The Global Diamond Industry 2018
A resilient industry shines through
方案联盟
Copyright © 2018 Bain & Company, Inc. All rights reserved.
This work was commissioned by AWDC and prepared
by Bain & Company and AWDC. It is based on secondary market
research, analysis of financial information available or provided
to Bain & Company and AWDC, and a range of interviews with
customers, competitors and industry experts. Bain & Company
and AWDC have not independently verified this information
and make no representation or warranty, expressed or implied,
that such information is accurate or complete. Projected market
and financial information, analyses and conclusions contained herein
are based (unless sourced otherwise) on the information described
above and on Bain & Company’s and AWDC’s judgment,
and should not be construed as definitive forecasts or guarantees
of future performance or results. Neither Bain & Company nor
AWDC nor any of their subsidiaries or their respective officers,
directors, shareholders, employees or agents accept any responsibility
or liability with respect to this document. This document is copyright
of Bain & Company, Inc., and AWDC and may not be published,
copied or duplicated, in whole or in part, without the written
permission of Bain & Company and AWDC.
方案联盟
The Global Diamond Report 2018
Page i
Contents
Note to readers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
1. Recent developments in the diamond industry . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Rough diamond production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Cutting and polishing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Diamond jewelry retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5. Key industry trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. Recent developments in the lab-grown market . . . . . . . . . . . . . . . . . . . . . . . 23
7. Updated supply and demand model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Key contacts for this report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
方案联盟
The Global Diamond Report 2018
Page ii
Note to readers
Welcome to the eighth annual report on the global diamond industry prepared by the Antwerp World
Diamond Centre (AWDC) and Bain & Company. This year’s edition covers industry developments
in 2017 and the first half of 2018 and takes a close look at key industry trends.
We begin with important developments along the value chain. In subsequent sections, we review
factors that influenced rough diamond production and sales, midstream performance and global
diamond jewelry demand in major markets.
We also provide an update on the long-term outlook for the diamond industry through 2030.
The 2030 supply-demand forecast considers announced production plans, recent changes
in mining operations, potential additional sources of supply, expected changes in global
and regional macroeconomic parameters, and potential effects of lab-grown diamonds.
Readers looking for a brief overview of this report can find key points below:
Following a period of high volatility, 2017 was strong for the diamond industry, with
approximately 2% growth across all segments of the value chain. In 2018, revenues are expected
to grow again, even accelerating in the mining and jewelry retail segments. Volatility persisted
in 2018; the final outcome for the year will be determined by sales performance during
the holiday season.
Rough diamond mining companies delivered unprecedented production growth of nearly 20%
in volume in 2017. The production increase came mostly from mines with lower-quality
assortments. Mining company revenues grew by 2% overall, indicating a positive trajectory
for the second year in a row. In 2017, some major producers reported decreases in their EBIT
margins, mostly due to currency appreciation in production countries. However, mining
companies’ profitability bounced back in the first half of 2018.
Midstream profitability remained positive with margins of about 1% to 3%. Assuming
the demand for diamond jewelry continues to rise through the end of 2018, overall profitability
of the cutting and polishing segment is expected to improve. Midstream inventories increased
in 2017–18, particularly in lower-quality and small-size assortments, as midstream players
prepared to ride another demand surge for those categories in 2018. India continued to grow its
leadership position in the cutting and polishing segment due to lower labor costs, a favorable
regulatory environment and relatively better access to financing. Even though financing
availability remains an issue in the midstream segment, transparent and financially healthy
companies report little impact on their ability to secure funding.
In line with positive luxury market trends, global diamond jewelry sales grew 2% in US dollar
terms in 2017, fueled by strong macroeconomic fundamentals in the US, resurging demand
from Chinese millennials, and increasing sales in the self-purchasing category in China.
方案联盟
The Global Diamond Report 2018
Page iii
The demand for diamond jewelry is expected to accelerate in 2018. However, if the trade war
between the US and China continues, it may have a negative effect on the growth prospects
for global demand in the short to medium term.
Three key industry trends are shaping the future of the diamond industry.
One of the most important opportunities is the increasing influence of digital technologies.
Emerging and maturing digital technologies are affecting all parts of the value chain, enabling
diamond producers, midstream players and retailers to increase efficiencies within their operations.
Marketing efforts that use digital technology can also deliver superior customer experiences.
The second trend is the growing presence of lab-grown diamonds. Lab-grown diamonds are
clearly here to stay. De Beers Groups’ launch of a lab-grown fashion jewelry retailer called
Lightbox Jewelery, and the US Federal Trade Commission ruling on diamond terminology were
major news in 2018. Lightbox does not provide grading reports for its products, as it states that
grading reports exist as a record of a diamond’s rarity and, therefore, its value — with products
that can be mass-produced to a particular recipe, Lightbox notes that grading reports could
confuse consumers about the value of their lab-grown stones. The effects on natural diamond
demand and price will depend on consumers’ perceptions and preferences. If the natural
diamond industry can differentiate its stones from lab-grown diamonds (perhaps positioning
lab-grown diamonds as fashion jewelry rather than luxury items), the effect on natural diamond
demand by 2030 will be limited up to 5% to 10% in value terms. Given the pace of declining
production costs and wholesale and retail prices, we expect lab-grown stones to become
accessible to a wider consumer audience, potentially increasing demand for diamonds in general.
In the short to medium term, growth of lab-grown diamonds will be limited by manufacturing
capacity, access to technology and intellectual property, and availability of funding.
The third key trend is the shifting preferences of younger generations of consumers. Younger
generations of consumers are causing industry players to rethink their sales and marketing
strategies. The self-purchase product category continues to grow as millennial and Generation
Z’s female spending power increases. Younger generations are also more inclined to consider
the opinions of social influencers, customer reviews and “likes” when making purchasing
decisions. Social media shopping is expected to increase significantly as the spending power
of Gen Z rises. Many retailers are already strategizing how the shifts in preferences will change
their approaches to marketing and operations.
The long-term outlook for the diamond market remains positive. Rough diamond supply
is projected to be negative 1% to 1% annually in volume terms. We expect demand for natural
rough diamonds to stay flat or grow up to 2% annually through 2030 in real terms (2% to 4%
in nominal), backed by strong fundamentals in the US and the continued growth of the middle
class in China and India. Our outlook incorporates possible demand substitution from lab-grown
diamonds, which is estimated to be 5% to 10%. It also reflects fundamental long-term supply
and demand factors rather than short-term fluctuations.
方案联盟
方案联盟
• Every segment of the value chain improved in 2017,
with industry revenue growing around 2%. In 2018,
we expect revenues to continue to trend upward,
and project accelerated growth in the mining
and jewelry segments.
• Revenue for rough diamonds increased, continuing
a climb that started in 2016. Revenue growth for rough
diamonds is largely attributed to increased production
by smaller players. The top five mining company
aggregates faced unfavorable exchange rates in 2017,
which contributed to lower profit margins of about 5%.
• Cutting and polishing revenues increased slightly in 2017
due to healthy demand, marking a turnaround from prior
years. Average profitability was stable at 1% to 3%, with
the most efficient players delivering margins of around 10%.
We expect cutting and polishing profitability to improve
in 2018, supported by rising prices for polished diamonds
and increased demand for diamond jewelry.
• Midstream inventory has increased in anticipation of higher
demand, particularly in lower-quality and smaller-sized
assortments.
• Global retail sales of diamond jewelry increased in 2017
due to a strong economy in the US, the world’s largest
diamond jewelry market. A resurgence of luxury
spending among Chinese millennials also contributed
to the increase.
• De Beers Group launched Lightbox Jewelry, a lab-grown
fashion jewelery retailer with a new linear pricing model
and no grading reports for its products, in September
2018. Along the value chain, companies are evaluating
how to strategically respond.
• Performance across the value chain was strong during
the first half of 2018, with accelerated growth expected
among mining companies and jewelry retailers. The final
outcome for the year hinges on holiday sales in December.
1.
Recent developments
in the diamond
industry
方案联盟
The Global Diamond Report 2018
Page 3
Source: Bain & Company
No. of
players:
Entry
barriers:
Bargaining
power:
Top 5 players
control 70%
Large retailers control
~35% of the market
high
high
>10,000 players
medium
low
medium
medium
~5,000 players
low
low
low
low
Production Sales
• Exploration
of diamond
resources
• Rough
diamond
production,
processing
and sorting
• Sale of rough
diamonds
from producers
• Rough
diamond
trading
Rough diamonds
Cutting and
polishing
Sales
• Cutting
and polishing
rough
diamonds
to produce
polished
diamonds
• Polished
diamond
wholesale
• Polished
diamond
trading
Polished diamonds
Jewelry manufacturing
• Jewelry design
and manufacturing
Retail sales
• Jewelry and watches
Diamond jewelry
~100 players
high
medium
Rough diamond sales
Global revenues by value chain segment, $
Rough diamonds
Cutting and polishing
Polished diamonds
Jewelry manufacturing Retail sales
Diamond jewelry
*Forecast (F) made based on FY 2017 results
Note: Jewelry manufacturing value is estimated at approximately 65% of retail sales based on historic average
Sources: Company data; Kimberley Process; Euromonitor; Bain & Company
+4–6%+2%
+3–5%+2%
+4–6%+2%
+4–6%+2%
2016 2017 YOY change 2016–172018F* YOY change 2017–18F*
Figure 1: Barriers to entry and bargaining power vary across the diamond value chain
Figure 2: Revenues improved throughout the process, and the trend is expected to accelerate in
2018
方案联盟
The Global Diamond Report 2018
Page 4
Rough
diamond
sales
Rough diamonds
Cutting and polishing
(including trading)
Polished diamonds
Jewelry manufacturing Retail sales
Diamond jewelry
Notes: Analysis of exploration and production is based on data for ALROSA, De Beers Group, Rio Tinto, Dominion Diamond Mines, Petra Diamonds;
analysis of large chains is based on data for Chow Sang Sang, Chow Tai Fook, Gitanjali Jewels, Lukfook, Signet Jewelers, Tiffany & Co., Titan Company
Sources: Publication analysis; company data; expert interviews; Bain & Company
2017 vs. 16 –5%
2018 vs. 17
Average operating margin, 2017
Rectangle width corresponds to segment revenue in 2017
Change in
profitability
1–3%
22–24%
2–4% 3–5%
9–11%
Small retailers
(~65% of market)
Large retailers
(~35% of market)
Notes: Estimated realized price is based on an estimate of carats sold if data is published, if not, on production data; ALROSA revenues represent diamond sales only;
Dominion Diamond Mines 2017 results based on H1 2017 as the company was delisted and no long publishes the data; Petra Diamonds data converted from year ending in June
to year ending in December, based on company reports for full year and half year; only diamonds tracked by Kimberley Process are included; other is estimated assuming no price change
for the players of this segment; E is estimate; to estimate average price per carat sold, total value of diamonds sold is divided by total volume of diamonds sold
Sources: Company data; Kimberley Process; analyst reports; Bain & Company
World rough diamond sales by producers (including sale of inventories), $ billions YOY change
(2016–17)
2%
Dominion
Diamond Mines
Other 20%
–6%
57%
15%
–7%
–5%
Petra Diamonds
Rio Tinto
De Beers Group
ALROSA
Average price per carat sold (including sale of inventories), $
~15
~16
~12
~15 ~15
~16
2013 14 15 16 17 18E
~119 ~131 ~114 ~111 ~99
Figure 3: Profitability in the rough diamond segment trended down in 2017 but is expected
to rebound in 2018
Figure 4: Rough diamond sales were stable in 2017 and are expected to rise in 2018
方案联盟
The Global Diamond Report 2018
Page 5
*Price index shows change in market price for like-for-like diamond categories weighted according to global rough and polished product mix
Sources: General polished diamond price index (, data set 2004–16); Kimberley Process; company data; Bain & Company
100
250
200
150
100
+2%−3%
+3%+1%
2004 05 06 07 08 09 10 11 12 13 14 15 16 17 H1 18
Polished diamond market price index,
2004 price=100*
Rough diamond market price index,
2004 price=100*
Change of average to previous year
Polished
diamonds
Rough
diamonds
50
150
200
Note: Technological inventories are diamond stocks necessary to maintain regular production and the selling cycles of cutters and polishers, and polished diamond traders
(around 9 months of total stock coverage)
Sources: Company data; Kimberley Process; expert interviews; Bain & Company
2012
100
13
~122
14
~168
15
~124
Inventory decline
due to decreased
rough diamond
sales by mining
companies
(fueled by rough
price decrease)
16
~130
17
~138
18E
~139
Accumulated inventory in midstream by value, index 2012=100
Stable inventory
due to increased
rough diamond
sales back
to normal levels
Shift of inventory
from producers
to midstream
(with accumulation
of lower-quality
diamonds)
Inventory
accumulation
reversed
in the second half
of the year due
to growth
in demand
for diamond jewelry
Figure 5: Rough and polished diamond prices trended up during the first half of 2018
Figure 6: Midstream inventories grew in 2017, largely with smaller and lower quality diamonds
方案联盟
The Global Diamond Report 2018
Page 6
方案联盟
方案联盟
• All of the top mining companies increased production
in 2017, leading to an unprecedented 19% growth
in rough diamond production; volume reached
151 million carats in 2017, breaking an eight-year
trend of flat output. However, the increase was largely
attributed to the processing of lower-quality supplies
and tailings, diminishing the effect on revenues.
• Canada, the Democratic Republic of the Congo,
Australia, Botswana and Russia accounted for 90%
of the output increase in 2017. Canada led the way, with
the largest production increases coming from commercial
mining efforts in Gahcho Kué and Renard, both of which
started production in 2016 and early 2017.
• We believe that 2017 was the pinnacle production level
for the natural diamond supply. From here on, output
is expected to remain stable at best. Miners’ plans
and actual production volumes in the first half of 2018
suggest production may even decline in the near future.
• The most significant decreases are expected from Mirny
in Russia and Voorspoed in South Africa, resulting from
their closure; Jubilee in Australia from lower-grade
mining; and Argyle, also in Australia, because
of depleted reserves in its block cave. Meaningful
increases are expected from Orapa and Jwaneng
in Botswana.
• Currency adjustments in production countries lowered
the EBIT margins (earnings before interest and taxes)
for De Beers Group and ALROSA in 2017. ALROSA
returned to positive in the first half of 2018
and maintains the highest margin in the segment,
attributable to rises in rough diamond prices, currency
devaluation and strong cost containment. Petra reported
negative EBIT margin in 2017 but rebounded in 2018.
• Merger and acquisition activity was focused
on the mining segment, with key industry players investing
in mining resources and operations. De Beers Group
purchased Chidliak, a diamond resource in Canada;
ALROSA increased its shares in Catoca from 33% to 41%.
2.
Rough diamond
production
方案联盟
The Global Diamond Report 2018
Page 9
21%
5%
16%
21%
23%
12%
78%
6%
Other
Angola
South Africa
DRC
Australia
Botswana
Canada
Russia
*Estimated based on company production plans
Notes: Only diamonds tracked by Kimberley Process are included; 2018 data is preliminary estimate and is to be updated with 2018 Kimberley data; due to rounding, some totals may not correspond
with the sum of the separate figures; DRC is Democratic Republic of the Congo
Sources: Company data; Kimberley Process; expert interviews; Bain & Company
2013
130
14
125
15
127
16
126
17
151
18E*
147
Annual production, million carats YOY change
(2016–17) (2017–18E)
19% –3%
Russia 2
Botswana 2
Botswana 2 Australia –3
Russia –1
Other –2
Australia 3
DRC 3
Canada 10
2016
126
Output
increase
Output
decrease
2017 Output
increase
Output
decrease
2018E
Annual production by country, million carats
Notes: Only diamonds tracked by Kimberley Process are included; 2018 data is preliminary estimate and is to be updated with 2018 Kimberley data; due to rounding, some totals may not correspond
with the sum of the separate figures; DRC is Democratic Republic of the Congo
Sources: Company data; Kimberley Process; expert interviews; Bain & Company
25
~0Other 2
Other 2
South Africa 1
151
3
–7
147
Figure 7: Rough diamond production grew by 19% in 2017, and may decline slightly in 2018
Figure 8: Five countries accounted for 90% of the output increase in 2017
方案联盟
The Global Diamond Report 2018
Page 10
30%Other
3%Petra
Diamonds
33%Dominion
Diamond
Mines
20%Rio Tinto
22%De Beers Group
6%ALROSA
2014
125
15 16 17 18E*
Annual production, million carats YOY change
(2016–17) (2017–18E)
19% –3%
* Estimated based on company production plans
Notes: Dominion Diamond Mines production includes 40% Diavik and 100% Ekati, and 2017 estimate is based on H1 2017 as the company was delisted and no longer publishes
the data; only diamonds tracked by Kimberley Process are included; 2018 data is a preliminary estimate and is to be updated with 2018 Kimberley data
Sources: Company data; Kimberley Process; expert interviews; Bain & Company
127 126
151
147
ALROSA De Beers Group Petra DiamondsRio Tinto
EBIT margin, %
EBITDA margin, %
45 53 56 47 54
36
44
48
37
47
26 21 23 25 22
19
12
17 15
13
35 42 39 41 41
16
19
12
22
25
32 25 45 8
–11
51
24
14
18 19
2014 15 16 17 H1 18
Notes: Rio Tinto, BHP Billiton revenues and EBIT include diamond mining only; Petra Diamonds data converted from year ending in June to year ending in December, based on company reports for full
year and half year; 2017 impairment charges are taken into consideration for Petra Diamond EBIT/EBITDA calculations
Sources: Company data; Bain & Company
Figure 9: All of the top mining companies increased production in 2017
Figure 10: Diamond producer margins showed mostly positive dynamics in the first half of 2018
方案联盟
方案联盟
• Healthy growth in the diamond jewelry retail market
supported a 2% increase in cutting and polishing
revenue, putting the segment on positive ground in 2017.
• While the cutting and polishing segment grew overall,
profit gains in 2017 were mostly limited to producers
of small stones. Companies that specialize in large,
high-quality stones experienced pressure from retailers
in 2017. That trend reversed in the first part of 2018.
To sustain profitability, cutting and polishing companies
are focusing on four strategies: managing inventory
levels, shortening production cycles, optimizing yields
and expanding operations. Technology is leading
improvements in the cutting and polishing segment,
from digitally mapping and modeling stones
to automating cutting processes.
• Because of its low labor costs, favorable regulatory
environment and relatively easier access to financing,
India continued to gain market share in 2017. India’s
growth came primarily at the expense of China and
other countries. India accounts for more than 90%
of global polished diamond manufacturing by value,
and it dominates in all size segments, including
the value-add segment of larger stones.
• In China, cutting and polishing revenue increased
in 2017, backed by strong domestic jewelry demand.
• Access to affordable financing continues to be an issue
for some midstream players. Following several defaults
in India, some banks have tightened credit requirements.
However, transparent and financially healthy players
in the cutting and polishing segment reported only
limited influence on their ability to secure funding.
3.
Cutting
and polishing
方案联盟
The Global Diamond Report 2018
Page 13
2013 14 15 16 17
India
China
Other
10%
−6%
2%
YOY growth
(2016–17)
Sources: Gem & Jewellery Export Promotion Council; International Trade Centre; Antwerp World Diamond Centre; China Customs Statistics; Israeli Central Bureau of Statistics; Bain & Company
Net import of rough diamonds to cutting and polishing countries, $
0
20
40
60
80
100%
11%
Sources: Expert interviews; Bain & Company
China and
Southeast
Asia
India
Africa
Other
Continuous cost optimization attracted volumes from other regions
Advancement of technologies and skills led to share gain in larger stones
Relatively more developed diamond financing infrastructure is in place
(India accounted for ~40% of all borrowings), but affordable financing remains an issue
China is the No. 2 country by cost efficiency, but its relatively higher cost structure proved
sensitive to margin pressures in 2015
Cutting and polishing sector grew in line with domestic diamond jewelry demand in 2017
Market stagnation occurred due to relatively low productivity and high cost structure
despite efforts to increase role in global cutting and polishing industry
Increase in volumes available for beneficiation due to production growth in region in 2018
Traditionally strong in large stone manufacturing, but slowly relinquishing positions
to India even in more expensive categories due to aging workforce and high costs
Lack of affordable financing available to cutting and polishing companies in selected
countries (Israel, US, Russia)
Efforts underway in Russia to consolidate local cutting and polishing industry to make
it more competitive
•
•
•
•
•
•
•
•
•
•
Figure 11: India’s dominance of the cutting and polishing industry grew in 2017
Figure 12: Differences in cost efficiency accounted for regional market-share changes
in the cutting and polishing segment
方案联盟
The Global Diamond Report 2018
Page 14
*Excluding raw materials costs
**Includes management and administrative compensation, insurance, utilities, logistics, marketing and certification costs
Note: C&P is cutting and polishing
Sources: Company data; expert interviews; Bain & Company
Cost structure of cutting and polishing*
for a typical Indian C&P player ($/ct, 2017)
Key factors that affect profit
Revenue
• Effective assortment management
• Diverse client base
Financing
• Financial transparency to secure low interest rate
• Shorten cutting and polishing cycles to reduce
requirements for working capital
• Access to affordable financing
SG&A
• Online distribution system to reduce selling costs
• Lean management organization
Production
• Automation of production processes
• Optimization of yields
• Access to skilled talent pool0
100
200
300
Small size
(– ct)
Midsize
(–1 ct)
Large size
(1+ ct)
Financing
Selling & admin**
Production
Figure 13: Labor and financing are key factors in the manufacturing costs of polished diamonds
方案联盟
方案联盟
4.
Diamond jewelry
retail
• The luxury category has been stable compared
with global GDP for the past five years, marking
a resilience to generational shifts. The luxury segment
has adapted to changing consumer preferences
and behavior. Keeping in line with luxury market
trends, global diamond jewelry sales grew 2% in US
dollar terms in 2017. Demand for diamond jewelry
is expected to continue or even accelerate in 2018,
steered by high demand from affluent consumers.
• An increase in retail diamond jewelry sales is attributed
to a strong economy and favorable macroeconomics
in the US, namely growing consumer credit, shrinking
unemployment and higher wages.
• Demand in China grew for the first time since 2013,
picking up momentum from millennial buyers. Favorable
adjustments to tax and customs policies should support
continued Chinese growth. The online channel
is expected to bring additional diamond jewelry sales
to regions in China with limited physical retail footprint.
• As in years past, India had the highest potential
for diamond jewelry retail growth, yet its revenues
remained flat. Despite inflation and a weaker rupee
in the first half of 2018, personal disposable income
is expected to grow in India and provide basis
for increase in demand.
• In 2017, performance was tempered in Europe
by lower consumer confidence and in Japan by weak
economic fundamentals. Both are positioned to rebound
in 2018, thanks to higher tourism volume and euro
appreciation in Europe and decreased unemployment
in Japan.
• If the US and China continue to dispute trade terms,
economic growth prospects in both countries could be
negatively affected, or consumer confidence could
dwindle. While nothing detrimental has materialized,
the potential outcomes of an ongoing trade war should
be considered.
方案联盟
The Global Diamond Report 2018
Page 17
*Personal luxury goods include luxury jewelry, watches, beauty goods, apparel and accessories
Sources: The Economist Intelligence Unit; Bain & Company Luxury Goods Worldwide Market Study, 2013–18
80
90
100
110
120
2013 14 15 16 17 18E
Global nominal GDP, personal luxury goods* and diamond jewelry markets (2013=index 100, 2013–18E) CAGR
(2013–18E)
~3%
~2%
~2%
Personal luxury
Diamond jewelry
Global GDP
*Compared with previous year
Sources: Euromonitor; Bain & Company Luxury Goods Worldwide Market Study, 2013–18
9%
5%
Worldwide diamond jewelry retail sales YOY growth rate, $
2013 14 15 16 17 18Е
Stabilization Moderation
Constant exchange rates*
Revival
Worldwide personal luxury goods market YOY growth rate, $
3%
–2%
0‒1% 2%
3‒5%
6%
4%
1% 0%
6% 6–8%
4‒6%
2%0‒1%
–6%
–1%
4%
Figure 14: Personal luxury and diamond jewelry spending remained stable relative to GDP over
the past five years
Figure 15: Global sales of diamond jewelry in 2018 are expected to see the highest growth
in five years
方案联盟
The Global Diamond Report 2018
Page 18
*Includes Saudi Arabia, United Arab Emirates, Oman, Bahrain and Qatar
Note: China includes Hong Kong
Sources: Publication analysis; Euromonitor; Bain & Company
Global diamond jewelry market in 2017, $ Key trends and performance in 2017–18
Other
2017
The Gulf*
India
Japan
Europe
China
US
Slow recovery from demonetization and Goods and Services Tax introduction
Rising inflation and depreciating rupee
Shift to organized retailing amid continued struggles of the less formal sector
Weak economic fundamentals balanced by yen appreciation
Labor market and consumer spending improvement
Steady inbound tourism growth in luxury retail capitals
Decreasing consumer confidence following Brexit and US tensions
Acceleration of euro appreciation catalyzing domestic consumption
Increasing demand for nonbridal jewelry from millennials
Government adjustment on tax and customs to boost consumption
Healthy GDP growth and consumer-confidence upward trend
Robust employment with job creation and wage growth
Tax cuts positively affecting consumption
Increasing demand from affluent customers
•
•
•
•
•
•
•
•
•
•
•
•
•
•
CAGR
(2016–17)
CAGR
(2017–18E)
Change of currency value vs. $,
2017 average vs. 2016 average
China China
India India
Japan Japan
EurozoneEurozone
The Gulf* The Gulf* No change No change
−2%
3%
−3%
2%
Change of currency value vs. $,
2018E** average vs. 2017 average
2%
−3%
6%
2 4 6%0
4%
−2−4−62 4 6%0−2−4−6
*Includes Saudi Arabia, United Arab Emirates, Oman, Bahrain and Qatar
**Estimate based on average of first 9 months of 2018
Sources: Thomson Reuters; Bain & Company
Figure 16: The diamond jewelry market is expected to grow across most major geographical
regions
Figure 17: Currency movements in 2018 support diamond jewelry retail growth, in US dollar
terms
方案联盟
方案联盟
• Three trends have the highest potential to affect
the diamond industry in the near term: advancements
in digital technologies, the development of lab-grown
diamonds and generational shifts in consumer
preferences.
• Among other benefits, digital technologies are aiding
transparency and efficiency efforts across all segments
of the value chain. For example, in 2017 and early
2018, blockchain projects were launched to help
consumers confidently identify the origin of their
diamonds. Mining companies are using predictive
maintenance, real-time controls and artificial
intelligence to mitigate rising operating costs. Cutting
and polishing players are pursuing advanced solutions
in digital mapping, modeling and manufacturing
to shorten production cycles and ultimately move
toward fully automated processes to manufacture
polished diamonds. Consumer behavior is also
changing as technology matures; social media,
for example, is enabling and influencing new
direct-to-consumer and online sales models.
• Two important events occurred in 2018 regarding
the lab-grown diamond market. In July, the US Federal
Trade Commission amended its Jewelry Guides,
clarifying “a diamond is a diamond” regardless
of its origin. In September, De Beers Group launched
a lab-grown fashion jewelery retailer called Lightbox
Jewelery that introduced a new pricing paradigm.
Lightbox uses a linear pricing model, reflecting
the linear cost of production, whereby all lab-grown
stones cost $800 per carat, regardless of size.
Lightbox also does not provide grading reports for its
products. As the lab-grown industry continues to evolve
and lab-grown diamond prices decline, players along
the entire natural diamond value chain will need
to determine how to respond and how to position
their products with consumers.
• While much attention has been paid to millennial
buyers, their successors in Generation Z have been
gaining buying power, forcing the industry to rethink
marketing and sales strategies. Self-purchase sales
and social media shopping are expected to increase,
attracting younger generations of diamond buyers
with distinct preferences.
5.
Key industry
trends
方案联盟
The Global Diamond Report 2018
Page 21
Source: Bain & Company
Cutters and
polishers
Jewelry
manufacturers
RetailersDiamond
producers
Real-time controls
Remote operating
center
Inventory tracking
Omnichannel
touchpoints
Quality controls
Internet
of Things (IoT)
Predictive
maintenance
3D mapping
and modeling
Predictive analytics/demand forecasting
Personalized
marketing and
loyalty campaignsData science,
advanced analytics
and artificial intelligence
Autonomous
vehicles
Fully automated
sorting
Automated
diamond grading
Automated cutting
and polishing In-store assistance3D printing Autonomous
activities
Distributed ledger/blockchain
Digital inscription/digital watermarking
Cybersecurity
and design for veracity
Source: Bain & Company
Transformation
of the retail experience
Growing role of influencers
and social media shopping
Seamless integration of
physical and digital worlds
Digital-savvy customers switch
between offline and online channels
Functions like “click and collect,”
online returns and online stock
availability are becoming industry
standard
•
•
Strategy for fewer but “bigger and
better” stores with focus on in-store
experience
Facing price competition from
online players, retailers spur traffic
to physical stores with shopping
and entertainment
•
•
Digital-age customers select and
buy products via social networks
Disrupters like Catbird challenge
big brands with Instagram campaigns
and microinfluencer partnerships
•
•
Figure 18: Digital technologies affect all segments of the value chain
Figure 19: Digital is redefining business models for diamond jewelry retailers
方案联盟
The Global Diamond Report 2018
Page 22
Today’s customers
(Generation X & late millennials) (Early millennials & Generation Z)
Tomorrow’s customers
Tech-literate
Independent and self-reliant
Value work-life balance
Require omnichannel
Pragmatic
Tech-innate
Collaborative and global-minded
Work toward own definition of success
Keen on social media shopping
Ethical
Source: Bain & Company
Source: Bain & Company
How can we use
digital to improve
our operations?
• How can we use
digital to further
optimize yields and
shorten cutting and
polishing cycles?
• How can we make use
of social influencers
and ensure readiness
for social media
shopping?
• What changes are
required to the business
model of the future with
increased competition
and rapid price decrease?
•
Should the bet be
on industrial or jewelry
segment?
•
How can we achieve
cost leadership?
•
Is it necessary,
and if so, how do we
build a successful
consumer brand?
•
Should lab-grown
diamonds be introduced
into portfolio? How
could this affect our
brand and reputation?
•
How should we adjust
footprint, product
design, assortment
and marketing messages
to remain competitive
with other products?
•
What opportunities
can an automated
process offer?
•
How can we redesign
our distribution system
to ensure confidence
from retailers?
•
How do we ensure
profitable growth of
our business?
•
What assortment
will be affected
by lab-grown
diamonds?
What does it mean
for our asset portfolio?
•
What should the
approach to marketing
strategy be? How can
we build a successful
brand around our supply?
•
Mining
companies
Cutters
and polishers
Lab-grown
producersRetailers
Figure 20: Industry players must adapt their marketing strategies to attract younger consumers
Figure 21: Strategic questions for different industry players
方案联盟
方案联盟
• Lab-grown diamonds have existed for more than
60 years, with limited effect on the natural gem-quality
market. But advancements in technology have pushed
the lab-grown market into a more competitive position.
Most notably, new chemical vapor deposition (CVD)
technology deeply cut the cost to produce larger,
higher-quality diamonds. Today, it costs $300 to $500
per carat to produce a CVD lab-grown diamond,
compared with $4,000 per carat in 2008.
• As production costs have dropped, retail prices have
followed. The retail price of gem-quality lab-grown
diamonds nearly halved in the past two years, while
wholesale prices dropped threefold. Prices are
expected to decrease even further as production
efficiencies increase, new competitors enter the market
and the segment commoditizes.
• Lab-grown diamond producers have two options:
to pursue gem-quality production for retail jewelry sales
or to produce diamonds for high-tech applications.
The latter option has the greatest potential for long-term
growth and profitability, as well as low barriers to entry.
Sensors, semiconductors and medical cutting tools,
for example, present an emerging market
for CVD-produced diamonds.
• The current gem-quality, lab-grown polished diamond
capacity is estimated at 2 million carats majority
of which is melee (diamonds size less than carats).
By 2030, the market could grow to between 10 million
and 17 million carats, if the segment can sustain its
current growth rate of 15% to 20% annually supported
by consumer demand and attractive economics. But we
believe manufacturing capacity will be a major limiting
factor in the short to medium term.
• Ultimately, marketing and consumer perception
will determine the effect of lab-grown diamonds
on the natural diamond market. Three scenarios exist:
Consumers could perceive lab-grown and natural
diamonds as interchangeable, as two different products,
or somewhere in between. Marketing could uphold
the value of natural diamonds, especially if the prices
of lab-grown diamonds continue to drop. It’s probable
that consumers will view lab-grown diamonds as fashion
jewelry but not luxury goods, limiting the effect
on natural diamond demand.
6.
Recent
developments
in the lab-grown
market
方案联盟
The Global Diamond Report 2018
Page 25
Note: CVD is chemical vapor deposition
Sources: Company data; expert interviews; Bain & Company
1950 1960 1970 1980 1990 2000 2010
1953
2018
1970s 20161960s
19701960s
Commercialization
of HPHT
technology
First lab-grown
gem-quality diamond
crystals produced
Commercialization
of CVD technology
De Beers Group
launched “Lightbox” —
lab-grown fashion
diamond
jewelry brand
First successful
HPHT diamond
synthesized
First CVD
diamond films
synthesized
Volume of lab-
grown diamonds
exceeded those
for natural bort
and drilling
International Grown
Diamond Association
is founded
2000s
Special features
Applications
Share of lab-grown
diamond market
by volume (industrial
and jewelry)
HPHT CVD
Imitation of the natural circumstances
for diamond growth
Produced layer by layer in a chamber
filled with ionized gas
High pressure,
high temperature
Chemical vapor
deposition
• Cheap in comparison with CVD
• Variety in terms of structure and sizes
• High mechanical properties
• Optical transparency
• Excellent semiconducting properties
• High thermal conductivity
• Largely used in construction industry
for abrasive qualities
• Mostly used in high-tech, medical
and jewelry manufacturing industries
~99% ~1%
Sources: Expert interviews; Bain & Company
Figure 22: Lab-grown diamonds have existed for more than 60 years
Figure 23: There are two technologies for producing lab-grown diamonds (industrial and jewelry)
方案联盟
The Global Diamond Report 2018
Page 26
Notes: Carat (ct) refers to final weight of polished diamond; production cost excludes polishing and certification; electricity cost of ~$15–$30 is equivalent to ~200–400 kWh
Sources: Expert interviews; Bain & Company
Production cost of lab-grown 1ct G VS polished diamond (industry average estimate)
−50% to −60%
~−70% to −80% Including electricity
cost of ~$15–$30
~$
2008 2013
~$–$
2018
~$–$
Note: Values calculated with the average discount and price for the given period
Sources: Thomson Reuters; expert interviews; online retailers’ websites; Bain & Company
Price of lab-grown diamond as a percentage of natural (1ct G VS polished)
~80%
~70%
~65%
~55%
~50%
~20%
Q4 2016 Q4 2017 Q4 2018
Retail price
Wholesale
price
Figure 24: Since 2008, CVD production costs have decreased tenfold, with further reductions
expected
Figure 25: The retail price of gem-quality lab-grown diamonds nearly halved in the past two
years, while wholesale prices dropped threefold
方案联盟
The Global Diamond Report 2018
Page 27
Sources: Expert interviews; Bain & Company
Major applications of lab-grown diamonds
• Colorless and colored
gem-quality diamonds
for jewelry
• Sensors, semiconductors,
acoustics, medical cutting
tools, optics and lasers
• HPHT
• Grinding and cutting tools
for construction, energy
and mining companies
• Mostly CVD • Mostly CVD
Traditional use High-tech use Jewelry use
HighVery highLow
Mature
Technology
Use
Maturity
of market
Growth
potential
Current
profitability HighHigh
Expected
profitability Medium LowLow
Low
DevelopingEmerging
Sources: Company data; expert interviews; Bain & Company
Expected growth in lab-grown diamond capacity (aggressive expansion scenario), Mct gem-quality polished
CAGR: 15%–20%
~10
~17
2018 2030
~2
Figure 26: The high-tech segment has the highest growth and margin potential for lab-grown
diamonds
Figure 27: Production capacity will limit lab-grown market growth in the short to medium term
方案联盟
The Global Diamond Report 2018
Page 28
Source: Bain & Company
–25% to –30%
impact on natural value (2030)
–10% to –15%
impact on natural value (2030)
–0% to –5%
impact on natural value (2030)
Customers will consider natural
and lab-grown diamonds
as two different products
Customers will see lab-grown
and natural diamonds as interchangeable
except for highest-quality stones
Customers will differentiate
two products on occasion except
for low-quality stones
Lab-grown,
Mct
Lab-grown,
Mct
Lab-grown,
Mct
Natural,
Mct
Natural,
Mct
Natural,
Mct
Unmet demand due
to capacity constraints
Low
differentiation
Medium
differentiation
High
differentiation
Figure 28: Three potential market scenarios exist based on how consumers perceive lab-grown
diamonds
方案联盟
方案联盟
• Based on our analysis, we expect natural rough
diamond supply to change at an average annual rate
of negative 1% to 1% in volume terms through 2030.
We expect demand to grow 0% to 2% in real value
terms during the same time frame. Our current outlook
versus the forecast from the previous year incorporates
revised macroeconomic forecast, possible demand
substitution from lab-grown diamonds, and reflects
fundamental supply and demand factors rather than
short-term fluctuations. The short-term supply-demand
balance depends on the actions of major producers
and efficiencies along the diamond pipeline.
• We expect China and the US to maintain their
leading roles in the diamond jewelry market.
Real GDP growth of 2% to 3% per year will fuel US
demand, and expansion of the middle class will
reinforce China’s positive long-term demand trend.
• India continues to show promising signs of growth,
even amid its current market challenges. As India’s
middle class expands and bridal jewelry is adopted,
demand should follow.
• Europe and Japan are expected to remain relatively
stable, with modest long-term growth prospects.
• The rough diamond supply is reasonably predictable
over the next 5 to 10 years. However, financial
challenges, production mix updates and overall
uncertainty over future market conditions could force
or delay production. As mining companies can adjust
output to react to changing market conditions,
production may fluctuate at existing mines.
• We based our rough diamond supply forecast
on an analysis of existing mines and anticipated
production at planned new mines. Our projections
also include potential supply from new sources, such
as tailings from older mines, reopening of distressed
mines, activation of options in resource development
plans and recycling of secondhand diamonds.
7.
Updated supply
and demand
model
方案联盟
The Global Diamond Report 2018
Page 31
• Consumer preference trends
– Diamond jewelry share in total jewelry
consumption
– Usage of diamonds in engagement and
wedding jewelry
– Acceptance of lab-grown diamond jewelry
• Short-term volatility of macroeconomic
factors (., regional or global crises)
• Geopolitical conflicts affecting
consumer confidence
• Pipeline efficiency as indicated
by accumulating inventories
• Market confidence of midstream
players
• Liquidity of midstream players
• Macroeconomic fundamentals
–
– Dynamics of middle-class households
• Supply fundamentals
– Long-term performance of current mines
(including depletion)
– Introduction of new mines
– Exploration of new deposits and tailings processing
Long-term factors Short-term factors
PDI and GDP growth for developed markets
Note: PDI is personal disposable income
Source: Bain & Company
Note: Other smaller projects include Lace and Ghaghoo mines in case they start being operational in future in optimistic scenario
Sources: Company data; expert interviews; Bain & Company
Forecasted rough diamond production of new mines, million carats, optimistic scenario
25
2017 2019F 2021F 2023F 2025F 2027F 2029F 2030F
10
20
0
Jay (Ekati) Dominion Diamond
Mines
Luaxe Endiama/ALROSA
Chidliak De Beers Group
Star-Orion South Star Diamond Corp
Zarya ALROSA
Other smaller projects
Figure 29: Long- and short-term factors are driving the rough and polished diamond supply-demand
balance, as well as prices
Figure 30: Announced new projects could add up to 21 million carats per year in rough diamond
production
方案联盟
The Global Diamond Report 2018
Page 32
Notes: Additional sources can come from tailings retreatment and production from new reserves that are identified in existing mines as a result of brownfield exploration and development; additional
sources also could include potential projects that are not in development now but may become viable should rough prices increase
Sources: Company data; Kimberley Process; expert interviews; Bain & Company
Rough diamond supply, million carats,
2017–30, optimistic scenario
Rough diamond supply, million carats,
2017–30, base scenario
Existing mines New mines/projects Additional production
~0% to 1%
CAGR
(2018–30)
~−2% to 1%
CAGR
(2018–30)
Argyle closure;
Ekati and Diavik
production decrease
180
2018E 2022F 2026F 2030F 2018E 2022F 2026F 2030F
150
120
90
60
30
0
180
150
120
90
60
30
0
Note: PDI is personal disposable income
Sources: Euromonitor; Bain & Company
Real (2017 prices) global GDP, $ trillions
Real (2017 prices) PDI, $ trillions
83
2018
53 56 60 63 67 70 74
2020 2022 2024 2026 2028 2030
90
96
103
110
117
125
CAGR
3%
3%
(2018–30)
Other
Japan
India
China
US
Europe
5%
1%
6%
5%
2%
2%
Figure 31: Even in optimistic scenarios, rough diamond production is expected to decrease
in short term, led by the depletion of existing mines
Figure 32: Real global GDP and PDI are expected to grow at 3% annually, fueling demand
for diamond jewelry
方案联盟
The Global Diamond Report 2018
Page 33
2018 2020 2022 2024 2026 2028 2030
264
308
352
393
436
478
519
6%
CAGR
(2018–30)
Note: Middle class is defined as the population between 75% and 125% of median income
Sources: Euromonitor; Bain & Company
Middle class in China and India (estimated), millions of people
India
China
8%
5%
CAGR
(2018–30)
Note: Rough diamond demand has been converted from polished diamond demand using historical ratio of rough diamond and polished diamond values; сhange in 2030 demand outlook versus
previous year's forecast is driven mostly by revised macroeconomic forecast and potential substitution from lab-grown diamonds
Sources: Kimberley Process; Euromonitor; Economist Intelligence Unit; company reports; expert interviews; Bain & Company
Rough diamond supply and demand, $ billions (in real terms), 2000–30,
2018 prices, constant exchange rates, optimistic and base scenarios
2000
5
10
15
20
25
2002 2006 2010 2014 2018F 2022F 2026F 2030F
~2%
~0%
~0–1%
~−1%
Optimistic supply
Base supply
Optimistic demand and high
differentiation (lab-grown vs. natural)
Base demand and medium
differentiation (lab-grown vs. natural)
Figure 33: Growth of middle class in China and India is expected to reinforce positive long-term
demand trend
Figure 34: The supply-demand outlook is moderately optimistic, with growth estimated at 0%–2%
in real terms (2%–4% in nominal)
方案联盟
The Global Diamond Report 2018
Page 34
Sources: Company data; Kimberley Process; expert interviews; Bain & Company
Actual rough diamond production vs. publicly announced plans, million carats
Plan 2 years before actual Plan 1 year before actual Actual /estimated
−17%
−14%
−16%
2014
150
146
125
152
142
127
146
137
127
140
142
151
144
142
147
15 16 17 18E
−10%
−13%
−7%
8%
6%
2%
4%
Figure 35: Delayed production of 2014–16 materialized in production growth in 2017–18,
exceeding previously announced plans
方案联盟
The Global Diamond Report 2018
Page 35
Glossary
• Average price per carat sold — indicator used to estimate change in value of diamond assortment
realized in specific period (including sales of stock produced in previous periods); to estimate
average price per carat sold, total value of diamonds sold is divided by total volume of diamonds sold.
• Beneficiation — the process by which producing governments seek to extract more value from their
natural resources by developing downstream industries in their own countries; typically it involves
commitments by producer companies to set up local cutting centers and hire local workers.
• CAGR — compound annual growth rate, a year-on-year growth rate over a specified period
of time.
• Carat — one of the four main diamond characteristics, the others being color, cut and clarity;
1 carat=250 mg.
• CVD — chemical vapor deposition, a high-temperature but normal-pressure process to grow
lab-grown diamonds.
• Gem-quality diamonds — diamonds used for jewelry manufacturing.
• HPHT — high-pressure, high-temperature; a process using large presses to grow lab-grown
diamonds.
• Kimberley Process — certification commitment aimed at prevention of conflict diamond sales.
• Lab-grown diamonds — diamonds produced in laboratories using HPHT or CVD methods;
also known as synthetic diamonds.
• Market price index — indicator that shows change in market price for like-for-like diamond
categories weighted according to global rough and polished product mix.
• Operating profit — profit from main operations before interest and tax.
• Personal disposable income — amount of money that households have available for spending
and saving after paying income taxes.
• Reserves — resources known to be economically feasible for extraction.
• Resources — valuable deposits that could potentially be economically extracted at a later point.
方案联盟
The Global Diamond Report 2018
Page 36
Key contacts for this report
This report was prepared by Olya Linde, a partner with Bain & Company, and Oleg Geyler, a principal
with Bain, together with Ari Epstein, chief executive officer, AWDC. The authors were supported
by a global team including Ivan Grishchenko, Sophia Kravchenko, Benoit Menardo, Anton Matalygin,
Julia Gavrilova, Masha Shiroyan, and Bain’s Mining and Luxury Goods practices.
Media contacts:
Dan Pinkney
Bain & Company
Phone: +1 646 562 8102
Email: @
Margaux Donckier
AWDC
Phone: +32 47 832 4797
Email: @
方案联盟
Shared Ambition, True Results
Bain & Company is the management consulting firm that the world’s business leaders come
to when they want results.
Bain advises clients on strategy, operations, technology, organization, private equity and mergers
and acquisitions. We develop practical, customized insights that clients act on and transfer skills that
make change stick. Founded in 1973, Bain has 57 offices in 36 countries, and our deep expertise
and client roster cross every industry and economic sector. Our clients have outperformed the stock
market 4 to 1.
What sets us apart
We believe a consulting firm should be more than an adviser. So we put ourselves in our clients’ shoes,
selling outcomes, not projects. We align our incentives with our clients’ by linking our fees to their results
and collaborate to unlock the full potential of their business. Our Results Delivery® process builds our
clients’ capabilities, and our True North values mean we do the right thing for our clients, people
and communities—always.
方案联盟
For more information, visit
方案联盟
方案联盟
方案联盟
