The De Beers Group which has a had a tight grip on the diamond industry for over a decade says its future growth will be largely driven by Millennials and generation Z, the diamond miner revealed this week through its latest insight report.
De Beers, the largest diamond producer by value, had a good year in 2017 when global consumer demand for diamond jewellery soared to a record $82 billion on the back of sustained robust growth in the US and China. The miner explained that demand for rough diamonds reflected positive developments at consumer level.
The company in its 2018 insight report boldly states that the future of diamonds is with Millennials and Gen Z. The Diamond Insight Report 2016 defined Millennials as the people born between 1981 and 2000. Currently, most generational researchers define Gen Z as those born after 1996. Accordingly, Millennials and Gen Z represent almost two-thirds (64 per cent) of the world population, making them the most populous generations in the world today.
The report says as Baby Boomers, who are the parents of Millennials, age and slowly reduce their consumption of some products and services, the Millennials are stepping in with their considerable numbers and increasing spending power. The size of the Millennial generation exceeds that of the preceding Gen X and, in many parts of the world, most notably the emerging economies of India and China, it outnumbers the Baby Boomers.
It is not only their population proportion that it is growing, but also their spending power. The spending power of Millennials is growing while that of Baby Boomers is declining. Millennial spending power is forecast to overtake Gen X permanently by 2020. Further insights from the report reveal that the growth in Millennials’ spending power is expected to come both from their own earnings and inheritance. According to World Bank forecasts, Millennials’ collective annual income will exceed $4 trillion by 2030, while Accenture estimates that they will receive a transfer of at least $30 trillion from US Baby Boomers during the next three decades
De Beers says these facts make the Millennials ‘core’ consumers today for most businesses ÔÇô including the luxury industry. The numbers are already there to see; Millennials drive almost 60 per cent of diamond jewellery demand in the US and nearly 80 per cent in China. In addition, the miner is convinced that the size and growth in wealth of Chinese Millennials make them a powerful consumer force. The World Bank estimates that the income of Chinese Millennials will overtake that of their US counterparts by 2035.
Turning to the younger generation, De Beers notes in the report that Gen Z represent the consumers of the future. Only coming of age now, they will have a growing impact on what consumer businesses need to offer and how marketers need to communicate in the near future. The cohort is bigger than the Millennial generation, representing 2.6 billion or 35 per cent of the world population. Of this group, 20 per cent live in India and a further 13 per cent in China, but nearly 63 percent are outside of the top four diamond-consuming nations.
“With its coming of age, Gen Z is becoming a consumer base worth capitalising on straight away. In the US, they already have $200 billion in direct buying power and $1 trillion in direct spending power as they command significantly more influence on household purchases than prior generations,” reads part of the report.
De Beers says with Millennials and Gen Z representing more than two-thirds of total diamond jewellery demand value in the four largest diamond-consuming countries, understanding the views, preferences, personal and social values, and lifestyles of Millennials and Gen Z is therefore essential if businesses in the diamond sector are to succeed now and into the future.
“With their focus on networks and instantaneous information sharing within an increasingly connected world, today’s consumers want businesses to demonstrate they understand what truly matters to them,” said Bruce Cleaver, De Beers CEO. “To meet this expectation, we need to listen closely to consumers, bringing with us innovative and thought-provoking propositions that set us apart from the rest.”