Regarding the value of diamonds, it is one of the most sympathetic conspiracies of human society under consumerism.
At the July 2021 Sotheby's Rosewood Jewelry Hong Kong auction, a pear-shaped natural diamond weighing more than 100 carats, the second largest pear-shaped natural diamond ever sold at auction, was purchased by an anonymous buyer for $12.3 million in cryptocurrency.
The anonymous buyer of the pear-shaped natural diamond, weighing more than 100 carats, bought it in cryptocurrency for $12.3 million
Almost all consumers know that it is the crystallization of a high-purity single carbon element, the color comes from the trace elements mixed into the crystal, and the sparkle is due to the multi-angle refraction of light caused by the cutting surface, but people just love it and are willing to pay a high price for its cultural meaning as a rough stone and its creative and artistic value after becoming a craft work. This may be where human thinking and behavior differ from purely digital rationality, and why, no matter how technology develops, numbers cannot completely replace entities.
Especially after the global impact of the new crown epidemic, the rapid bottoming out of the diamond industry and the medium-term future that are generally optimistic about the industry show that the value provided by the fashion industry is not only about the product, but also about the combination of culture, emotion and art.
So, when the global economic development generally enters a "weak cycle", as a representative of the field of hard luxury consumption, what kind of development trend will the diamond industry show in 2022 and the next few years?
On February 7, Bain & Company and antwerp World Diamond Centre jointly released the "The Global Diamond Industry 2021 - 22" research report (The Global Diamond Industry 2021 - 22), bringing good news that the entire diamond industry chain is vibrating.
A Tiffany diamond ring set with Imperial diamonds
According to the report, after a difficult situation in 2020, the diamond industry has achieved remarkable results in 2021, and each department has performed well, proving that the industry has emerged from the crisis caused by the new crown pneumonia epidemic and will usher in better development in 2022.
In 2021, revenue from the diamond mining sector increased by 62%, revenue from the cutting and polishing sector by 55%, and revenue from the diamond and jewelry retail sector increased by 29% – all three indicators higher than before the pandemic began. The diamond industry underwent a spectacular reversal of fortunes in 2021, rebounding faster than expected.
2. Profit margins in all sectors of the industrial chain have returned to pre-pandemic levels. Upstream margins increased by about 9-11 percentage points to 2018-19 levels; both midstream and retail achieved decade-high profitability, up 3-5 percentage points and 6-8 percentage points, respectively. Total profit from diamond mining and retail increased by $7 billion in 2021 compared to 2020.
3. At one end of the supply chain, there is a shortage of inventory caused by the decline in mining capacity caused by the epidemic, and at the other end of the market, consumer demand has increased significantly, which has brought enough space for the price increase of rough and finished products. Rough diamond prices rose 21 percent in 2021 and polished diamond prices by 9 percent, both of which have returned to near pre-pandemic levels and historical averages.
4, enterprises will use profits for reinvestment, the capital market is full of information on the prospects of the industry, so that the diamond industry has a wealth of liquidity, which is the key to the entire industry into a virtuous circle.
5. Although the impact of the new crown epidemic does not know when it will be completely outstanding, and there has been no significant progress in resource exploration, rough production can only grow at a rate of no more than 2% in the next five years, but at least in 2022, rough production can reach more than 1.2 million carats, and clear demand growth and production scarcity will support the stable and sustained rise in rough diamond prices.
6. In 2021, the global personal luxury and diamond jewelry market experienced a decade of high growth, of which the growth rate of diamond jewelry retail sales was 29%, and in China, diamond jewelry retail sales increased by 19% year-on-year, 6% higher than the pre-epidemic level. The U.S. also achieved a 38% year-over-year increase, up 23% compared to 2019. Europe and India also saw growth, but still failed to return to pre-2019 levels.
All in all, diamonds and their products will continue to increase in price and market in 2022.
In addition to the decline in production capacity due to objective reasons, when analyzing the short- and medium-term prospects of the diamond industry, "China" and "sustainable development" have become the most frequently mentioned keywords in the report.
The report observes that China is the fastest recovery market after the outbreak of the epidemic - strong local consumer demand has begun to recover from the second half of 2020, coupled with the national "14th Five-Year Plan" to release huge consumption potential in lower-tier cities and suburbs, and China's strong e-commerce channels have properly solved the problem of brand-owned physical stores can not expand rapidly, and brought a new incremental market to the diamond industry.
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Of course, as an industry with wedding demand as an important consumption scene, diamond jewelry retail in China has also been affected by the stagnation of marriage rate growth. However, in WWD China's view, Chinese women have the highest employment rate in the world, and their self-pleasing consumption demand, rapidly increasing consumption power, high acceptance of hard luxury products, and the gradual change in the aesthetics of men's traditional jewelry will rely on China's huge market volume to provide greater development space for the diamond industry and its consumer market.
In the context of sustainable development concepts and responsible consumption gradually becoming the collective consensus of the industry and consumers, the field of natural diamonds naturally faces no small challenges. The ESG agenda in the diamond industry is more valued by investors and consumers, with carbon neutrality, climate impact and product transparency being the most concerned issues.
This trend is reflected in De Beers' Diamond Insights Report 2021: About one-third of consumers worldwide value the sustainability behind natural diamonds (above price, design and size) when choosing them. Nearly 60% of consumers choose between "a sustainable natural diamond produced by a reputable brand that meets ESG goals" and "a diamond produced by a reputable brand with no sustainability guarantee"; 85% are willing to choose to pay an average premium of 15% for sustainable properties. Environmental protection, fair worker treatment and conflict-free procurement are the top three ESG factors that diamond consumers consider.
De Beers has committed to carbon neutrality (Scope 1 and Scope 2 greenhouse gas [GHG] emissions) by 2030, and Russian diamond giant Alrosa, which has about 1/3 of the world's diamond reserves, is also decarbonizing its climate and environmental strategies to decarbonize its operations.
De Beers' 2030 Sustainability Strategy
In terms of transparency and traceability, De Beers has launched the Code of Origin program using the Tracr platform, Alrosa is developing its own non-invasive laser marking technology, and Lucara, a Canadian diamond mining company with the world's second largest rough diamond, is working with Sarine, the world's first diamond technology company based in Israel, to allow buyers to track the supply and production chain of their diamonds.
At the same time as the natural diamond harvest challenge, laboratory synthetic diamonds seem to have ushered in an "opportunity".
The Global Diamond Industry 2021-22 study observes that Lab-grown Rocks has grown into a separate, more affordable jewelry category. With the increase in the supply of laboratory-grown diamonds and advances in technology, the former's demand in the market segment has continued to grow compared to naturally mined diamonds, and it naturally has a more affordable price advantage – the average wholesale price of laboratory-grown diamonds has now fallen to 14% of the price of natural diamonds and the selling price of 30% of the price of natural diamonds.
While laboratory synthetic diamonds have so far failed to establish a universal value consensus and acceptance among consumers, there have been prescients who are confident in the future of synthetic diamonds and have even used laboratory synthetic diamonds to begin an "offensive" on the fine jewelry market.
Laboratory synthetic diamond company Lightbox began selling lab-grown diamonds in bulk in October 2021
In January, Luximpact, a Paris-based start-up, acquired Oscar Massin, a French jewelry brand born in the 19th century, and plans to use lab-grown synthetic diamonds to reinvigorate the ancient brand. Frédéric de Narp, one of the founders of Luximpact, served as President and CEO of North America at Cartier and Harry Winston.
Born in Belgium and apprenticed to jewelry from the age of 12, Oscar Massin customised works for European royals, established his eponymous studio in 1863 and won a gold medal at the Paris World's Fair in 1867. In 1892, Oscar Massin retired, and the brand has remained silent ever since.
In an interview in November 2021, Frédéric de Narp said Luximpact will reinvigorate the age-old brand from a creative, financial and ESG perspective: Oscar Massin will be the first traditional luxury brand to use laboratory-grown synthetic diamonds from the United States, made from fully traceable, untreated and climate-free Latitude diamonds, while other materials are made from 100% recycled gold and platinum, scess-compliant Global Services measures high standards of environmental and ethical responsibility. In terms of design, the revived brand will continue the founder's aesthetic legacy, including his metallic lace and signature 'rose cut'. The first brand revival series will be officially released in February this year.
Oscar Massin will be the first traditional luxury brand to use laboratory-grown synthetic diamonds from the United States
At that time, whether the distinct sustainability attributes and long history will make sense for laboratory synthetic diamond jewelry to enter the fine jewelry market may be seen.
In addition to traceability programs, the second-hand jewelry business has also received the brand's attention. Tiffany & Co. Launched a new product line made from recycled gold, Signet, one of the largest jewelry retailers in the United States, launched a series of recycled gold and recycled diamond products, and Online Jewelry brand Blue Nile launched a second-hand engagement ring recycling and sales service.
It is not difficult to find that the diamond industry has been reorganized from the sudden outbreak of the epidemic, and is ready to respond to sustainable development issues, major suppliers and brands are aware of the empowerment of e-commerce channels, and marketing methods are becoming more and more diverse. The combination of the above factors led to the optimistic expectations of the 2021-22 Global Diamond Industry study: "In the medium term, diamond demand may be affected by government policies around economic stimulus and travel restrictions, but market growth in 2022 will remain higher than in the pre-pandemic period and is likely to return to historical growth in 2023-24." ”
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However, the perfect preparation of the supply side does not mean that the consumer side is celebrating, and the great prospects of the diamond industry are not exclusive to professional hard luxury brands. In recent years, there have been frequent traditional soft luxury strong brands, such as Louis Vuitton, Gucci and other hard luxury markets.
2022 marks the 90th anniversary of CHANEL Jewelry, the founding work of Chanel Jewelry is the diamond jewelry collection "Bijoux de Diamants". Recently, Chanel has released the Allure Céleste necklace, a blockbuster from the latest Diamond Jewelry 1932 collection. It is understood that the entire 1932 collection will include 77 pieces made of diamonds and precious stones.
Chanel Diamond Jewelry 1932 collection blockbuster Allure Céleste necklace
On February 10, Dior also officially presented a collection of precious diamonds to the world – a 150 ct rough fancy intense yellow diamond cut to 88.88 carats – in honor of the reopening of the boutique at 30 Avenue Montaigne, the hall of the brand. The diamond will then be set in a bespoke piece designed by Dior Fine Jewelry Art Director Victoria de Castellan to showcase the craftsmanship of the brand's Fine Jewelry Workshop.
Dior named the precious diamond after "Le Monontaigne."
The better the market prospects, the more fierce the competition, and there may be more drama in the diamond-related field in 2022. WWD
Written by Ma Xiao Thorn
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