Diamond Prices Lower Than a Decade Ago, But Retailing Them is a Tough Sell

Finance and Trade
08/04/2016 10:12

The fact that diamond miners have been unable to prevent prices from dropping below where they were a decade ago is a clear sign that the industry is failing to maintain the cachet of its brand. Today's consumers have different desires than those of their parents who may remember Marilyn Monroe singing 'Diamonds are a girl's best friend' and are more likely to spend their money on nice vacations, fancy handbags and high-tech gadgets. They likely only think of diamonds when it comes to a (mostly) once-in-a-lifetime engagement ring or a wedding band.

Ironically, diamonds are now cheaper than they were in 2006, data from PolishedPrices.com show, according to a Bloomberg Business report, while over the same period, the price of luxury items such as fancy cars, shoes and fine foods have risen at above-inflation rates. And attempts by diamond miners to push prices higher in the past five years unraveled last year because polishers were simply unable to pass on the higher costs as consumers refused to pay. “Producers cannot simply just increase rough prices and expect consumers to pay more for diamond jewelry,” said Anish Aggarwal, a partner at industry consultant Gemdax in Antwerp. “Consumer demand cannot be taken for granted, even in mature markets and especially with millennials.”

Meanwhile, Charles Wyndham, a former sales director at De Beers and founder of WWW International Diamond Consultants Ltd, said "a huge cultural change" is needed to bring about strong retail sales. And mining analyst Ben Davis at Liberum Capital said there is no choice for diamond producer but to put more cash into generic promotion: “It’s got to come down to ad-spend. They just need to bite the bullet.”