The impact of the coronavirus pandemic on the diamond market

Despite short-term challenges, the diamond market prospects remain positive for the future. Fluctuating financial markets and uncertainty about economic growth caused by the spread of the coronavirus are among the temporary problems that the gemstone industry will have to deal with. However, looking at the diamond market in the long run, the outlook is optimistic, caused, among others, by declining diamond supply and the growing role of the middle class in the US, China and India. The dynamically developing e-commerce market, whose growth has significantly accelerated due to the COVID-19 pandemic, will also have a huge role to play.

The COVID-19 pandemic has changed consumer behaviour

The dynamic development of the e-commerce market is indisputable. Year by year, people around the world buy more and more products and services online. In 2009, 54% of Internet users in the European Union purchased goods or services in this way at least once. And already at the end of 2019 the percentage of online purchases increased to 71%. The dynamics of the e-commerce market growth is noticeable not only in Europe.

Thanks to the growing availability of smartphones and the use of modern technology, online shopping is becoming more and more effective and popular. In the latest B2C E-commerce Market Size, Share & Trends Analysis Report By Type report, Grand View Research analysts forecast an annual growth of the e-commerce market by 7.90% by 2027.

At the current market value ($ 3.35 trillion in 2019), the valuation will almost double in 8 years to $ 6.15 trillion. The dynamic growth will also continue due to the changing habits of consumers who, in the times of the COVID-19 pandemic, switched to doing as many activities as possible online, shopping primarily. This tendency is also visible in the diamond market and jewellery made of them.

Sharp increase in online sales in the jewellery and diamonds market

Diamonds and jewellery have never had a significant share in the Internet sales. Consumers most often bought textiles, footwear and books.

However, as we indicated in the analysis "Is it worth investing in diamonds?" - the growing share of diamond jewellery sales in online distribution is visible. This trend has been gaining momentum for several years thanks to the growing expenditure on marketing in the largest chains of jewellery stores. It became stronger during the so-called global lockdown and the resulting changes in consumer purchasing preferences. Within a few weeks, people were forced to stay at home. Consequently, they started shopping online on an unprecedented scale. 

The largest consumers of gemstones and diamond jewellery are the USA, China and India. Since 2013, the share of online sales of these products has been growing dynamically in the United States and the Middle Kingdom. In 2013, only 2% of diamond jewellery in China was sold online. It is estimated that in 2019 it was already 11%. This is an over 5-fold increase in this distribution channel.

Restrictions introduced by governments around the world in connection with the COVID-19 pandemic and the policy of encouraging people to stay at home will be factors that will positively influence the global trend in the further increase of online sales.

Chart 1. Share of online sales in total sales of diamond jewellery

Source: The Global Diamond Industry 2019, Bain & Company

The development of the e-commerce market in the largest markets will intensify the sale of diamond jewellery. Currently, the industry is still feeling the effects of the downtime in spring 2020, when jewellery sales were stalled. As reported by one of the largest stone sellers - De Beers Group - by October 9, 2020, it had sold the rough diamonds worth of $ 1.87 billion. For comparison, in 2019 it was $ 3.2 billion at the same time.

However, according to estimates by Research and Markets - within 7 years the global value of jewellery sold via the Internet will grow annually by 15.5% to USD 58.9 billion in 2027. The majority of online sales will be generated by diamond jewellery. The average annual growth of this segment in the years 2020-2027 is estimated at 16% to the level of USD 46.2 billion at the end of the period.

Chart 2: Value of global online sales of jewellery in 2020-2027 (in billions of USD)

Source: Research and Markets

Bain & Company estimates that demand for diamond jewellery will return to pre-pandemic values in 2022–2024. Assuming that GDP growth in the most important world markets and the growing importance of the middle class will be as predicted, from 2023 to 2030 the demand for diamond jewellery should go up by 2-3% annually.

Similar estimates are presented by one of the largest diamond mining companies - Russia's ALROSA. The demand for diamond jewellery will grow the most in India. In the baseline scenario, growth is expected by 3%, while in the optimistic scenario - by as much as 7% annually until 2030.

Chart 3. Forecast. The increase in income and the size of the middle class will stimulate the demand for diamond jewellery

Source: ALROSA Investor Presentation, 4-5 June 2019

Long-term demand for diamonds

The COVID-19 pandemic has left its mark on many markets. For the diamond market, it can be a catalyst for increasing sales. The positive impact on e-commerce and the prospect of increasing sales of stones through this distribution channel are already visible. The growing size of the middle class and the increase in its wealth in the next decade will positively affect the demand for diamond jewellery.

By 2030, middle-class income is expected to grow - by an annual average of 7% in India, 6% in China and 2% in the US. This can lead to an increased demand for diamond jewellery. The highest result is expected in India, where in the optimistic scenario it will grow by 7% annually, and in the conservative - by 3%.

Download your free Diamond Investment Guide

See the trends and factors involved in diamond investments. Completely free and no obligation.

Your personal information is confidential and private. By clicking "download" you agree to subscribe to our newsletter. You may unsubscribe anytime.

Fancy Colour Diamonds

Download your free Diamond Investment Guide

See the trends and factors involved in diamond investments. Completely free and no obligation.

Your personal information is confidential and private. By clicking "download" you agree to subscribe to our newsletter. You may unsubscribe anytime.

Download your free Diamond Investment Guide

See the trends and factors involved in diamond investments. Completely free and no obligation.

Your personal information is confidential and private. By clicking "download" you agree to subscribe to our newsletter. You may unsubscribe anytime.

Blog & Education

diamond inspection tools

Diamond Investment Center

loose yellow diamonds

Diamond Education Center