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Retail sales of diamond fashion jewelry grew in 2014 and in the first half of 2015 by 4 to 8 percent with strong performance from the U.S. Meanwhile, the Chinese market remains to slow, due to stagnant GDP growth-- a risk we anticipated formerly-- which triggered a causal sequence throughout the whole value chain. In 2015, diamond producers and mid-segment companies need to anticipate a 10-20 percent reduction in profits with diamond precious jewelry sales to stay near flat. These are the findings from the 5th annual report, The Global Diamond Industry 2015: Growth point of views amid short-term challenges, launched today by Bain & Company and the Antwerp World Diamond Centre (AWDC).

The mild decline in customer demand for diamond jewelry started in 2014 in Greater China and led to a significant drop in demand for polished and rough diamonds in 2015. As a result, costs for polished and rough diamonds plunged 12 percent and 23 percent, respectively, since May 2014 and 8 percent and 15 percent, respectively, for the very first nine months of 2015.

"Following the economic chaos of 2001 and 2009, costs took 18 to 24 months to recuperate," said Olya Linde, lead author of the international diamond market file and a Bain partner. "This time, we prepare for the marketplace has the possible to recuperate much quicker-- within just 1 to 2 years-- presuming rough-diamond producers and polished-diamond manufacturers closely keep track of and manage their supply levels. This will go a long way toward assisting built up stocks work their way through the system effectively.".

"Hard high-end represents as much as 30 percent of the GCC high-end products market. It is a EUR2.3 Bn market which fine precious jewelry represent a third. The GCC precious jewelry retail market has carried out much better than other luxury products classifications in 2015, due to a lower sensitivity to non-GCC tourists" stated Cyrille Fabre, partner and head of Bain's Retail and Consumer Products Practice in the Middle East.

Additional findings in the report reveal a somewhat rough year for the rough-diamond market in 2014 and 2015. Rough-diamond incomes grew 8 percent in 2014 on the strength of enhanced sales by the good 5 producers and in spite of a decrease in the overall volume of carats mined. During that same time, rough-diamond production volume fell by 4 percent globally to slightly less than 125 million carats, with the largest drops taking place in Australia and Africa.

On the other hand, cutting and polishing profits continued its favorable trajectory last year with development in the mid-single digits, due in huge part to India and China. Together, they now represent about 80 percent of the marketplace. In contrast, Africa's cutting and polishing market declined considerably, despite efforts to turn the tide by the governments of Botswana, Namibia and South Africa-- nations that have not yet become competitive in terms of making efficiency and proficient labor. In other places, nations focused on high-end stones, such as the United States and Belgium, tape-recorded decreases in polished profits as volumes of huge stones migrated to India. The nation now cuts and polishes more than 40 percent of the world's diamonds larger than 1 carat with quality requirements comparable to those of industrialized markets.

As in past years, the market continues to face obstacles-- most significantly that mid-market companies are being required to review their business models amidst industry turbulence and continuing pressure on the marketplace.

"At the minute, the mid-market sector is simply too weak to cushion versus short-term fluctuations in the diamond fashion jewelry retail market," stated Linde. "Though it has little bargaining power over rough producers and limited access to funding, mid-market gamers still bear the brunt of price volatility, but this is not a life sentence. We anticipate their ongoing development will allow the market to carry out more sustainable company designs gradually.".

In addition, rather flat consumer demand in 2014 and 2015 shines a light on the market's enduring challenge of sustaining enduring need for diamonds. Bain's current research study on the high-end industry reveals that consumer attitudes towards high-end overall are altering, especially in Europe, the United States, and Japan. Further, little is understood about the diamond intake patterns of the brand-new generation of customers. Lastly, the market is still having a hard time to boost financial investment demand for diamonds. All of these factors to consider are further challenged by the continuous penetration of undisclosed synthetics that can weaken customer confidence.

Ari Epstein, CEO of the Antwerp World Diamond Centre: "This report verifies simply how challenging the past year has been for the international diamond market, but we need to not lose sight of the fact that steps are already being required to bring the system back into balance. While we have actually witnessed sluggish economic development in the Far East impacting consumer demand, we have also seen continued robust U.S. market efficiency. The United States has constantly been the main limo driver of diamond intake and is still going strong. And while the industry as a whole responded too ambitiously to exponential development in Chinese and Indian demand recently, the existing slowdown in those countries in no chance implies long-lasting stagnancy. The whole pipeline is now recalibrating its output and costs to adapt to rather lower growth projections. Moreover, the measures the major miners have actually taken in reaction to the needs of the midstream, together with efforts to stimulate need for sleek diamonds, should bring the pipeline back into balance. Every indicator indicate a recuperation beginning mid-2016. We remain confident in the long-lasting prospects for the diamond industry.".

Looking ahead, Bain's proprietary forecasting method anticipates rough-diamond demand will grow at a yearly rate of about 3-4 percent over the next 15 years. On the other hand, the aging and exhaustion of existing mines and relatively little brand-new supply coming online, will eat into supply by 1-2 percent annually from 2015 to 2030, triggering the gap between supply and demand to broaden starting in 2019. In spite of an expected slow-down due to weaker financial development and slowing growth of the middle and upper classes, the Chinese market will likely remain flat in 2016 before an anticipated recuperation in 2017 that is anticipated to lead to 4-5.5 percent annual growth through 2030. This forecast is down from about 7 percent in previous Bain forecasts.

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