The dynamics of Botswana’s diamond consumer market is consistent with critics’ vehement opinion that Africa “produces goods it does not consume and consumes goods it does not produce”.
Botswana is the world’s largest producer of diamonds, by value, yet it appears that consumers are not drawn to where the diamond sparkle emanates from. The local diamond consumer market does not seem to be recognized in the same light as its diamond production.
Following the release of DeBeers’ Insight report, De Beers’ Executive Head of Strategy, Bruce Cleaver explained to Sunday Standard that such a scenario exists because Botswana is not a big market.
“It’s a question of how the consumer market is and where advertisers choose to spend,” said Cleaver, adding that it is the retailers that assess where they are going to spend for their advertising. The local diamond consumer market is closely linked to Tourism.
The Insight report which captured trends in the diamond industry over the last full year of 2014 discloses among other things that “India’s diamond consumer market has achieved almost uninterrupted growth over the last 20 years and the growth of its middle class points to continued growth.”
An acute attention to India’s diamond consumer market immediately sets it vastly apart from Botswana and suggests through its depiction the reason Botswana’s consumer market is insignificant.
“75 million new Indian households are expected to see income rise above $5000-$6000 in the decade, contributing to growing diamond demand. Meanwhile the number households is expected to triple in size over the next decade to 12 million, while the super-elites are expected to quadruple in size and reach over three million households by 2024, presenting the industry with a major value opportunity,” reads the report. India is today one of the world’s largest markets. Despite that such empirical observations have not been conducted in the local diamond consumer market, Botswana’s size of the market is incomparable to that of India. The lack of real wage growth over an extended period of time and the sluggish business environment in Botswana makes it less likely for a middle class to sprout and hence create the willingness and ability to purchase diamonds. The retail landscape is considered to be undergoing change in India, with modern forms of retailing taking precedence among all consumer groups whereas in the case of Botswana retailing does not seem to possess an equal measure of significance.
Market indigestion, depicted by low levels of inventory restocking, is the trend that befell the diamond industry and still persists. The demand of rough diamonds fell far below the production levels as manufacturers reflected concerns of squeezed profit margins over 2015. Cleaver however anticipates that 2016 will show a modest pick but is dependent on the global economy recovery and the United States of America Christmas season. The glimmering news was that of the global diamond jewelry sales which increased 3 percent in 2014, exceeding $80 billion for the first time, continuing growth since the financial meltdown.