Diamond de-industrialization - Markets news - KOTLYARS.COM

Diamond de-industrialization

Analysts are unanimous in asserting that public welfare in recent years has been growing across the world, saying that if this is so, demand for jewelry is growing as well. Meanwhile, diamond consumption and diamond prices are inexorably going south in the last few years. However, the market of luxury goods, including jewelry, does not show any significant fall, staying at the same level year after year.

If jewelry demand is really growing, what are people buying instead of diamonds?

For a long time, we have been passionately surveying the market of synthetic diamonds and its aggressive marketing. Against this background, we lost sight of another interesting market - the market of colored gemstones, which, seemingly staying in the shadows, demonstrates rapid growth. And the emergence of another strong player on the jewelry market makes the overall situation even more complicated and confusing.

Make it in color

Colored gemstones have been known to the world for hundreds, if not thousands of years. Rubies, sapphires and emeralds adorned the crowns of many ancient rulers and had exactly the same chance to become broadly popular, but diamonds and the A Diamond is Forever campaign “fired” first. For a long time, this kind of mining industry had no large-scale development prospects: major deposits of colored gems were in African countries, which presented huge political risks in the 20th century (not to mention the trivial risk for life), while the broad marketing campaign launched by De Beers left little chance for investments in their production to pay back through sales.

However, political risks have “petered out,” while mining technologies made a step forward and the art of marketing diamonds as an eternal value was very "timely" suspended. This has contributed to the emergence of several players in the 2000th, who are now very successful in mining and selling colored gemstones. The largest of them, Gemfields recently posted the results of 2016, including prices for their goods.

Changes in prices for gemstones in 2010-2016:

analyt_30012017.jpg
 

According to the graph above, prices for colored gemstones have increased by a multiple of 3.5 only in recent years. When did we see last time diamond prices going up threefold – well, at least by 30 per cent?

Gemfields calls its business model “Mine and Market.” The company mines gemstones and dedicatingly invests in marketing, thereby forming demand for its goods on a relatively "empty" market. The marketing campaign is going on across the entire board: Hollywood stars graced with its bright jewels willingly pose on the red carpet, while well-known bloggers make video records for social networks. Colored gemstones are being positioned in all market segments at once – both as everyday jewelry and as an engagement gift (for which purpose a separate marketing campaign has been launched, Say Yes in Color). Judging by the price graph presented above, this kind of marketing is more than successful.


www.rough-polished.com

2017-02-24