“Millennial consumers have distinctive preferences, which in many ways diverge from previous generations,” said Bank of America Merrill Lynch analyst Ashley Wallace in a research note last June.
“They tend to be more value conscious, more concerned with sustainability and ethical production, and often value unique and individual products versus items that are standardized and mass-produced.”
Wallace further argued that the millennial consumers were also marrying later.
According to Pew Research the median age for millennial women to marry was 27 and 29 for men.
Unnamed industry analysts cited by CNBC noted that when they do marry, some consumers were opting for more gemstone engagement rings, such as sapphires, or fashion jewelry with lab-grown diamonds.
Synthetic diamonds can cost 30 percent less than mined diamonds.
“Millennials don’t want what all their friends have and don’t want what they’ve been told to have,” Jewelers of America spokesperson Amanda Gizzi was quoted as saying.
However, De Beers revealed that it was optimistic about the millennials in its latest diamond insight report.
It noted that globally, millennials were the largest consumer market for diamond jewellery – a generation which will soon reach its maximum earning potential.
“Everyone is talking about the millennials because of the considerable size of this age cohort and the fact that this generation is due to reach its most affluent life stage in about 10 years’ time,” it said.
“The ageing population is a significant demographic trend – in all major diamond markets, except India, the proportion of people aged over 34 in the overall population has increased, while the 15–34 age group has lost share over time. Across the top four diamond markets combined, millennials made up 34 per cent of the total population in 2015, compared with 40 per cent back in 1990.”
De Beers said in 2015, millennials spent nearly $26 billion on diamond jewellery in the largest four markets combined, representing 45 per cent of the total retail value of new diamond jewellery acquired in these markets.
Demand for diamond jewellery from millennials in the US alone rose from $10 billion in 1999 to $16 billion in 2015.
“Despite experiencing less favourable economic conditions than preceding generations and progressing more slowly along the traditional life path, Millennials do express strong desire for diamonds when they reach financial and demographic maturity,” it said.
Millennials’ share of the total diamond jewellery value was particularly high in China at 68 per cent; in India it was 47 per cent, in the U.S 41 per cent and it was the lowest in Japan at 29 per cent.
This, it said, highlights that millennials in these markets contributed a greater share of sales value than the share of population that they represent.
“The belief that younger generations are turning away from diamond jewellery stems from the fact that, despite being on average better educated than people of the same age were in previous decades, lower proportions of Millennials find themselves employed,” said De Beers.
Strong connection with diamonds
De Beers raised five key insights that showed that the millennials’ connection with diamonds remain “strong”.
Firstly, it said millennials place diamonds in the top four most desired high value gifts.
“The stability in share of demand for the 18–34 age group in the US over the past couple of decades is grounded in the undiminishing desire this age group holds for diamonds as a gift,” it said.
“Diamonds rank high on the list of most-desired gifts, with only overseas holidays, weekend getaways and personal electronics being more valued. Foreign travel has always held the greatest allure for US consumers, with overseas trips ranked first back in 2003.
“In the intervening 13 years, short holidays and personal electronics have become more desirable for Millennials, who prioritize experiences over material goods, but still desire smart electronic devices due to their need for interconnectedness.”
De Beers said in Japan, diamonds were more desirable as gifts to millennials than they are to the older generations.
It said among Chinese millennials, diamond jewellery was the most desired fine jewellery item to own, with 52 per cent placing it at number one, compared with 43 per cent for older generations.
In India fine jewellery far outweighed other luxury or experiential categories in terms of desirability: 63 per cent of millennials wish to buy it for themselves and 46 per cent hope to receive it as a gift, it said.
Secondly, millennials grow into the diamond category, according to De Beers.
It said introducing young people to diamonds early in their lives was a strong driver of millennial long-term engagement with the category.
“Diamond jewellery ownership among Millennials is high in the US, with 62 per cent owning at least one piece of diamond jewellery,” said De Beers.
“That figure jumps from 48 per cent of 18 – 24 year olds to 72 per cent of 25–34 year olds, comparing favourably with the 76 per cent seen among older consumers, and suggesting that diamonds are maintaining relevance for the young who grow into the category.”
On average, US millennials who own diamond jewellery own 5.3 pieces, while 15 per cent of them own eight pieces or more.
“Diamond ownership levels in the other main markets were lower than in the US, but in India (10 per cent) this is in line with ownership among the older generations, and in China (20 per cent among all Millennials) it peaks among the 25–34 year olds (29 per cent),” said De Beers. “Japan is the only market where Millennial ownership is considerably lower (31 per cent) than older consumers’ ownership (66 per cent).”
Thirdly, De Beers said millennials acquire diamonds more than the older generations.
It said the proportions of diamond jewellery-buyers among millennials, with the exception of India, were significantly higher than among those aged older than 35, with the 25 – 34 age group most active of all.
“This can be explained by the fact that a very high proportion of bridal acquisitions fall within the Millennial segment, as discussed in more detail later in this chapter,” it said.
Fourthly, the group said self-purchasing of diamond jewellery was an important and growing acquisition route among millennials.
“While the Bridal category has provided stability in markets where there is an established and growing diamond engagement ring tradition, non-bridal acquisition delivers the greatest growth opportunity for Millennials,” it said.
“Self-purchase of diamond jewellery among 18–34 year olds has increased to deliver a sizeable proportion of non-bridal diamond jewellery retail volumes in the US and India.
“Self-purchasing in the US has increased more among Millennials than older consumers recently, growing from a quarter of all non-bridal pieces acquired in 2013 to 31 per cent in 2015. Those same figures are 34 per cent and 37 per cent respectively for older consumers.”
Lastly, De Beers said gifting from parents and grandparents to millennials was a “powerful” opportunity for the diamond industry.
“Another important acquisition route for millennials is gifting from relatives other than partner or spouse,” it said.
“In the US, a diamond gift from parents and grandparents accounts for 15 per cent of non-bridal acquisitions by millennials, but in the youngest age group of 18–24 it is as high as 31 per cent.”
De Beers concluded in the report that millennial consumers were a large and important cohort for the diamond industry despite the strong headwinds they still experience in terms of financial constraints in mature markets, the overwhelming noise of competition for their discretionary spend and a declining share of population in many markets.
“Millennials deliver volume and value growth underpinned by stable bridal consumption and potent desire for diamonds as gifts,” it said.
“There are powerful opportunities among this generation to expand the non-bridal diamond acquisition. Self-purchase, acquiring for celebration of the individual and familial gifting are growing ways in which millennials are accessing the market.”
It said diamond marketers need to understand the specifics of the lifetime values and preferences of millennials to unlock this potential market.
“While millennials dream about diamonds, more needs to be done to make diamond jewellery a top of mind category and nurture a deeper emotional connection, so that diamonds become more relevant day to day, and that millennials will, in turn, seed the love affair for future generations,” it said.