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Sustainable Diamonds Sell for More – De Beers

Oct 26, 2021 4:27 AM   By Joshua Freedman
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Sustainability is now a leading consideration for diamond shoppers, with many prepared to pay a premium for proof of socially responsible origins, according to De Beers’ annual Diamond Insight Report.

Some 56% of consumers are willing to spend 10% to 20% more on natural-diamond brands that can demonstrate they operate in a socially and environmentally responsible way, the miner said Tuesday. Almost 17% of shoppers are open to paying 25% more for a sustainable diamond, it added.

“The economics have caught up to the ethics,” said David Prager, De Beers’ chief brand officer, in an interview with Rapaport News.

This has made sustainability a topic the trade ignores at its peril, he noted. While provenance assurance comes at a cost, having it helps dealers and manufacturers secure future profits.

The diamond midstream “should understand that it is a significant commercial lever, and it’s not a trend; it’s here to stay,” the executive added. “And they should understand that if they’re able to be part of the value chain that provides downstream players with a sustainable route to market, that’s really powerful.”

Purchase decisions

Three-quarters of people who bought sustainable products in recent years paid more than they would have for a regular product, according to the survey. Some 41% said they paid a 10% premium; for 19%, this premium was 15% or more.

The industry has seen an “ultra-acceleration” of consumers making purchase decisions based on these factors, pointed out Esther Oberbeck, De Beers’ senior vice president for strategy analytics.

“Before, it was, ‘I make my decisions based on price, design, quality,’ etc.,” Oberbeck observed. “And it's nice to have this bit and I’m alert to it. Now, the report is saying, a very large proportion of people already put these [sustainability] considerations right at the top.”

De Beers commissioned consultancy and polling company GlobeScan to survey 8,400 men and women across the US, China, India, France, Italy, the UK and South Africa.

The results show that jewelry ranked third among the categories consumers bought most frequently based on sustainability considerations, behind food and clothes. Younger millennials care about this more than those aged 33 to 40, while around one in five Gen Z-ers — those in their late or early teens — already considers sustainability factors when purchasing jewelry, the survey found.

Overall, consumers in Europe and South Africa showed the strongest focus on sustainability, while shoppers in China and India gave a greater weight to brand reputation. In the US, value was the top factor, though sustainability was a major consideration in all locations.

The diamond industry, De Beers insisted, has already done a lot in this field. Diamond mining is far less damaging to the environment than are many other extraction industries, Prager argued.

“As an industry, we’re pretty good at building a sustainability agenda,” he commented. “Consumers have…caught up to…purchasing based on these considerations, which puts us in a very powerful position now to create a proposition that responds to their needs.”

Holiday caution

De Beers struck a cautious tone ahead of the fourth-quarter holiday season, as results will reflect a comparison with the buoyant 2020 festive period. The coronavirus pandemic continues to add uncertainty, it noted.

“The caution comes from the fact that…we think we do see some increases in Covid-related issues around the world, especially in Asia,” said Oberbeck. “Globally…we should keep [a] more cautious outlook. But there is no doubt everything we hear for the US festive season is very, very strong.”

Overall, full-year retail demand will increase versus the previous 12 months, De Beers predicted. The company forecast a “full recovery” to pre-pandemic demand levels in 2022.

Rough, however, is in short supply, as large miners have had operational issues, and some major deposits — including Rio Tinto’s Argyle — have closed. Global rough production is unlikely to return to pre-coronavirus levels in the next decade, though output this year and next will be around 10% higher than in 2020, the company projected.

“While there are several notable diamond projects on the horizon that may be able to fill the gap to some extent, these projects are not expected to reach full production in the near term,” the report said.

Image: A loupe and diamond ring in a De Beers Jewellers store on Old Bond Street, London. (Ben Perry/Armoury Films/De Beers)
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Tags: Argyle, China, David Prager, De Beers, Esther Oberbeck, France, Gen Z, GlobeScan, India, italy, Joshua Freedman, Millennials, Rio Tinto, South Africa, sustainability, UK, US
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