What happened
With marriage rates hitting a record low and young consumers increasingly committing to a solo lifestyle, are diamonds still a girl’s (and guy’s) best friend in China?
Although consumer demand for diamond jewelry has softened in light of the pandemic, De Beers Group is optimistic about the category’s potential growth in the country. Up to 200 million Chinese consumers are expected to enter the middle class by 2030, giving them more disposable income to purchase natural diamonds, which rank among the top three most-desired luxury purchase categories, states the diamond company.
As Al Cook, CEO, De Beers Group, said in a statement: “From being a relatively small player on the world diamond stage at the end of the last century, China now represents the largest market for diamond jewelry outside the United States.”
China now represents the largest market for diamond jewelry outside the United States.
In its Diamond Insight Report 2023 released on Wednesday last week, De Beers found that millennials are the most important generation for diamond sales, accounting for two-thirds of purchasers and market value last year. But Gen Z demand for the stone is expanding — both as gifts and for themselves — even though their average spend is about 18 percent lower than that of their millennial counterparts.
The Jing Take
Although De Beers is optimistic about long-term growth, short-term challenges remain. Last year, the size of China’s diamond market fell 18 percent year on year, according to data from the Gems and Jewelry Trade Association of China. Besides Covid-19-related lockdowns, lackluster income growth and a slumping property sector also contributed to declining diamond jewelry sales last year.
Higher consumption requires higher consumer confidence and stronger wage growth, De Beers notes in the report.
This wavering consumer confidence has impacted brands. Chinese diamond ring brand I Do filed for bankruptcy in January this year, while the parent company of luxury engagement ring brand Darry Ring, which only allows customers to purchase a ring from it once in their lifetime, posted a 90 percent slump in net profit in 1H 2023.
Still, the market opportunity is promising for those willing to rough it out, particularly given the gap between the intent to acquire and actual acquisition rates. As such, brands should tailor their marketing tactics to the different diamond consumer groups within China. For example, as millennials largely regard diamond jewelry as an expression of love, product designs and narratives that celebrate relationship milestones could appeal to this audience.
On the other hand, with Chinese Gen Z paying more attention to price tags and ethics, lower-priced entry items that are also sustainable, such as lab-grown diamonds, may be the way to go.
The diamond’s shine may have dimmed in China, but it is not completely diminished. De Beers is certainly banking on a comeback — a diamond is forever, after all.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.