De Beers Faces Record Diamond Inventory Amid Market Challenges

De Beers has accumulated its largest diamond stockpile since the 2008 financial crisis, with an inventory valued at approximately $2 billion, according to a report by the Financial Times. 

This development reflects broader challenges in the diamond industry, including shifting market dynamics and evolving consumer preferences.

Market Pressures and Declining Sales

De Beers’ chief executive, Al Cook, described 2024 as “a tough year for rough diamond sales,” citing a combination of factors contributing to decreased demand. A slowdown in China’s economy—historically a key driver of diamond consumption—has significantly impacted global sales. Additionally, the rise of lab-grown diamonds, which offer a more affordable alternative, has intensified competition within the sector.

De Beers’ sales for the first half of 2024 were reported to be down approximately 20% compared to the same period the previous year. This decline comes despite the company’s strategy of stockpiling diamonds in anticipation of a price recovery that has yet to materialise.

Strategic Pivot Towards Marketing

In response to these challenges, Cook has indicated a shift in focus towards marketing efforts. Speaking to the Financial Times, he stated: “This feels to me like the right time to focus on marketing and support for our retail initiatives, even as we reduce capital expenditure on mining.”

This shift in strategy coincides with significant organisational changes. Earlier this year, Anglo American, De Beers’ parent company, announced plans to spin off its diamond business through a sale or initial public offering (IPO). This transition is likely to allow De Beers to focus more directly on its marketing and retail strategies.

For jewellers, De Beers’ situation reflects broader market trends. Slowing economic growth in key regions and increasing consumer acceptance of lab-grown diamonds are forces reshaping the industry. Jewellers may need to adapt by considering diversified product offerings and addressing consumer interest in sustainability and traceability.

The planned spin-off of De Beers could also lead to new opportunities and challenges, as the company’s strategy and market positioning evolve in response to changing market dynamics.