As we step into a new year, let's reflect on the tumultuous journey of 2023 and the shifting dynamics that defined it. But before going there, it's imperative to examine the challenges that marked the past year.
Two topics in this report that will both explain the sharp drop in diamond prices that fortunately came to an end last December.
1) Came Covid, came a relatively good demand for many consumptive goods other than the restricted travel, or wine & dine. My industry profited quite a bit from this phenomenon up until March 2022, even reaching a 20y high before it nose-dived just as Russia invaded Ukraine.
The monthly diamond index average witnessed a staggering 16% decline from January to December, in contrast to the 7.5% decrease observed in 2022. Global economic downturn and weakened consumer sentiment plagued numerous industries throughout this period.
The diamond market fortunately has now returned to its 2020 levels, showing first signs of recovery.
2) Lab-grown diamonds.
I remember -I believe it was 2016- writing an editorial where I quoted Meryll Lynch who estimated the synthetic diamond market-share at 3%, projecting it to eventually reach 5%.
Well listen to this:
2023, 18.1% of all diamonds sold worldwide were synthetic. Not only Millennials and the upcoming Gen-Z were drawn towards the ecological lower footprint of an LG (Lab-Grown), but it also attracted those seeking a more accessible entry point due to the affordability of LGs.
In other words, not every lab-grown diamond sold came at the expense of a natural one.
The landscape of the diamond market underwent a profound transformation in 2023. Lab-grown diamonds found a niche in low-entry fashion retailers like Pandora and Swarovski, as well as smaller, family-owned jewellery stores. Unfortunately, also quite a few unscrupulous establishments misrepresented LGs as naturals.
In contrast, natural diamonds ascended to the realm of high-end brands and reputable jewellery stores, solidifying their status as symbols of luxury.
The diamond market is redefining itself as we speak and the future looks a little more ‘brilliant’ again.
From the world capital of diamonds, I wish you all a healthy and certainly more peaceful 2024.
Rob van Beurden
The Diamond House Group.