Antwerp, Belgium — MININGREVIEW.COM — 18 November 2008 – Top diamond producer De Beers plans to double its advertising spend in the United States ahead of the Christmas season, and is confident the sector will gain market share over other luxury and consumer goods.
“I believe consumers will buy diamonds disproportionately this year and we will, even in a smaller market, take a bigger market share,” De Beers managing director Gareth Penny told Reuters in an interview here.
“Obviously it will be down on last year, but I think that in terms of what people are expecting to sell it will be better and lead to a more positive mood in terms of the pull-through of the pipeline in the New Year,” he said, adding that diamonds should show resilience through 2009.
Speaking at an industry conference in world diamond hub Antwerp, Penny said that prices for unpolished or rough diamonds – which had risen around 16% by August – were still above year-ago levels, a year-on-year advantage he believed would be sustained to the end of 2008. “There has not been a collapse of prices,” he insisted.
Penny went on to say that the long-term outlook for diamonds was positive, given growing demand in developing countries and waning supply. Reserves suggested around 20 years of supply based on current production.
De Beers itself had responded to the economic downturn by carrying out necessary maintenance, including waste stripping at its open caste mines, some of which had been put on hold in the previous boom.
Reuters reports that, with a campaign featuring slogans such as “fewer better things”, “here today, here tomorrow”, and “here’s to less”, De Beers believes the idea of an enduring item that retains value will persuade consumers to buy diamonds, despite the financial crisis and economic downturn.
The United States – which many economists believe to be on the brink of a recession – buys about 45% of the world’s diamonds, with Christmas sales accounting for 40 % of that. The global diamond jewellery market is estimated to be worth US $70 billion. (R720 billion).
According to a De Beers survey carried out at the end of October, diamond jewellery was the number one choice for Christmas for 25% of its U.S. target market – twice as popular as the closest competitor, electronics, which was ahead last year.