India’s diamond industry is looking up in 2017 after being hit by demonetisation last year, a Bain & Company report said, adding that projections over the longer-term are upbeat, supported by positive economic and demographic indicators. Bain & Company, in its seventh Annual Global Diamond report, said that strikes by jewellers and demonetisation disrupted India’s market last year, which has turned upwards in the current year.
The report, which was released in partnership with Antwerp World Diamond Centre, found that rough-diamond players are likely to increase their marketing spend by about 50% over previous years to promote the diamond story. The report also mentioned that the global rough diamond production volume also remained relatively flat in 2016 at 127 million carats, extending the trend of the last eight years.
“Global sales of diamond jewellery were roughly stable last year. The U.S. remained the largest global diamond jewellery market, but sales here were flat in 2016 following several years of consistent growth. China’s performance faltered, as the yuan posted its largest decline in value in 10 years and consumer confidence softened. A strike by jewellers and demonetization disrupted India’s market,” the report said.
“The midstream segment’s future health will depend on the interplay of rough and polished prices as well as the segment’s ability to make continued operational improvements,” said Olya Linde, a Bain partner and one of the authors of the diamond report.
The outlook for 2017 is stable across the diamond value chain. “The revenues of major retail chains in key markets are trending up amid healthy macroeconomic fundamentals. Retail demand in India turned upward in 2017, after demonetization of large-denomination currency notes at the end of 2016 supported strengthening of organized jewellery retail,” the report said.
However, the report also points out that the future growth of the global diamond industry rests on two key assumptions: continued demand for diamond jewellery and a limited substitution of natural diamonds by lab-grown stones.