the global diamond business 2014

The Global Diamond

Business 2014

(For Analysts and Diamond Traders)

Equity Communications

2014 Edition

www.diamondshades.com/diamondreport

Equity Communications 2014


Contents

page

1. Introduction 1

2. Supply 2

Production Summary 3

2014 Annual Research: Key Findings 3

Kimberley Process Certification Scheme Updates 2013 Data 5

2014 Review of Major Diamond Producers 6

De Beers plus 2013 Production and Sales 6

Rio Tinto Diamonds plus 2013 Production and Sales 8

Dominion Diamond Corporation plus 2013 Production and Sales 9

Alrosa plus 2013 Production and Sales 10

Marange (Zimbabwe) plus 2013 Production and Sales 12

SMC (Catoca) plus 2013 Production and Sales 13

Advanced Major New Projects 14

Gahcho Kue - Canada 14

Renard - Canada 14

Grib - Russia 15

Supply: Supplementary Charts and Tables 16

Supply and Demand Fundamentals 20

What Are Diamonds? 20

Top Ten Diamond Producer Countries 21

Gem Quality Diamonds and Industrial Diamonds 22

Eternal Appeal of Rare Diamonds 23

Rare Diamonds and The Wealthy 25

Exhibits: Diamonds and Luxury 26

Love Markets and Diamonds 29

Supply Outlook 31

What Lies Ahead - Winners and Losers for Next 10 Years 31

Global Exploration Review 32

Discovery of Rich Deposits Fuels Exploration 33

Supply Analysis and Production Forecasts 36

Methodology 36

Global Supply Facts 41

A Review of Contemporary Diamond Production 1994-2013 42

Forecast Diamond Production 46

Trends in Contemporary Production of Diamonds 2000-2013, 2009-2018 48

Global Diamond Production 2009-2013 versus 2014-2018 (ten years) 49

Mines On Their Way Out 57

Replacement Projects and Sources of Additional Supply 58

Diamond Supply: Review of Key Points 59



Contents...

page

3. Trade 62

Diamond Markets and Diamond Prices 63

Rough Diamond Markets 63

Formula Used By Expert Diamond Traders To Value Rough Diamonds 63

What Influences Rough Diamond Prices? 65

Polished Diamond Markets 73

Formula Used By Expert Diamond Traders To Value Polished Diamonds 73

What Influences Polished Diamond Prices? 73

Rough Diamond Prices versus Polished Diamond Prices 75

Diamond Trade in International Markets 78


International Rough Diamonds Trade 80

Major Rough Diamond Trade Centers 81

Dubai Challenges Antwerp 82

Summary: Global Dynamics of Rough Diamonds Trade 83

International Polished Diamonds Trade 85

Polished Diamonds Trade Shifts East 88

Polished Diamonds Trade Review 90

Polished Diamonds Production and Forecasts 92

Rough Diamonds Processing and Beneficiation 96

Group A Processors versus Group B Processors 98

De Beers Shifts Focus to Southern Africa 100

Beneficiation 102

Shrewd Diamond Processors Adjust to New Realities 103

Diamond Jewelry Manufacturing 106

Bank Finance and Diamond Trade 107

Industry Banks Become Industry Custodians 108

Diamond Industry Finance post-GFC 111

Case Study: India 112

Outlook: Diamond Industry Finance 115

Lab-created Diamonds 118

Lab-created Diamonds versus Natural Diamonds 118

Why the huge fuss about lab-created diamonds in the diamond industry’s pipeline? 120

Trade: Supplementary Tables and Charts 122



Contents...

Page

4. Consumption 126

2013 Retail Consumption Review 127


Five Key Drivers of Diamond Consumption 134

Economic Growth and Income Growth 136

Global Realignment Of Precious Jewelry Markets 136

Exhibits: India, China And Global Precious Jewelry Consumption 140

Exhibits: Adult Wealth Patterns 143

Availability of Credit (Consumer Finance) 148

How The US Market Has Responded To Polished Diamonds Price Changes 149

Exhibit: Diamond Jewelry Retailing in USA 152

Jewelry Consumption Culture 155

Financial Considerations in Jewelry Consumption 155

Demographics and Marriage Trends 160

Marriage Trends 160

Demographics 164

Luxury Brands Expansion 167

Exhibit: Tiffany and Co - Sales Impact of Stores in Gateway Cities 172

Development of Diamond Consumer Markets 174

Love Occasions Sustain Appeal of Diamonds 174

Progression of Top Three Retail Markets 177

Mainland China 177

Market Penetration 178

Gold Rules In China 179

Anticipated Growth of The Diamond Jewelry Market in China 182

Consumption Patterns 185

India 189

Gold Rules In India 190

Market Penetration and Consumption Patterns 191

USA 195

Bridal-Related Jewelry Sales 197

Future Global Demand For Diamonds 204

How Do We Predict Future Consumer Demand For Diamonds? 204

How Diamonds Are Introduced To New Consumers 207

Why 95% of The World Has Never Seen A Diamond In Real Life 208

How Jewelry Retailers Decide To Sell Diamonds 209

How A Mass-market For Diamonds Is Created 210

Can China Become A Mass-market For Diamond Jewelry? 212

Current State of Global Diamond Jewelry Consumption 214

Growth of Global Diamond Jewelry Sales 215



Contents...

Page

5. Special: Investing In Diamonds 227

Trading Diamonds For Profit 228

Analysis Of The Business Of Trading Diamonds 228

Why Diamond Trading Can Be Appealing 231

Exhibit: From Rough Diamond To Polished Diamond 232

Favorable Conditions For Diamond Trading 234

Diamond Industry Fundamentals Understood To Be Positive 237

Exhibit: De Beers Predicts Structural Deficit 237

How To Read Fundamentals Of Supply And Demand 239

Trading In Rough Diamond Markets 239

Trading In Polished Diamond Markets 244

The De Facto Investment Market For Diamonds 245

Accumulation Of Massive Diamond Stocks In The Pipeline 247

Speculators Sense An Opportunity For Great Profit 252

Exhibit: Diamond Industry Experts Say Consumer Demand Will Outpace Supply 254

Trading of Investment Grade Diamonds 262

Diamonds For Investors 262

What Makes A Diamond Rare? 263

Exhibits: Typical Examples Of Investment Grade Diamonds 266

Typical Properties Of Investment Grade Diamonds 269

Most Popular Diamonds For Investment Holdings 269

Typical Valuation Premiums For Investment Grade White Diamonds 270

Investment Funds For Diamonds 270

Annual Returns - Investment Grade Diamonds 271

The Promise Of Investment Grade Diamonds 274

Money Laundering, Tax Evasion and Diamonds 276

Exhibit: International Sentiment On Tax Havens More Negative 277

6. Conclusion 280

7. Supplementary Glossary of Terms 281

8. Index of Charts, Tables and Exhibits 283



Catalog of Charts, Tables and Exhibits

Guide to the Global Diamond Industry 2014

Catalog of Charts, Tables and Exhibits

Supply Section Page

Production Summary

2014 Annual Research: Key Findings

Chart 1: World Diamond Production 2004-2018F 4

Chart 2: Primary Producers: Rough Diamond Sales 2009-2013 4

KP Certification Scheme Updates

Chart 3: KP - World Diamond Production by Value 2013 vs 2012 5

Table 1: Diamond Production Value (Countries) US$/carat 2013 vs 2012 5

Supply: Supplementary Tables and Charts

Table 2: World Diamond Production Volume (Leading Producers) 2004-2013 16

Chart 4: Percentage Share of World Diamond Production (Leading Producers) 2009-2013 16

Table 3: Forecast Diamond Production (Diamond Producers) 2009-2018F 17

Table 4: Diamond Producers - Rough Diamond Sales (Value) 2009-2013 18

Chart 5: 2013 Rough Diamond Sales - Diamond Producers 19

Chart 6: Percentage Share of Rough Diamond Sales (Diamond Producers) 2009-2013 19

Supply and Demand Fundamentals

Chart 7: Map - Global Supply of Diamonds (Map of Key Diamond Regions 2013) 20

Table 5: Comparison of DRC and Namibia Diamond Production (2012) 20

Chart 8: 2013 World Diamond Production Volume and Value (Top Ten Producer Countries) 21

Chart 9: Production of Gem Quality, Near-Gem and Industrial Diamonds 2004-2013 22

Eternal Appeal of Rare Diamonds

Exhibit 1: Rare Diamonds Like These Fancy Pink Beauties 23

Exhibit 2: Argyle Red Diamonds 24

Chart 10: Number of Global High Networth Individuals 2010-2013 25

Diamonds and Luxury

Exhibit 3: i-phone 4 Diamond Rose 26

Exhibit 4: Montblanc Meisterstuck Mozart Jewelry "Gold" Fountain Pen 27

Exhibit 5: Mouwad's 637 carat L' Incomparable Diamond Necklace 28

Love Markets and Diamonds

Exhibit 6: Marriage Proposals with Diamond Ring 29

Exhibit 7: Diamond Engagement Ring 29

Exhibit 8: Bride and Groom Wearing Diamond Rings 30



Catalog of Charts, Tables and Exhibits...

Supply Section continued… Page

Supply Outlook

Exploration Review

Chart 11: De Beers Exploration Costs 1999-2012 32

Chart 12: De Beers Exploration Ground Holdings 2007-2012 32

Chart 13: Timeline - Discovery of Rich Diamond Deposits 1954 to Present 33

Supply Analysis and Production Forecasts

Global Supply Facts

Table 6: Global Diamond Supply 2013, Region, Territories, Market Share 41

Chart 14: History of Global Diamond Production From Antiquity to 2013 42

Chart 15: Canada Diamond Mines - Life of Mine Years (1995-2040) 43

Chart 16: Global Diamond Reserves 2000-2012 45

Forecast Diamond Production

Table 7: Classification of Producer Countries by Value of Production Footprint 46

Table 8: Market Share of Producer Group (Countries) by Volume and Value 2008-2012 47

Chart 17: Global production of Rough Diamonds (Top Ten Country Rankings) 2001-2013 48

Chart 18: Production Footprint of Gem and Near- Gem Diamonds (Top Ten) 2009-2018F 49

Chart 19: Global Diamond Production Volume (Countries) 2009-2013 versus 2014-2018F 50

Table 9: Global Diamond Production Volume (Countries) 2009-2013 versus 2014-2018F 50

Chart 20: Global Diamond Production Volume (Gem) 2009-2013 versus 2014-2018F 51

Table 10: Global Diamond Production Volume (Gem) 2009-2013 versus 2014-2018F 51

Chart 21: Global Diamond Production Value (Countries) 2009-2013 versus 2014-2018F 52

Table 11: Global Diamond Production Value (Countries) 2009-2013 versus 2014-2018F 52

Chart 22: Canada Diamond Mines - New Lease of Life 54

Chart 23: Sources of Additional Production Capacity for 2013-2018F 58




Trade Section Page

Diamond Markets and Diamond Prices

Rough Diamond Markets

Chart 24: Rough Diamond Import Prices 2004-2013 67

Chart 25: DTC Price Index 2002-2015F 69

Chart 26: Global Rough Diamonds Trade (Margins for Profitable Trade 2004-2013) 71

Chart 27: Rough Diamond Price Trends 2004-2013 71

Chart 28: Rough Diamond Export Prices 2004-2013 72

Polished Diamond Markets

Chart 29: China Polished Diamond Imports 2007-2013 74

Rough Diamond Prices versus Polished Diamond Prices

Chart 30: Polished and Rough Diamonds Price Index 2004-2013 75

Chart 31: Polished Diamonds Index 2004-2013 76

Diamond Trade in International Markets

Trade Summary: 2014 Annual Research: Key Findings

Chart 32: Global Diamond Trade Turnover 2007-2013 79

Chart 33: Rough and Polished Diamond Indices 2004-2013 79

Rough Diamonds Trade

Chart 34: Value of Rough Diamonds Trade 2004-2013 80

Chart 35: Major Trade Centers - Rough Diamond Trade Volume 2004-2013 81

Chart 36: Major Trade Centers - Rough Diamond Trade Value 2004-2013 81

Table 12: Dubai Challenges Antwerp 82

Chart 37: UAE versus Belgium - Imports of Rough Diamonds 2006-2013 82

Polished Diamonds Trade

Chart 38: Polished Diamonds Trade Turnover 2008-2012 85

Chart 39: Israel Exports of Polished Diamonds Value 1997-2012 86

Chart 40: Israel Exports of Polished Diamonds Volume 1997-2012 86

Chart 41: India Polished Diamonds Trade 2005-2013 87

Table 13: Global Ranking of Polished Diamond Imports 2007-2013 (Top Nine Countries) 88

Chart 42: Israel Net Polished Diamond Exports 2007 versus 2012 89

Chart 43: Belgium Gross Polished Diamond Exports 2007 versus 2012 89

Chart 44: India Polished Diamond Exports 2007 versus 2012 89




Trade Section continued… Page

Chart 45: Key Trade Centers - Trade Values 2002-2012(Price per Carat Trends) 90

Chart 46: USA Imports of Polished Diamonds 2002-2012 90

Chart 47: USA Exports of Polished Diamonds 2002-2012 90

Polished Diamonds Production and Forecasts

Chart 48: India Rough Diamond Imports 1990-1998 92

Chart 49: Belgium and India Rough Diamond Imports Versus Annual Production (1998-2013) 93

Chart 50: Global Production of Polished Diamonds 1997-2018F 94

Chart 51: Forecast Polished Diamonds Production 2012-2018F 94

Rough Diamonds Processing and Beneficiation

Chart 52: Net Flow of Rough Diamonds Trade - Market Share by Regions 2004-2013 96

Chart 53: Net Rough Diamonds Demand 2004-2013 96

Processing Market Share

Chart 54: Group A Processors Versus Group B Processors 98

Chart 55: De Beers Rough Diamond Sales - Global Versus Southern Africa 2006-2012 100

Chart 56: De Beers Sales in Southern Africa 2006-2011 100

Chart 57: Exports of Polished Diamonds Southern Africa 2009-2012 100

Beneficiation

Exhibit 9: Botswana Beneficiation Drive 2012 102

Exhibit 10: Tiffany and Co - Leading Global Luxury Brand 105

Exhibit 11: Chow Tai Fook - Greater China Focused and Largest Jewelry Company 105

Bank Finance and Diamond Trade

Industry Banks Become Diamond Industry Custodians

Chart 58: Diamond Industry Debt 2001-2011 108

Chart 59: Antwerp Diamond Bank Balance Sheet 1997-2012 110

Chart 60: Antwerp Diamond Bank Profitability 1997-2012 110

Diamond Industry Finance Post GFC

Chart 61: Market Share of Diamond Industry Debt by Trade Centre 2007-2011 112

Chart 62: India International Polished Diamonds Trade 2005-2013 113

Chart 63: India Diamond Industry Debt 2001-2013E 113

Chart 64: Rupee Rough and Polished Diamonds Indices 2004-2013 114

Trade Section: Supplementary Tables

Table 14: Rough Diamonds Supply and Net Flow 2004-2013 (carats) 122

Table 15: Rough Diamonds Supply and Net Flow 2004-2013 (value) 123

Table 16: Rough Diamonds Trade Data 2004-2013 (Production, Rough Diamond Imports and Exports) 124

Table 17: Production of Polished Diamonds 1997-2018F 125




Consumption Section Page

2013 Retail Consumption Review

2014 Annual Research: Key Findings

Chart 65: Global Retail Sales of Diamond Jewelry 2003-2014F 129

Chart 66: Retail Sales of Diamond Jewelry 2009-2013 (Top Markets and World Regions) 129

Table 18: Retail Sales of Diamond Jewelry 2012 and 2013 (Top Markets and World Regions) 130

Chart 67: 2013 Retail Sales of Diamond Jewelry (Top Markets and World Regions) 130

Chart 68: Retail Sales of Diamond Jewelry Top Markets (2013 versus 2008 Market Share) 131

Chart 69: Average Import Price - Polished Diamonds USA versus Japan 2003-2013 132

Chart 70: Average Polished Diamond Import Prices -Top Trade Markets (2002-2012) 132

Five Key Drivers of Diamond Consumption

Table 19: The Three Main Subdivisions of Retail Diamond Jewelry Consumption 134

Table 20: Changing First World Consumer 137

Table 21: Retail Forecast Next Five Years - Selected World Regions (Y-o-Y) 138

Special Exhibits: India, China and Global Precious Jewelry Consumption

Exhibit 12: Precious Metals Consumption in Jewelry (Top Markets) 1998-2002, 2011-2013 140

Exhibit 13: Global Production of Polished Diamonds 140

Exhibit 14: Gold Consumption in Jewelry (Top Markets) 1998-2002 Average, 2011-2013 141

Exhibit 15: Platinum Consumption in Jewelry (Top Markets) 1998-2002 Average, 2011-2013 141

Exhibit 16: Silver Consumption in Jewelry (Top Markets) 1998-2002 Average, 2011-2013 142

Exhibit 17: Polished Diamond Consumer Preferences in Leading Markets 142

Special Exhibits: Adult Wealth Patterns

Exhibit 18: Global Adult Wealth Pattern 2010-2013 143

Exhibit 19: China's Adult Wealth Pattern 2010-2013 144

Exhibit 20: Europe's Adult Wealth Pattern 2010-2013 145

Exhibit 21: North America's Adult Wealth Pattern 2010-2013 145

Exhibit 22: India's Adult Wealth Pattern 2010-2013 146

Exhibit 23: Global High-Networth Individuals 2010-2013 147

Availability of Credit (Consumer Finance)

Chart 71: Polished Diamonds Index versus Other Precious Jewelry Indices 2004-2013 148

Chart 72: USA Polished Diamonds Trade 1990-2012 149

Chart 73: USA Imports of Polished diamonds 2002-2012 150

Chart 74: USA Jewelry Stores Absorb Commodities Cost Increases 2002-2013 151

Chart 75: Number of Jewelry Store Establishments in USA 1998-2011 151

Exhibit 24: Jewelry Retailing In USA (Sterling Jewelers) 152

Chart 76: Chow Tai Fook Revenue by Geography 2012-2014 153

Chart 77: Chow Tai Fook POS Network 2012-2014 154




Consumption Section continued… Page

Jewelry Consumption Culture

Chart 78: Two Types of Markets for Precious Jewelry Consumption (World Map) 155

Table 22: Typical Margins for Gold Jewelry in India 156

Table 23: Typical Margins for Precious Jewelry Products in China 157

Table 24: Typical Margins for Precious Jewelry Products in EU 157

Demographics and Marriage Trends

Chart 79: Diamond Jewelry Consumption Breakdown (Top Markets) 160

Chart 80: Crude Marriage Rates for Selected Territories 1970-2011 161

Chart 81: Number of Registered Marriages for Selected Territories 1990-2012 161

Chart 82: Age at First Marriage USA 1970-2012 162

Chart 83: Age at First Marriage Selected Countries (1980 versus 2010) 163

Chart 84: Crude Birth Rate for Selected Territories 1950-2030 164

Chart 85: Japan Diamond Jewelry Sales 1991-2013 165

Chart 86: Japan imports of Polished Diamonds 1991-2013 165

Chart 87: Japan and USA Comparison of Polished Diamond Import Trends 1991-2013 165

Chart 88: Major Jewelry Consumption Markets, Population Ages 0 to 14 (1970-2012) 166

Luxury Brands Expansion

Chart 89: Total Wealth for Regions and Selected Countries 2000-2013 167

Chart 90: Share of World Wealth for Regions and Selected Countries 2000-2013 167

Chart 91: Tiffany and Co Retail Locations 2003-2013 168

Table 25: Luxury Retail Brands versus Regular Diamond Jewelry Retailers 170

Exhibit 25: Tiffany and Co - Sales Impacts of Stores Located in Gateway Cities 172

Development of Diamond Consumer markets

Love Occasions Sustain Appeal of Diamond


Chart 93: "Have you ever considered diamonds specifically as an investment?" 175

Table 26: "How important are the following criteria when deciding from which store to buy" 175

Progression of Top Three Retail Diamond Markets

Mainland China

Chart 94: Mainland China Diamond Jewelry Sales 2003-2013 177

Chart 95: Hong Kong Diamond Jewelry Sales 2003-2013 177

Chart 96: Chow Tai Fook Revenue by Product Category 2012-2014 179

Chart 97: China polished Diamond Imports 2007-2013 182


Chart 99: China Number of Registered Marriages 1990-2018F 185

Chart 100: Crude Birth Rate for China 1975-2005 185




Consumption Section continued… Page

India

Chart 101: India - Gold and Diamond Jewelry Demand by Region 190

Chart 102: India - Diamond Jewelry Sales 2003-2013 191

Chart 103: India - Diamond Jewelry Preferences by Region 192

Table 27: Diamond Jewelry Market Share of Retail Sales in India 193

Chart 104: Consumption Breakdown for Diamond Jewelry in India 193

USA

Chart 105: USA Diamond Jewelry Sales 1998-2012 195

Chart 106: 2013 USA Jewelry Store Sales 196

Chart 107: Consumption Breakdown for Diamond Jewelry in USA 197

Chart 108: Breakdown of Diamond Engagement Ring Sales 2012 198

Chart 109: 2013-2015 Retail Sales of Jewelry in USA 199

Chart 110: Age at First Marriage USA 200

Chart 111: USA Earnings and Unemployment Rate by Educational Attainment 201

Chart 112: USA Female Annual Personal Income 201

Chart 113: USA Average Annual Earnings by Highest Degree Earned 201

Chart 114: Crude Birth Rate for USA 1950-2030 202

Chart 115: Fertility Rate for USA 1950-2030 202

Chart 116: Number of Registered Marriages in USA 1990-2015F 203

Future Global Demand For Diamonds

How Do We Predict Future Consumer Demand for Diamonds?

Chart 117: Forecast Global Sales of Diamond Jewelry 2006-2016 204

Table 28: Wholesale Price of 1 carat Round Diamond (Illustrative) 205

How a Mass-market For Diamond Jewelry Is Created

Table 29: Percentage of First Time Brides Receiving Diamond Engagement Ring 210

Current State of Global Diamond Jewelry Consumption

Chart 118: Global Retail Sales of Diamond Jewelry - 2003, 2009 and 2013 214

Chart 119: Diamond Jewelry Sales Year-on-Year Growth 2004-2013 215

Table 30: Retail Sales Growth Leading Markets 2013 versus 2003, 2013 versus 2009 215

Table 31: Diamond Jewelry Sales Leading Markets (Market Share and Annual Growth) 216

Table 32: Key Diamond Jewelry Markets, Wealth and Demographics 217

Chart 120: Per Adult Consumption of Diamond Jewelry (Leading Markets and World) 217

Table 33: Number of Registered Marriages Leading Markets 2003, 2009, 2013 217

Table 34: Diamond Consumer Market Developers - Leading Markets 219

Table 35: Agglomerations With A Population Of Plus 1 Million Inhabitants (Key Markets) 220

Table 36: Number of Mega Cities in Key Diamond Consumer Markets 220




Trading Diamonds For Profit

Analysis of the Business of Trading Diamonds

Chart 121: Trading Diamonds in the Diamond Pipeline 228

Table 37: 2013 Diamond Pipeline Statistics 229

Why Diamond Trading Can Be Appealing

Table 38: Diamonds More Like Traded Art 231

Exhibit 26: From Rough Diamond to Polished Diamond 232

Chart 122: Differing Values for Diamonds 233

Table 39: From Rough Diamond to Polished Diamond (Business Considerations) 233

Table 40: Art of Valuing a Polished Diamond - Representative Factors Considered 233


Chart 123: Flow Chart of Diamond Trading in Pipeline 234

Diamond Industry Fundamentals Understood To Be Positive

Exhibit 27: De Beers Exhibit On Anticipated Structural Supply Deficit 237

How to Read Fundamentals of Diamond Supply and Demand

Table 42: De Beers Monopoly Curtailed 240

Table 43: Traders With Consignment Stocks - Market Share of Rough Diamond Sales 241

Table 44: Diamond Processing in India 242

Chart 124: Profitable Rough Diamonds Trade in Dubai 2003-2013 243

The De Facto Investment Market For Diamonds

Chart 125: Demand Sources - Precious Jewelry Commodities 245


Chart 127: US Dollar and Indian Rupee Rough and polished Diamond Indices 2004-2013 246

Accumulation of Massive Diamond Stocks in the Pipeline

Chart 128: India Rough Diamond Imports Outpace Global Diamond Production 1998-2013 247

Chart 129: USA International Polished Diamonds Trade 1989-2013 247


Chart 131: Belgium, India Rough Diamond Imports Outpace Global Production 1998-2005 250

Chart 132: Diamond Banks Increase Credit to Industry 2001-2008 250

Chart 133: Diamond Producers Boost Production 1998-2009 251

Chart 134: De Beers Slashes Number of Sightholders 2001-2015 251

Exhibit 28: Diamond Industry Experts Say Consumer Demand Will Outpace Supply 253

Table 45: Diamond Industry Value Chain 2009 versus 2013 256

Chart 135: Precious Jewelry Commodities - Asset Volatility 2004-2011 258




Special Section: Investing in Diamonds continued… Page

Trading of Investment Grade Diamonds

Diamonds for Investors

Exhibit 29: An Exceptional 25.5ct Blue Diamond 262

What Makes A Diamond Rare?

Table 46: Color Scale for White Diamonds 263

Table 47: 12 Basic Hues for Colored Diamonds 264

Table 48: Clarity Grading Scale 265

Table 49: Alrosa 2013 Diamond Sales by Weight Class 265

Special Exhibits: Typical Examples of Investment Grade Diamonds

Exhibit 30: Gem Diamonds - Top 9 Diamonds Sold in 2013 266


Exhibit 32: D Color Flawless and D Color Internally Flawless 268

Table 50: Typical Properties of Investment Grade Diamonds 269

Table 51: Diamonds Most Commonly Traded For Investment Purposes 269

Chart 136: Different Premiums for Investment Grade White Diamonds 270

Chart 137: Value of Magnificent Diamond by Graff Diamonds 2005 versus 2012 272

Chart 138: Value of Archduke Joseph Diamond 1993 versus 2012 272

Money Laundering, Tax Evasion and Diamonds

Exhibit 33: International Sentiment on Tax Havens Turns Negative 277

Table 52: Global Ranking of Polished Diamond Imports 2007-2012 278



8. Index of Charts, Tables and Exhibits

Charts page

Chart 1: World Diamond Production 2004-2018F 4

Chart 2: Primary Producers: Rough Diamond Sales 2009-2013 4

Chart 3: KP - World Diamond Production by Value 2013 vs 2012 5

Chart 4: Percentage Share of World Diamond Production (Leading Producers) 2009-2013 16

Chart 5: 2013 Rough Diamond Sales - Diamond Producers 19

Chart 6: Percentage Share of Rough Diamond Sales (Diamond Producers) 2009-2013 19

Chart 7: Map - Global Supply of Diamonds (Map of Key Diamond Regions 2013) 20

Chart 8: 2013 World Diamond Production Volume and Value (Top Ten Producer Countries) 21

Chart 9: Production of Gem Quality, Near-Gem and Industrial Diamonds 2004-2013 22

Chart 10: Number of Global High Networth Individuals 2010-2013 25

Chart 11: De Beers Exploration Costs 1999-2012 32

Chart 12: De Beers Exploration Ground Holdings 2007-2012 32

Chart 13: Timeline - Discovery of Rich Diamond Deposits 1954 to Present 33

Chart 14: History of Global Diamond Production From Antiquity to 2013 42

Chart 15: Canada Diamond Mines - Life of Mine Years (1995-2040) 43

Chart 16: Global Diamond Reserves 2000-2012 45

Chart 17: Global production of Rough Diamonds (Top Ten Country Rankings) 2001-2013 48

Chart 18: Production Footprint of Gem and Near- Gem Diamonds (Top Ten) 2009-2018F 49

Chart 19: Global Diamond Production Volume (Countries) 2009-2013 versus 2014-2018F 50

Chart 20: Global Diamond Production Volume (Gem) 2009-2013 versus 2014-2018F 51

Chart 21: Global Diamond Production Value (Countries) 2009-2013 versus 2014-2018F 52

Chart 22: Canada Diamond Mines - New Lease of Life 54

Chart 23: Sources of Additional Production Capacity for 2013-2018F 58

Chart 24: Rough Diamond Import Prices 2004-2013 67

Chart 25: DTC Price Index 2002-2015F 69

Chart 26: Global Rough Diamonds Trade (Margins for Profitable Trade 2004-2013) 71


Chart 28: Rough Diamond Export Prices 2004-2013 72

Chart 29: China Polished Diamond Imports 2007-2013 74

Chart 30: Polished and Rough Diamonds Price Index 2004-2013 75

Chart 31: Polished Diamonds Index 2004-2013 76

Chart 32: Global Diamond Trade Turnover 2007-2013 79

Chart 33: Rough and Polished Diamond Indices 2004-2013 79

Chart 34: Value of Rough Diamonds Trade 2004-2013 80

Chart 35: Major Trade Centers - Rough Diamond Trade Volume 2004-2013 81

Chart 36: Major Trade Centers - Rough Diamond Trade Value 2004-2013 81

Chart 37: UAE versus Belgium - Imports of Rough Diamonds 2006-2013 82

Chart 38: Polished Diamonds Trade Turnover 2008-2012 85

Chart 39: Israel Exports of Polished Diamonds Value 1997-2012 86

Chart 40: Israel Exports of Polished Diamonds Volume 1997-2012 86



8. Index of Charts, Tables and Exhibits...

Charts continued… page

Chart 41: India Polished Diamonds Trade 2005-2013 87

Chart 42: Israel Net Polished Diamond Exports 2007 versus 2012 89

Chart 43: Belgium Gross Polished Diamond Exports 2007 versus 2012 89

Chart 44: India Polished Diamond Exports 2007 versus 2012 89

Chart 45: Key Trade Centers - Trade Values 2002-2012(Price per Carat Trends) 90

Chart 46: USA Imports of Polished Diamonds 2002-2012 90

Chart 47: USA Exports of Polished Diamonds 2002-2012 90


Chart 49: Belgium and India Rough Diamond Imports Versus Annual Production (1998-2013) 93

Chart 50: Global Production of Polished Diamonds 1997-2018F 94

Chart 51: Forecast Polished Diamonds Production 2012-2018F 94

Chart 52: Net Flow of Rough Diamonds Trade - Market Share by Regions 2004-2013 96

Chart 53: Net Rough Diamonds Demand 2004-2013 96

Chart 54: Group A Processors Versus Group B Processors 98

Chart 55: De Beers Rough Diamond Sales - Global Versus Southern Africa 2006-2012 100

Chart 56: De Beers Sales in Southern Africa 2006-2011 100

Chart 57: Exports of Polished Diamonds Southern Africa 2009-2012 100

Chart 58: Diamond Industry Debt 2001-2011 108

Chart 59: Antwerp Diamond Bank Balance Sheet 1997-2012 110

Chart 60: Antwerp Diamond Bank Profitability 1997-2012 110

Chart 61: Market Share of Diamond Industry Debt by Trade Centre 2007-2011 112

Chart 62: India International Polished Diamonds Trade 2005-2013 113

Chart 63: India Diamond Industry Debt 2001-2013E 113

Chart 64: Rupee Rough and Polished Diamonds Indices 2004-2013 114

Chart 65: Global Retail Sales of Diamond Jewelry 2003-2014F 129

Chart 66: Retail Sales of Diamond Jewelry 2009-2013 (Top Markets and World Regions) 129

Chart 67: 2013 Retail Sales of Diamond Jewelry (Top Markets and World Regions) 130

Chart 68: Retail Sales of Diamond Jewelry Top Markets (2013 versus 2008 Market Share) 131

Chart 69: Average Import Price - Polished Diamonds USA versus Japan 2003-2013 132

Chart 70: Average Polished Diamond Import Prices -Top Trade Markets (2002-2012) 132

Chart 71: Polished Diamonds Index versus Other Precious Jewelry Indices 2004-2013 148

Chart 72: USA Polished Diamonds Trade 1990-2012 149

Chart 73: USA Imports of Polished diamonds 2002-2012 150

Chart 74: USA Jewelry Stores Absorb Commodities Cost Increases 2002-2013 151

Chart 75: Number of Jewelry Store Establishments in USA 1998-2011 151


Chart 77: Chow Tai Fook POS Network 2012-2014 154

Chart 78: Two Types of Markets for Precious Jewelry Consumption (World Map) 155


Chart 80: Crude Marriage Rates for Selected Territories 1970-2011 161





Chart 81: Number of Registered Marriages for Selected Territories 1990-2012 161

Chart 82: Age at First Marriage USA 1970-2012 162

Chart 83: Age at First Marriage Selected Countries (1980 versus 2010) 163

Chart 84: Crude Birth Rate for Selected Territories 1950-2030 164

Chart 85: Japan Diamond Jewelry Sales 1991-2013 165

Chart 86: Japan imports of Polished Diamonds 1991-2013 165

Chart 87: Japan and USA Comparison of Polished Diamond Import Trends 1991-2013 165

Chart 88: Major Jewelry Consumption Markets, Population Ages 0 to 14 (1970-2012) 166

Chart 89: Total Wealth for Regions and Selected Countries 2000-2013 167

Chart 90: Share of World Wealth for Regions and Selected Countries 2000-2013 167

Chart 91: Tiffany and Co Retail Locations 2003-2013 168


Chart 93: "Have you ever considered diamonds specifically as an investment?" 175

Chart 94: Mainland China Diamond Jewelry Sales 2003-2013 177

Chart 95: Hong Kong Diamond Jewelry Sales 2003-2013 177

Chart 96: Chow Tai Fook Revenue by Product Category 2012-2014 179

Chart 97: China polished Diamond Imports 2007-2013 182


Chart 99: China Number of Registered Marriages 1990-2018F 185

Chart 100: Crude Birth Rate for China 1975-2005 185

Chart 101: India - Gold and Diamond Jewelry Demand by Region 190

Chart 102: India - Diamond Jewelry Sales 2003-2013 191

Chart 103: India - Diamond Jewelry Preferences by Region 192

Chart 104: Consumption Breakdown for Diamond Jewelry in India 193

Chart 105: USA Diamond Jewelry Sales 1998-2012 195

Chart 106: 2013 USA Jewelry Store Sales 196

Chart 107: Consumption Breakdown for Diamond Jewelry in USA 197

Chart 108: Breakdown of Diamond Engagement Ring Sales 2012 198

Chart 109: 2013-2015 Retail Sales of Jewelry in USA 199

Chart 110: Age at First Marriage USA 200

Chart 111: USA Earnings and Unemployment Rate by Educational Attainment 201

Chart 112: USA Female Annual Personal Income 201

Chart 113: USA Average Annual Earnings by Highest Degree Earned 201

Chart 114: Crude Birth Rate for USA 1950-2030 202

Chart 115: Fertility Rate for USA 1950-2030 202

Chart 116: Number of Registered Marriages in USA 1990-2015F 203

Chart 117: Forecast Global Sales of Diamond Jewelry 2006-2016 204

Chart 118: Global Retail Sales of Diamond Jewelry - 2003, 2009 and 2013 214

Chart 119: Diamond Jewelry Sales Year-on-Year Growth 2004-2013 215

Chart 120: Per Adult Consumption of Diamond Jewelry (Leading Markets and World) 217





Chart 121: Trading Diamonds in the Diamond Pipeline 228

Chart 122: Differing Values for Diamonds 233

Chart 123: Flow Chart of Diamond Trading in Pipeline 234

Chart 124: Profitable Rough Diamonds Trade in Dubai 2003-2013 243

Chart 125: Demand Sources - Precious Jewelry Commodities 245


Chart 127: US Dollar and Indian Rupee Rough and polished Diamond Indices 2004-2013 246

Chart 128: India Rough Diamond Imports Outpace Global Diamond Production 1998-2013 247

Chart 129: USA International Polished Diamonds Trade 1989-2013 247


Chart 131: Belgium, India Rough Diamond Imports Outpace Global Production 1998-2005 250

Chart 132: Diamond Banks Increase Credit to Industry 2001-2008 250

Chart 133: Diamond Producers Boost Production 1998-2009 251

Chart 134: De Beers Slashes Number of Sightholders 2001-2015 251

Chart 135: Precious Jewelry Commodities - Asset Volatility 2004-2011 258

Chart 136: Different Premiums for Investment Grade White Diamonds 270

Chart 137: Value of Magnificent Diamond by Graff Diamonds 2005 versus 2012 272

Chart 138: Value of Archduke Joseph Diamond 1993 versus 2012 272

Tables page

Table 1: Diamond Production Value (Countries) US$/carat 2013 vs 2012 5

Table 2: World Diamond Production Volume (Leading Producers) 2004-2013 16

Table 3: Forecast Diamond Production (Diamond Producers) 2009-2018F 17

Table 4: Diamond Producers - Rough Diamond Sales (Value) 2009-2013 18

Table 5: Comparison of DRC and Namibia Diamond Production (2012) 20

Table 6: Global Diamond Supply 2013, Region, Territories, Market Share 41

Table 7: Classification of Producer Countries by Value of Production Footprint 46

Table 8: Market Share of Producer Group (Countries) by Volume and Value 2008-2013 47

Table 9: Global Diamond Production Volume (Countries) 2009-2013 versus 2014-2018F 50

Table 10: Global Diamond Production Volume (Gem) 2009-2013 versus 2014-2018F 51

Table 11: Global Diamond Production Value (Countries) 2009-2013 versus 2014-2018F 52

Table 12: Dubai Challenges Antwerp 82

Table 13: Global Ranking of Polished Diamond Imports 2007-2013 (Top Nine Countries) 88

Table 14: Rough Diamonds Supply and Net Flow 2004-2013 (carats) 122

Table 15: Rough Diamonds Supply and Net Flow 2004-2013 (value) 123

Table 16: Rough Diamonds Trade Data 2004-2016 (Production, Rough Diamond Imports and Exports) 124

Table 17: Production of Polished Diamonds 1997-2018F 125

Table 18: Retail Sales of Diamond Jewelry 2012 and 2013 (Top Markets and World Regions) 130

Table 19: The Three Main Subdivisions of Retail Diamond Jewelry Consumption 134

Table 20: Changing First World Consumer 137




Tables continued… page

Table 21: Retail Forecast Next Five Years - Selected World Regions (Y-o-Y) 138

Table 22: Typical Margins for Gold Jewelry in India 156

Table 23: Typical Margins for Precious Jewelry Products in China 157

Table 24: Typical Margins for Precious Jewelry Products in EU 157

Table 25: Luxury Retail Brands versus Regular Diamond Jewelry Retailers 170

Table 26: "How important are the following criteria when deciding from which store to buy" 175

Table 27: Diamond Jewelry Market Share of Retail Sales in India 193


Table 29: Percentage of First Time Brides Receiving Diamond Engagement Ring 210

Table 30: Retail Sales Growth Leading Markets 2013 versus 2003, 2013 versus 2009 215

Table 31: Diamond Jewelry Sales Leading Markets (Market Share and Annual Growth) 216

Table 32: Key Diamond Jewelry Markets, Wealth and Demographics 217

Table 33: Number of Registered Marriages Leading Markets 2003, 2009, 2013 217

Table 34: Diamond Consumer Market Developers - Leading Markets 219

Table 35: Agglomerations With A Population Of Plus 1 Million Inhabitants (Key Markets) 220

Table 36: Number of Mega Cities in Key Diamond Consumer Markets 220

Table 37: 2013 Diamond Pipeline Statistics 229

Table 38: Diamonds More Like Traded Art 231

Table 39: From Rough Diamond to Polished Diamond (Business Considerations) 233

Table 40: Art of Valuing a Polished Diamond - Representative Factors Considered 233


Table 42: De Beers Monopoly Curtailed 240

Table 43: Traders With Consignment Stocks - Market Share of Rough Diamond Sales 241

Table 44: Diamond Processing in India 242

Table 45: Diamond Industry Value Chain 2009 versus 2013 256

Table 46: Color Scale for White Diamonds 263

Table 47: 12 Basic Hues for Colored Diamonds 264

Table 48: Clarity Grading Scale 265

Table 49: Alrosa 2013 Diamond Sales by Weight Class 265

Table 50: Typical Properties of Investment Grade Diamonds 269

Table 51: Diamonds Most Commonly Traded For Investment Purposes 269

Table 52: Global Ranking of Polished Diamond Imports 2007-2012 278




Exhibits page

Exhibit 1: Rare Diamonds Like These Fancy Pink Beauties 23


Exhibit 3: i-phone 4 Diamond Rose 26

Exhibit 4: Montblanc Meisterstuck Mozart Jewelry "Gold" Fountain Pen 27

Exhibit 5: Mouwad's 637 carat L' Incomparable Diamond Necklace 28

Exhibit 6: Marriage Proposals with Diamond Ring 29

Exhibit 7: Diamond Engagement Ring 29

Exhibit 8: Bride and Groom Wearing Diamond Rings 30

Exhibit 9: Botswana Beneficiation Drive 2012 102

Exhibit 10: Tiffany and Co - Leading Global Luxury Brand 105

Exhibit 11: Chow Tai Fook - Greater China Focused and Largest Jewelry Company 105

Exhibit 12: Precious Metals Consumption in Jewelry (Top Markets) 1998-2002, 2011-2013 140

Exhibit 13: Global Production of Polished Diamonds 140

Exhibit 14: Gold Consumption in Jewelry (Top Markets) 1998-2002 Average, 2011-2013 141

Exhibit 15: Platinum Consumption in Jewelry (Top Markets) 1998-2002 Average, 2011-2013 141

Exhibit 16: Silver Consumption in Jewelry (Top Markets) 1998-2002 Average, 2011-2013 142

Exhibit 17: Polished Diamond Consumer Preferences in Leading Markets 142

Exhibit 18: Global Adult Wealth Pattern 2010-2013 143

Exhibit 19: China's Adult Wealth Pattern 2010-2013 144

Exhibit 20: Europe's Adult Wealth Pattern 2010-2013 145

Exhibit 21: North America's Adult Wealth Pattern 2010-2013 145

Exhibit 22: India's Adult Wealth Pattern 2010-2013 146

Exhibit 23: Global High-Networth Individuals 2010-2013 147

Exhibit 24: Jewelry Retailing In USA (Sterling Jewelers) 152

Exhibit 25: Tiffany and Co - Sales Impacts of Stores Located in Gateway Cities 172

Exhibit 26: From Rough Diamond to Polished Diamond 232

Exhibit 27: De Beers Exhibit On Anticipated Structural Supply Deficit 237

Exhibit 28: Diamond Industry Experts Say Consumer Demand Will Outpace Supply 253

Exhibit 29: An Exceptional 25.5ct Blue Diamond 262







Exhibit 33: International Sentiment on Tax Havens Turns Negative 277



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167

Five Key Drivers of Diamond Consumption...

5. Luxury Brands Expansion

Chart 89:

Chart 90:

Charts Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth

Data Book 2013. Equity Communications


www.diamondshades.com/diamondreport 168


Premier luxury brands set to dominate diamond jewelry sales and global gateway cities set to dominate

diamond jewelry retailing...

Economic development efforts of key populous countries gained enough momentum to be significantly

impactful on the global stage by the beginning of this millennium. The ripple effects of this juggernaut have

been enormous, resulting in a transformational rearrangement of the world’s spheres of influence.

In essence, the number of people with money to spend is swelling worldwide, opening up new markets for

premium luxury goods. Accordingly, purveyors of luxury goods have expanded sales networks to these

emerging centers of wealth and attained great profit.

Chart 91:

For instance in the last ten years, Tiffany and Co - known for stocking beautiful diamonds - has increased the

number of its retail locations by 227 percent in the Asia Pacific region, 286 percent in Latin America and

Canada, 236 percent in Europe, 8 percent in Japan, 84 percent in USA and 500 percent in other Emerging

Markets. That is to say, 289 retail locations at the end of 2013 compared to 141 retail locations at the end of

2003.

Chart Source: Equity Communications, Tiffany & Co




Prior to the Global Financial Crisis, about 85 percent of consumer demand for diamonds was located in

developed diamond markets such as USA, Canada and Japan. Post-crisis consumer demand for diamonds has

become a bit more globally diversified largely because of growing demand from emerging markets - led by

India and China.

However, while global expansion of diamond markets is a good thing for growth of the diamond industry, it

also increases competition for the best diamonds and intensifies competition for customers in the diamond

industry’s value chain.

Essentially, enhanced global competition for increasingly costly high quality diamonds - and the fact

that the world has become one market in the internet age - will disqualify even more jewelry retailers

and retail locations from the diamond business.

First, offline (brick and mortar) retail channels are losing consumer traffic to online (internet) retail channels.

The shift is global. Many retail locations that sell diamond jewelry become less profitable with reduced store

traffic because of high inventory carrying costs and lower margins.

At the same time, the online diamond business has really made things much more transparent and better for

customers since all the diamond choices out there are literally available at their fingertips. However, price

transparency at the retail level has introduced price competition to the industry and lowered polished

diamond prices by up to 40 percent over the years, to the continued ruin of retailer margins.

For the most part, consumers are now known to price-compare before finalizing a purchase. As you know,

the internet is the ideal environment to pits one seller versus the other and allows the laws of supply and

demand to set the most efficient price. Consequently, retailers who sell comparable diamonds at a premium

have been forced to reduce prices in order to move stock.

Correspondingly, there literally is even less margin for error in emerging diamond markets like India and

China where the adornment+investment factor is a huge component of jewelry consumption.




For the above reasons, it is reasonable to assume that more of the diamond retailing business will migrate to

luxury retail brands and global gateway cities in the coming years.

There is emotional buying at the upper end of the consumer spectrum, therefore luxury brands have the

ability to defend higher margins in the face of rising costs and enhanced competition. Conversely, there is

value-driven buying at the lower end of the consumer spectrum, therefore regular jewelry retailers find it

harder to pass on higher costs to consumer.

Table 25:

Using the example of Tiffany, for one thing, the luxury brand retailer can sell sterling silver jewelry pieces

for US$300 and achieve great margin success because desirability of the brand is the most important thing

for its customers.

Diamonds, like silver, are a commodity; however, brands are not. Luxury brands have gained strong

desirability over time and this translates into pricing power. Pricing power translates into margin success and

ultimately profit.


Luxury Retail Brands versus Regular Diamond Jewelry Retailers

Consumer Spectrum Customer Purchase Decision Customer Attachment Margins Marketing Budgets

Luxury Retail Brands Upper end Brand Emotion Strong Higher Gross (40-70%) Deep

Regular Jewelry Stores Lower end Value-driven Weak Lower Gross (20-50%) Shallow

Source: Equity Communications




Turning now to the physical aspect of the diamond retailing business, we believe global gateway cities

are the prime real estate of the present and future since they provide the most potential for sustainable

diamond jewelry retailing.

Global gateway cities are cities that serve as cultural and economic hubs of a region. These cities possess the

ability to attract a constant flow of human traffic from within the country and from other countries -

becoming vast melting pots of people, trade and innovation. Cities like London, Paris, Milan, New York,

Miami, Beijing, Shanghai, Singapore, Dubai, Hong Kong, Miami, Moscow, Geneva, Tokyo and Berlin etc.

Global gateway cities are often quite divorced from the local economy of a region - taking cues from the

global economy - and tend to attract large numbers of wealthy travelers with money to spend. Unfortunately

for regular retailers, the downside is that global gateway cities are often the preserve of global luxury brands

that afford astronomical rents.

At the global level, emerging wealth flocks to gateway cities to purchase jewelry and luxury goods because

of higher luxury taxes at home and the prestige factor. For instance, Hong Kong has benefitted tremendously

from wealthy Mainlanders who visit the city for luxury shopping. London is also a popular shopping

destination for wealthy Africans.

Incidentally, tourist shopping in many of Europe's gateway cities has sustained luxury retail locations since

domestic demand is currently weak. For instance, foreign tourist spending represents more than a quarter of

Tiffany sales in Europe.





Exhibit 25: Tiffany and Co – Sales Impact of Stores Located in Global Gateway

Cities

Tiffany's New York Flagship store represents 8% of worldwide sales - about US$320 million. Sales

to foreign tourists account for approximately 45% of store sales.

Tiffany has 54 locations in Japan but the store located in the luxury shopping district of Ginza in

Tokyo accounts for more than 10% of total sales in Japan

Tiffany has 45 stores in Greater China but the store located on the prestigious Canton Road in Hong

Kong is the companies highest volume store in the region by a considerable distance. Canton Road is

very popular with tourists from the Mainland.

Sales in the U.K represent 40% of Tiffany's sales in Europe. The store located on Old Bond Street -

popular with tourists from all over the world - is Tiffany’s highest volume store in Europe.





Gateway cities will continue to attract wealthy shoppers therefore it makes sense for jewelry brands to

gravitate to such cities, particularly in the retailing of expensive high-quality jewelry. Furthermore, jewelry

brands have to strive to create the widest possible network of retail stores in gateway cities because

sometimes consumers will buy less in Hong Kong, less in Paris, more in Dubai, and more in London.

Dynamic things that change all the time such as the weather, taxes, airline routes and currency movements

are considered carefully by luxury goods shoppers in the planning of foreign shopping trips. In essence, the

shopping experience has become more important than ever and the appeal of different shopping destinations

changes all the time.

Naturally, only brands that travel well can go international. Travelling well also entails having adaptive

websites that provide the same high quality user experience whether access is from laptops, tablets, or

smartphones.

Numerous studies and surveys indicate that tourists use the internet to plan their shopping while still at home

and update shopping plans while on the go. The wealthy expect the same level of high quality service from

luxury brands no matter the location or device.

In the final analysis - by and large - pace of growth of emerging diamond consumer markets will depend on

the expansion strategies pursued by luxury brands like Tiffany, Van Cleefs and Arpels, Graff Diamonds and

other prestigious and well established jewelry brands like Chow Tai Fook in Greater China and Damas

Jewelry in the Middle East.

In established diamond markets like the USA, retailing of diamonds will consolidate into strong and well-

established national retail chains like Kay Jewelers and Jared both owned by Sterling Jewelers.

After all, these companies have some important advantages in common:

They possess the ability to capitalize on their stronger brand names, higher margins, stronger marketing and

advertising budgets, and deeper capital resources for sustainable diamond jewelry retailing in a global

environment that has become more competitive and volatile.

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the global diamond business 2014

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