Avi Krawitz, Edahn Golan and Rob Bates, the three experts behind the Diamond Dudes podcast, discuss the major developments shaping the diamond market each month. To mark CIBJO’s centenary, celebrated at Vicenzaoro in early September, they brought together several industry figures to examine the key challenges facing the sector.
At Vicenzaoro, the three seasoned experts, who between them have 75 years of industry experience, were joined by Raj Mehta, CEO of Spectrum, Mehul Shah, President of the World Federation of Diamond Bourses, Raluca Anghel, Head of External Affairs and International Relations at the NDC, and Mahiar Borhanjoo, Chief Commercial Officer at De Beers.
One of the first points on which the participants agreed was that, while the diamond market appears to be stabilizing, this is being driven primarily by the scarcity of rough supply and the strength of the high-end segment. Overall demand, meanwhile, remains relatively subdued. The contrast is clearly visible at retail. Below $2,500, sales of natural diamond jewelry are declining, while synthetic diamonds are gaining ground. Above that price point, by contrast, sales are increasing in both volume and value. “We are clearly talking about luxury purchases here,” notes Rob Bates, founder of The Jewelry Wire. This polarization at opposite ends of the market confirms the dynamics of a K-shaped market, as the three experts had already observed in a previous podcast (see the June edition of La Lettre HERE). Raj Mehta, CEO of Spectrum BV, points out that the market is responding more to a shortage of rough than to demand. Yet without a rebound in consumer demand, no recovery can be sustainable. “You cannot sustain the entire industry on the high end alone,” adds Rob Bates.
The challenge is to create desirability, to differentiate and to offer customers a rewarding experience. Diamonds need to be elevated to the same status as other rare luxury products — those for which customers may sometimes wait months and whose purchase is accompanied by a certain sense of ceremony.
Raluca Anghel rightly points out, and this is undoubtedly one of the key takeaways from the discussion, that natural diamonds are not competing solely with synthetic diamonds, but also with travel, fashion and all the rewarding experiences that luxury can offer. “Any approach built around confrontation, around an ‘us versus them’ mindset, takes us precisely in the wrong direction,” she adds.
The strategic target is millennials and Gen Z, a group Raluca Anghel refers to as “Zillennials,” encompassing consumers aged 18 to 40. According to NDC data, consumers spend an average of nine hours a day on their smartphones and as many as 12 hours a day consuming media. Digital channels, the social media shopping experience, on-demand content and platforms such as YouTube must therefore be at the heart of the industry’s priorities.
The conversation also turned to the scarcity of certain stones. Sourcing a diamond that meets specific criteria, or, conversely, securing large volumes of diamonds of the same quality and weight, is becoming increasingly difficult. Amid the turmoil affecting the market, some production and processing facilities have closed, contributing in part to this shortage. Rough prices are currently rising because less supply is available, not because final sales are increasing significantly. While retail is delivering positive results, growth does not yet appear strong enough on its own to account for the rise in rough prices further upstream.
The discussion also highlighted a need for greater clarity. Faced with a proliferation of certificates, different laboratories and conflicting messages, customers are becoming confused. Mehul Shah calls for greater international harmonization. “The area we are not focusing on enough is consumer confidence.” Beyond these formal considerations, the challenge for natural diamonds is not simply to defend their rarity, but to make their value visible, position them within a contemporary context and restore their emotional value.
Other topics raised during the debate focused more specifically on communication, including the use of the term “laboratory” in relation to synthetic diamonds, an issue CIBJO has been actively pursuing, the prohibition on describing these diamonds as “eco-friendly,” and the case for communicating the significant social role played by the natural diamond economy in Botswana, which is currently under threat, while also questioning how much resonance this argument can have with Western audiences far removed from the realities on the ground.
Taken together, these issues highlight the challenges facing industry stakeholders, including CIBJO, the NDC and De Beers, as they seek to establish clear, harmonized guidelines that are shared internationally. The impending sale of De Beers and the strategic choices made by its new owners will inevitably influence the direction the industry takes in the months ahead.
The full podcast is available HERE.
Image: Diamond Dudes podcast