-producing countries, with the trend set to continue.
Philippe Mellier, chief executive of De Beers, said: “Consumer demand remains the one true source of value for the diamond industry. With demand forecast to increase further from 2013’s record levels, the opportunity for growth is clear.
“But this must not be seen as cause for complacency. The industry will continue to lose ground to other luxury categories if it does not invest significantly in production, marketing and technology.”
