GEMSTONE INFORMATION

New developments in the diamond industry

In July, the proportion of diamond retail cultivation in the United States was extremely close to 50%

2023-08-12

Precautions:
⚠️ This article interprets Tenoris' unilateral data and viewpoints, and we have not verified their samples. Please refer carefully.

⚠️ The term 'sales' used in this article is calculated in units, while' sales' is calculated in US dollars.

Overall, the total sales of jewelry and diamonds in the United States decreased by 5.1% in July, far exceeding the 2.8% decline in June. From a value perspective, the total sales of jewelry and diamonds decreased by 10.8% year-on-year, also exceeding the 8.7% in June.

At the same time, the proportion of cultivating diamond bare diamonds in the total market sales is already extremely close to 50%.



▲ Sales of finished jewelry in the US market

Source: Tenoris

1、 Finished jewelry sales continue to decline
In July, the sales of finished jewelry in the US market decreased by 5.4% year-on-year, sales decreased by 6% year-on-year, and retail profits decreased to 51% (-1.3%).

From the beginning of this year to the end of July, sales of finished jewelry decreased by 5.7% and sales decreased by 6.8%.

The sales of products in different categories vary greatly. Compared to the same period last year:

·Sales of necklace products+0.7%, sales+6.5%;

·Sales of bracelet products -0.4%, sales+3%;

·The sales volume of pendant products is -1.9%, and the sales volume is -2.2%;

·The sales volume of earring products is -5.7%, and the sales volume is -12%.

The performance varies across different price ranges, with mid to high-end markets, where sales in sectors with a unit price of over $100000 are+25% and sales are+34.8%; But the sales and revenue of other sectors have shown a downward trend.

Diamond jewelry sales volume -7.7%, sales volume -7.3%, of which natural diamond jewelry sales volume -9.9%, sales volume -9.1%. The proportion of sales of cultivating diamond jewelry has increased from 3.8% in the same period last year to 6.2% in July this year.

Compared to July 2022, the sales of cultivated diamond jewelry in July this year increased by 51.9% year-on-year, and the sales increased by 31.6% year-on-year.

Tenoris believes that cultivating diamonds has seen growth in all indices except for price. Importantly, after several months of market adjustment, the previously close market share of cultivated diamonds and natural diamonds has now reached 50/50





▲ Comparison of retail prices and costs of natural diamond bare diamonds in the US market

Average gross profit margin 35%

Source: Tenoris


2、 Natural diamond bare diamond sales decline

In July, the sales of natural diamond bare diamonds decreased by 30% year-on-year, and sales decreased by 34% year-on-year. The best-selling round bare diamonds are 1.04 carat, G-H color, and SI clarity grade, with an average retail price between $2500 and $5000.

The average retail price of bare diamonds in July was $9713, a year-on-year decrease of 2.1% and a month on month decrease of 6.5%.

From an inventory perspective, the average inventory duration of natural diamond bare diamonds at the retail end in 2022 was 13 months, while the average inventory duration in July this year was 19 months, which had a significant impact on cash flow. During the month, the total inventory of bare diamonds by professional retailers in the United States increased by 2.4%.

In addition, the natural bare diamond consignment ratio at the retail end in July was 26.5%, compared to only 18% in the same period last year.

▲ Comparison Chart of Retail Price and Cost of Cultivated Diamond Bare Diamonds in the US Market

Source: Tenoris


3、 Cultivate diamond bare diamond prices to continue to decline

The average retail price of cultivated diamond bare diamonds in July decreased by 3.6% month on month, and the entire supply chain (including manufacturers, processors, etc.) has put some pressure on prices.

The sales of bare diamonds decreased by 5.7% in the same month, but Tenoris believes that this is not a decrease in consumer interest, but rather due to the industry's off-season. From a historical perspective, the demand in the jewelry market generally decreases in July, which naturally lowers the sales of cultivated diamonds.

In July, the sales gross profit margin of cultivated diamond bare diamonds reached 62.7%, far higher than that of natural diamonds.

The average weight of a single cultivated diamond at the retail end is 1.94 carats, and the demand growth trend in the 2-carat segment remains unchanged. Tenoris expects the demand for 3 carats to continue to rise, which will drive up the average weight of cultivated diamond bare diamonds at the retail end.

Since the beginning of this year, the sales of cultivated diamond bare diamonds have increased by 55.5%, and sales have increased by 20.9%. Consumer demand for this type of product has been increasing in the US market.


▲ Market share of cultivated diamonds and natural diamonds in the United States

Source: Tenoris


4、 Cultivate diamond sales accounting for 50%

As early as May this year, Edahn Golan (a partner at Tenoris) expressed the view that "cultivating diamond sales will reach 50%", which caused a sensation in the industry at that time.

In July, within the professional jewelry industry in the United States, the sales of cultivated diamond bare diamonds accounted for 49.9%, while the proportion of natural diamonds decreased to 50.1%. From a value perspective, the retail sales of cultivated diamonds account for 25.2%.

This proportion may fluctuate, but the trend in the next year is that the supply and demand of natural diamonds will remain stable, and cultivating diamonds will gain more share


Based on this data situation, we can basically determine the following facts:


A. The diamond jewelry industry is in the off-season, and the economic environment is one of the most important influencing factors.

B. The market share of cultivating diamonds is constantly increasing, and retailers seem to be more inclined to sell this type of product, but maintaining the value of this category remains a challenge.

C. The share of natural diamonds is being squeezed, but the supply and demand situation of this category is relatively stable, which is optimistic in the long run.


Please refer carefully to the above content

It is normal for any report to have sample limitations.

From the perspective of professional jewelry merchants in the United States, Tenoris' report is relatively objective and truthful.


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